Corn futures are expected to open 3 to 5 cents higher on short-covering.
- Corn futures ended the overnight session 4 to 5 cents higher on short-covering and news of Chinese corn purchases.
- Key will be if funds return as active buyers or if traders continue to lighten their long exposure to the market ahead of the July Fourth holiday.
- Trade sources say China recently booked three cargoes of new-crop U.S. corn as prices were cheaper than domestic supplies. This signals U.S. corn has reached "value" levels.
- Meanwhile, traders view the near-term weather forecast as non-threatening, which will limit buying to short-covering for new-crop futures.
- Gulf corn basis is 4 cents firmer for immediate delivery to stand 44 cents over July futures.
Soybean futures are called to open 10 to 20 cents higher on short-covering.
- Soybean futures ended the overnight session with double-digit gains, with nearbys leading the way amid bull spreading due to tight old-crop supplies.
- While old-crop futures continue in the steep uptrend from the June low, new-crop futures have trended lower during this same period and are enjoying short-covering this morning.
- Focus in the market today will be on evening positions ahead of the key July Fourth period.
- Non-threatening weather will make it difficult for traders to rebuild long positions unless a wave of fresh demand news surfaces.
- Gulf soybean basis is 2 cents firmer for immediate delivery to stand 64 cents over July futures, with basis for deferred delivery steady.
Wheat futures are called to open 5 to 10 cents higher on short-covering.
- Wheat futures at all three exchanges enjoyed gains overnight, with Chicago leading the way by posting gains of 6 to 12 cents.
- Wheat futures were supported overnight by reports that China has booked around 700,000 MT to 800,000 MT of "overseas wheat" on the price break.
- If realized, fresh demand news of this magnitude would help the market build a base of support and secure a harvest low.
- This morning USDA has confirmed purchases of 360,000 MT of U.S. SRW wheat for 2013-14.
- Winter wheat harvest is thought to have crossed the halfway point by this time, which has traders anticipating the bulk of hedge-related pressure is now behind the market.
- Gulf SRW wheat basis is 4 cents firmer this morning to stand 44 cents over July futures to suggest a pickup in demand.
Live cattle futures are called steady to weaker on light followthrough pressure.
- Live cattle futures softened into the close yesterday to post slight losses, raising the risk of followthrough pressure this morning.
- But pressure should be limited as traders are still anticipating at least steady cash cattle trade given this week's tighter showlist.
- But the boxed beef market has been unimpressive this week. Choice values firmed 46 cents and Select rose 84 cents yesterday, but movement was lackluster at just 168 loads.
- No active bidding has been reported, which suggests cash trade will likely be delayed until after July Fourth.
- Feeder cattle futures are vulnerable to profit-taking as well as strength in the corn market.
Lean hog futures are called steady to lower on weakness in the pork cutout market.
- Lean hog futures are vulnerable to followthrough from yesterday's losses, although futures came well off session lows into the close.
- But traders are concerned about the cash hog market after pork cutout values slipped another $1.56 yesterday. Movement improved to 384.58 loads of cuts and 21.17 loads of trim, but cutout values have slipped more than $4 from their late-June peak.
- The cash hog market is expected to be mostly steady today, but a mixed tone could develop due to variable demand.
- Some plants are in need of additional supplies, while others have scaled back kill requirements due to the holiday.