Ahead of the Open (VIP) -- June 10, 2013

June 10, 2013 03:16 AM
 

Corn futures are called 5 to 10 cents lower on negative outside markets and an improved weather forecast.

  • Corn futures ended the overnight session mostly 7 to 10 cents lower as traders react to improved weather forecasts for the emerging crop.
  • While some areas of the Corn Belt received heavy rains yesterday and overnight, this week's forecast is drier and warmer.
  • This afternoon's crop progress data will reflect the acreage that is at risk of being unplanted or switched to another crop, as it's too late for much of the Midwest to continue planting corn without a significant risk to yield.
  • Negative outside markets are also weighing on the commodity markets this morning as the dollar index is higher.
  • Gulf corn basis is 3 cents higher for immediate delivery and 10 cents higher for August delivery to reflect tight supplies.

 

Soybean futures are called 10 to 15 cents lower amid profit-taking.

  • Soybeans ended the overnight session mostly 9 to 16 cents lower on profit-taking following last week's gains and due to negative outside markets.
  • Soybeans are also being pressured by forecasts for less rain and warmer temps this week, which traders believe should boost soybean planting progress.
  • According to official Chinese trade data, the country's soybean imports in May of 5.1 MMT were up 28% from April but down 3.4% from year-ago.
  • Adding to concerns about Chinese trade is news, its consumer price index came in 2.1% above year-ago, triggering concerns about growth.
  • Gulf soybean basis is steady this morning to stand 70 cents above July futures for immediate delivery.

 

Wheat futures are called to open 2 to 5 cents lower on spillover from neighboring pits.

  • Chicago and Kansas City wheat ended the overnight session mostly 3 to 5 cents lower with Minneapolis 2 to 3 cents lower in all but the front-month contract, which ended marginally firmer.
  • Much of this morning's pressure is expected to come on spillover from neighboring pits and strength in the dollar index, although traders anticipate harvest-related hedge pressure to begin building soon.
  • Based on the first official forecast from Ukraine's ag ministry, the country is expected to produce a grain crop between 53 MMT and 54 MMT, up from 46.2 MMT last year.
  • Futures are also expected to be pressured by recent rains across the HRW Wheat Belt, although western areas didn't see as widespread of coverage and yield impacts are expected to be minimal.
  • Gulf SRW wheat basis is 2 cents higher for immediate delivery this morning to stand 52 cents above July futures.

 

Live cattle futures are called to open mixed as traders wait on cash trade to develop.

  • After posting slight losses last week, live cattle futures are expected to be mixed as traders gauge this week's beef market.
  • Ideas the boxed beef market has posted a near-term high will limit buying, although pressure on live cattle futures should be limited by the discount nearbys hold to the cash market.
  • Only light cash cattle trade was seen last week, meaning most feedlots held inventory over to this week, giving them less bargaining power.
  • Weakness in the corn market should generate some short-covering in feeder cattle futures.

 

Lean hog futures are called to open mixed amid spreading.

  • Following last week's gains, lean hog futures are vulnerable to some profit-taking, although the technical outlook has improved.
  • Bulls are also encouraged by tightening supplies and late-week improvement in the pork cutout market, although packers' profit margins are still in the red.
  • Pork cutout values improved $1.25 on Friday thanks to sharp gains in the belly market, but movement was light at 267.6 loads of cuts.
  • The cash hog market is called steady to firmer despite negative margins and most packers are thought to be in need of supplies to start the week.
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