Ahead of the Open (VIP) -- June 12, 2013

June 12, 2013 03:19 AM
 

Corn futures are expected to be choppy this morning as traders put their finishing touches on positions ahead of this morning's USDA reports.

  • Corn futures ended the overnight session mostly 2 to 3 cents lower, but saw little overall price movement to suggest traders have moved to the sidelines ahead of this morning's USDA reports.
  • Traders look for USDA to trim its old- and new-crop corn carryover pegs from last month, but are reluctant to aggressively extend long positions in risk of a bearish report surprise.
  • Another wave of showers is moving across the western Corn Belt this morning, which should serve as a reminder to traders of the likelihood that remaining unplanted acres will be abandoned or switched to another crop.
  • Strength in the U.S. dollar index is limiting buying interest in corn futures this morning.
  • Gulf corn basis is 3 cents softer for immediate delivery to stand 80 cents above July futures to suggest a softening of old-crop demand.

 

Soybean futures are called mixed amid bull spreading.

  • Old-crop soybean futures ended the overnight session 3 to 6 cents higher, with new-crop down 1 to 4 cents amid bull spreading.
  • Traders' focus is on evening positions ahead of this morning's USDA reports. Traders look for USDA to leave its old-crop soybean carryover peg unchanged from last month but for new-crop carryover to climb by around 8 million bu. from last month.
  • Meanwhile, rains moving across the western Corn Belt this morning are delaying soybean planting and raising questions about the timeliness of remaining planting to be done.
  • Gulf soybean basis is unchanged for immediate delivery but has risen by 3 to 5 cents for July delivery to remind traders of the tight old-crop supply situation.
  • Yesterday July soybean futures posted the highest close since last September to improve the near-term technical outlook of the market.

 

Wheat futures are called to open 2 to 6 cents lower as traders even positions ahead of USDA's reports.

  • Chicago and Kansas City wheat ended the overnight session mostly 3 to 6 cents lower, with Minneapolis marginally lower.
  • Strength in the dollar index weighed on wheat overnight, with traders also focused on evening positions ahead of this morning's USDA reports.
  • According to pre-report guesses, traders look for USDA to trim the size of the wheat crop by around 31 million bu. largely due to the poor finish of the HRW wheat crop.
  • Meanwhile, traders look for only minor revisions to old-crop wheat carryover from last month, while new-crop carryover is expected to decline by around 36 million bushels.
  • ABARES has raised its forecast for the 2013-14 Australia wheat crop by 499 MT to 25.399 MMT, which, if realized, would be up 15% from last season. This added to overnight price weakness as it reminds traders of the plentiful global stocks situation.

 

Live cattle futures are called to open steady to firmer on followthrough from yesterday's gains.

  • Following yesterday's strong gains, live cattle futures are expected to benefit from followthrough buying.
  • Traders are hopeful at least steady cash cattle trade will be seen this week given packers' positive profit margins and stability in the boxed beef market.
  • But given this week's slightly larger showlist, cash trade is still in question and traders will be hesitant to push nearby futures in line with last week's $122 cash cattle trade on the Southern Plains.
  • Choice beef values softened by 19 cents yesterday, but Select rose by 72 cents and movement was solid at 209 loads.
  • Feeder futures are expected to be influenced by price action in live cattle and could be choppy as they are also keeping an eye on the corn market.

 

Lean hog futures are called to open mixed as traders reevaluate positions.

  • Lean hog futures closed slightly to moderately higher yesterday, but near session lows, which raises the risk of followthrough selling this morning.
  • But pressure on futures should be limited by tightening market-ready supplies.
  • Packers' profit margins remain in the red, but the cash market is still expected to be steady to firmer as packers are still in need of supplies.
  • Pork cutout values firmed 85 cents yesterday and movement improved to 388.5 loads.
  • June lean hog futures are trading at around a $2 premium to the cash index to suggest traders have a positive bias toward the cash market.
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