Ahead of the Open (VIP) -- June 11, 2013

June 11, 2013 03:18 AM
 

Corn futures are expected to be choppy this morning on a continuation of mixed overnight trade.

  • Corn futures ended the overnight session 2 cents lower to 2 cents higher, with nearbys leading gains amid bull spreading.
  • Traders are giving little attention to yesterday's crop condition report from USDA, which reflected further deterioration in the corn crop.
  • USDA also reported that 95% of intended corn acres were planted as of Sunday, leaving around 4.87 million acres intended for corn unplanted at this late date.
  • Traders' focus is also on evening positions ahead of tomorrow's USDA reports. Traders look for a tightening of old- and new-crop carryover from last month, which should help limit selling today.
  • Gulf corn basis is 2 cents weaker for immediate delivery to stand 83 cents above July futures, suggesting a weakening of demand.

 

Soybean futures are called 2 to 10 cents higher on bull spreading.

  • Soybeans ended the overnight session marginally to 9 cents higher, with nearbys leading gains amid bull spreading due to tight old-crop supplies.
  • Yesterday's crop progress report showed soybean planting 71% complete as of Sunday, which is below the five-year average of 84% complete.
  • Warmer temps this week are expected to boost crop emergence, but with more rain in the forecast, planting progress concerns should gain more momentum.
  • Traders are also preparing for tomorrow's USDA S&D Report, which is expected to show old-crop carryover unchanged from last month and new-crop carryover up by around 8 million bu. from last month to 273 million bushels.
  • Gulf soybean basis is steady this morning to stand 70 cents above July futures for immediate delivery.

 

Wheat futures are called to open marginally to 2 cents lower amid a lack of fresh news.

  • Chicago and Kansas City wheat ended the overnight session marginally to 2 cents lower, with Minneapolis weaker in all but the front-month July contract.
  • Without strength in neighboring markets, it will be difficult for wheat to generate much more than short-covering due to the start of harvest in the Southern Plains.
  • USDA reports 31% of the Texas crop and 8% of the Oklahoma crops have been harvested.
  • Meanwhile, concerns about planting delays in spring wheat country continue to linger, with the greatest acreage loss potential in North Dakota, where just 77% of intended acres have been seeded and 58% has emerged as of Sunday.
  • Gulf SRW wheat basis is steady to 2 cents lower for immediate delivery to stand 50 to 52 cents above July futures.

 

Live cattle futures are called to open mixed, with pressure limited by short-covering.

  • Following yesterday's losses, live cattle futures are called mixed on a combination of followthrough selling on demand concerns and short-covering on ideas losses are overdone.
  • Concerns about this week's showlist after supplies were largely carried over from last week due to an inactive cash cattle market will limit buying in live cattle futures this morning.
  • But the solid start to the boxed beef market suggests there is demand despite current lofty price levels. Choice beef values rose $1.59 yesterday and Select was 7 cents firmer on solid movement of 188 loads.
  • Feeder futures are expected to be choppy, with buying limited by the large premium nearbys hold to the cash index.

 

Lean hog futures are called to open steady to firmer amid tightening supplies.

  • Following yesterday's choppy day of trade, lean hog futures are expected to be steady to firmer on tightening supplies and indications of strong demand.
  • Nearbys were supported yesterday by rumors that China was buying U.S. pork., which remains unconfirmed at this point.
  • Additional support in lean hog futures is expected from the pork cutout market, which improved $1.96 yesterday. But pork movement was lackluster at 277.6 loads of cuts.
  • The cash hog market is called steady to firmer, but packers have seen profit margins slip further into the red as gains in the cash market have outpaced those in the pork cutout market.
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