Ahead of the Open (VIP) -- June 21, 2013

June 21, 2013 03:16 AM
 

Corn futures are called to open 2 to 5 cents lower on light followthrough from yesterday's losses.

  • Corn futures ended the overnight session mostly 2 to 5 cents lower on light followthrough selling and strength in the dollar index.
  • Key will be how funds want to be positioned heading into the weekend after they lightened their long exposure to the market yesterday.
  • Rains moving across the upper Corn Belt this morning are perceived as helpful for the crop after warmer temps this week gave the crop a boost. But growers recognize the late start to the growing season is a disadvantage for yield.
  • Gulf corn basis is 1 to 2 cents lower for nearby delivery to stand 98 cents above July futures for immediate delivery, which suggests a softening of old-crop demand.

 

Soybean futures are called to open mixed amid bull spreading.

  • Nearby soybean futures ended the overnight session marginally to 1 cent higher, with deferred futures mostly 2 to 6 cents lower amid bull spreading following yesterday's sharp losses.
  • Outside markets are a bit calmer this morning, although the U.S. dollar index is stronger this morning, which is limiting buying in commodity markets. Crude oil is choppy and gold is firmer.
  • Rains moving across the Upper Midwest this morning are raising concerns about whether producers in the region will be able to wrap up soybean plantings this week.
  • How the market closes the week will be important technically after November beans saw trade below the $12.70 level yesterday.
  • Gulf soybean basis is steady this morning to stand 84 cents above July futures for immediate delivery. Lackluster demand has kept basis from improving this week.

 

Wheat futures are called to open mixed on a combination of followthrough selling and short-covering.

  • Chicago futures ended the overnight session mostly 1 to 3 cents lower, with Kansas City and Minneapolis wheat mixed.
  • Key will be traders' comfort level as they even positions ahead of the weekend.
  • Varied harvest results from HRW wheat country as harvest moves into southern Kansas are limiting pressure on Kansas City wheat futures.
  • Traders are also aware of a large amount of intended North Dakota spring wheat acres that remain unplanted.
  • India's cabinet approved the sale of 10 MMT of wheat from government stocks into the domestic market, but a decision on an additional 2 MMT was not voted on.
  • Strength in the dollar index raises concerns about export demand.

 

Live cattle futures are called to open mixed as traders even positions ahead of the COF Report and wait on cash cattle trade to begin.

  • Live cattle futures are expected to be choppy after yesterday's slight losses. Traders will be cautious about extending positions ahead of the weekend and this afternoon's Cattle on Feed Report.
  • The COF Report is expected to show On Feed at 96.5%, Placements at 95.9% and Marketings at 97.9% of year-ago levels. The fact traders look for all categories to come in below year-ago levels should limit selling in futures.
  • Cash cattle trade may be delayed until after the report as packers and feedlots are several dollars apart in negotiations. Due to this week's slightly larger showlist, most expect steady to weaker trade compared with last week's $120 cash trade.
  • Feeder futures are expected to follow live cattle, but will also be watching the corn market. Weakness in corn futures should limit pressure in feeder futures.

 

Lean hog futures are called to open steady to weaker as traders prepare for this afternoon's Cold Storage Report.

  • Lean hog futures held up well in mixed trade yesterday given widespread commodity selling due to strength in the dollar index.
  • But futures are expected to favor a weaker tone this morning as traders prepare for this afternoon's USDA Cold Storage Report. The report is expected to show end-of-May pork stocks in frozen storage at a record for the month.
  • Meanwhile, the cash hog market is expected to be mostly steady as packers say they largely have this week's needs secured.
  • Traders will be keeping a close eye on the pork cutout market after values slipped 86 cents yesterday on lackluster movement of 233.3 loads.
  • July lean hog futures ended yesterday at around a $4 discount to the cash index, which should limit pressure on futures.
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