Ahead of the Open (VIP) -- July 31, 2013

July 31, 2013 03:20 AM

Corn futures are expected to favor a weaker tone on the open of the day session.

  • Corn futures closed out the overnight session mixed, although December through July futures were mostly 3 cents lower.
  • New-crop futures were pressured overnight by a combination of technical and fundamentals factors, as bearish momentum is building and weather is seen as favorable for crop development.
  • December corn futures remained within the boundaries of yesterday's trading range in overnight trade, but a slip through support at Monday's low could trigger a fresh wave of chart-based selling.
  • Meanwhile, forecasts continue to call for below-normal temps and above-normal precip across the Corn Belt, which is seen as favorable for the pollinating corn crop.
  • Gulf corn basis is steady for immediate delivery, but is up 15 cents for early August delivery to stand 95 cents over September futures. This is supportive for the front-month contract.


Soybean futures are called to open 1 to 5 cents higher on short-covering.

  • Following yesterday's sharp losses, soybean futures were choppy overnight, but benefited from mild short-covering late in overnight trade to end mostly 1 to 3 cents higher.
  • Upside potential is limited to short-covering, however, as traders say mild temps and forecasts for more rains this week are beneficial to the bean crop.
  • The technical situation continues to deteriorate. November beans dipped below the $12.00 level again in overnight trade, but so far selling has been limited below that level.
  • USDA announced a 120,000 MT soybean sale to an unknown destination for 2013-14, which signals prices are attracting fresh demand.
  • Gulf soybean basis is steady for immediate delivery to stand $1.65 over November futures.


Wheat futures are expected to favor a firmer tone in mixed trade.

  • SRW wheat futures ended the overnight session mixed, but favored a firmer tone. HRW futures ended fractionally to 1 cent higher and HRS ended steady to 2 cents lower.
  • While traders recognize that demand for U.S. wheat has improved recently and the market is due for a post-harvest rally, it's difficult for wheat to gain upside momentum due to ongoing weakness in the corn and soybean markets.
  • HRS futures were pressured overnight by mild weather that is benefiting spring wheat crop development.
  • Gulf SRW wheat basis is steady this morning at 55 cents over September futures.
  • Otherwise, there's little fresh news to excite bulls this morning.


Live cattle futures are called to open mixed with an upside bias to maintain the recent choppy trading tone.

  • Live cattle futures posted slight losses yesterday, which is expected to spur light short-covering to continue the recent choppy trading range.
  • A lackluster start to the boxed beef market is expected to contribute to the choppy tone. Choice values improved 37 cents yesterday and Select dropped 56 cents. Movement of 142 loads signals demand remains lackluster.
  • This week's cash cattle trade faces hurdles, which will limit buying in nearby futures today. This week's showlist is up from last week and boxed beef movement hasn't been strong enough to encourage packers to raise bids.
  • A choppy to weaker tone in the corn market is supportive for feeder cattle this morning.


Lean hog futures are called to open steady to firmer on corrective short-covering.

  • Following yesterday's moderate to sharp losses, lean hog futures are called to open steady to firmer on corrective short-covering.
  • Traders are also expected to begin more actively working to get August futures in line with the cash market. The contract holds around a $2 discount to the index, which is also a limiting factor to the downside over the near-term.
  • Futures are also expected to be supported by strength in the pork product market. The cutout value improved 94 cents yesterday on improved movement of 393.1 loads.
  • The cash hog market is called mostly steady with the possibility of a firmer tone due to improved packer profit margins.
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