Ahead of the Open (VIP) -- July 5, 2013

July 5, 2013 03:15 AM
 

This morning's employment report from the Department of Labor showed hiring picked up in June, with 195,000 non-farm payrolls added. This was above expectations of 165,000 jobs being added. Unemployment was unchanged at 7.6%, which is a slight disappointment given the uptick in job creation. The U.S. dollar index immediately shot higher on the news, with gold futures posting an immediate negative reaction.

Corn futures are expected to open 4 to 6 cents lower on non-threatening weather.

  • Corn futures are expected to start the day under pressure as traders return to factor in non-threatening weather.
  • Yesterday's NWS 6- to 10-day forecast calls for below-normal temps across the Corn Belt and mostly above-normal precip, with the exception being normal precip expected across most of Iowa and northern Illinois.
  • Strength in the U.S. dollar index is expected to add to the negative tone.
  • This morning's weekly export sales report showed corn sales of 233,100 MT for 2012-13 and 81,400 MT for 2013-14, which came within expectations.
  • Additionally, USDA announced a 120,000 MT corn sale to unknown destinations for 2013-14.
  • Gulf corn basis is steady this morning.

 

Soybean futures are called to open 8 to 12 cents lower on a lack of crop concerns.

  • Traders are returning to the market this morning after taking a one-day break. The lack of a weather threat is expected to weigh on soybean futures this morning.
  • But bull spreading should continue to dominate price action in the bean pit amid tight old-crop supplies.
  • The near-term weather forecast calls for below-normal temps and widespread rains across the Corn Belt.
  • Weekly soybean sales of 120,600 MT for 2012-13 and 249,100 MT for 2013-14 were within expectations.
  • Gulf soybean basis is 1 cent higher for immediate delivery to stand 65 cents over July futures.

 

Wheat futures are called to open 5 to 8 cents lower on short-covering.

  • Wheat futures are expected to start the day under pressure on spillover from neighboring pits.
  • Sharp strength in the dollar index is expected to add to the weaker tone.
  • This morning's weekly export sales report was a solid showing, which should help to limit downside risk. Sales of 593,100 MT for 2013-14 were primarily to China.
  • Exports of 688,500 MT were also mostly to China.
  • USDA announced a 120,000-MT SRW wheat sale to China for 2013-14.
  • A pickup in export business signals prices have returned to "value" levels.
  • Gulf SRW wheat basis is steady this morning to stand 20 cents over July futures.
  • In a positive development, South Korea announced it has lifted its pan on U.S. wheat. But Japan is leaving its ban on U.S. western white wheat in place for now.

 

Live cattle futures are called steady to weaker on disappointing cash cattle trade.

  • Traders are returning after the one-day break to the disappointment of weaker cash cattle trade.
  • Cash trade got underway Wednesday afternoon at $119 across the Southern Plains, which is down $1 from last week.
  • Meanwhile, boxed beef values firmed on Wednesday, with Choice up 63 cents and Select up $1.85 on solid movement of 182 loads.
  • Key will be how the beef market performs after the holiday, as it will provide clues to whether retailers plan on beef features.
  • Weekly beef export sales of 12,400 MT were solid, with Japan the lead buyer.
  • Weakness in the corn market should help to limit pressure on feeder cattle futures.

 

Lean hog futures are called steady to lower on weakness in the pork cutout market.

  • Lean hog futures are expected to be pressured by Wednesday's sharp losses in the pork cutout market.
  • Pork cutout values slipped $1.40 due to sharp weakness in hams, but belly prices recovered. Movement of 414.49 loads of cuts was impressive.
  • The cash hog market is expected to be mostly steady today but varied demand could result in some firmer bids as some locations are still in need of supplies for tomorrow's kill.
  • July lean hog futures are trading at around a $2 discount to the cash index, which should help to limit pressure on futures this morning.
  • Weekly pork export sales of 10,000 MT were primarily for Hong Kong.
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