Ahead of the Open (VIP) -- June 25, 2013

June 25, 2013 03:25 AM
 

Corn futures are called steady to 3 cents higher on the reopening of trade this morning.

  • Corn futures finished 1 to 3 cents higher overnight, but gains were trimmed late in the session, which could temper buying interest on the open this morning.
  • Corn traders are weighing slowed crop development in key areas of the western Corn Belt, especially Iowa and Minnesota, against an overall increase in crop ratings over the past week.
  • Rains are again falling on saturated areas of the western Belt this morning and are expected to linger into Wednesday.
  • While there are concerns west of the Mississippi River, crop conditions in Illinois and Indiana are generally relatively strong.

 

Soybean futures are called to open 5 to 8 cents higher this morning.

  • Soybeans ended the overnight session 4 to 9 cents higher, though most contracts backed off overnight lows late. Monday's high-range close led to followthrough buying overnight.
  • Tight stocks and plentiful demand for those supplies are supporting old-crop futures.
  • New-crop futures are being supported by slowed planting and emergence. As of Sunday, USDA reports there was still 8% of the soybean crop left to plant and 19% has yet to emerge. Given soggy soils in areas where the bulk of those acres are located, there are increased crop concerns.
  • But USDA reports the overall condition of the soybean crop improved, with the "good" to "excellent" categories rising 1 percentage point last week.

 

Wheat futures are called to open 3 to 5 cents higher, with Minneapolis seen leading gains.

  • Wheat futures ended the overnight session mostly 2 to 7 cents higher, with Minneapolis contracts leading gains amid crop concerns in spring wheat country. Planting and emergence continues to lag in North Dakota.
  • Wheat futures are expected to see a corrective bounce today following Monday's losses. But with harvest picking up in the Plains, gains will be corrective in nature.
  • USDA put winter wheat harvest at 20% complete as of Sunday, which is well behind the five-year average of 37%. But reports out of Kansas signal harvest will be in full swing in the state today. Yields are improving as combines push north. Harvest-related hedge pressure will limit buying interest in the wheat market.
  • Stats Canada put all wheat seedings at 25.9 million acres, which was just slightly less than expected and down roughly 700,000 acres from its previous estimate.
  • The U.S. dollar index was weaker and provided support to wheat futures overnight, but the greenback has firmed this morning.

 

Live cattle futures are called to open steady to firmer.

  • Live cattle futures are expected to mildly favor the upside this morning after a weaker performance yesterday.
  • Cash market uncertainty is likely to limit trader participation on both sides of the market. Bulls are looking for steady to firmer cash cattle prices this week after three consecutive weeks of light purchases by packers and given strong margins. But bears note that packers are buying for a shortened slaughter schedule next week and increased showlist supplies in southern locations.
  • Boxed beef trade was mixed Monday as Choice prices dropped 14 cents, while Select values firmed 36 cents. Movement was light at 139 total loads.
  • Feeder cattle futures are expected to be mixed this morning. While live cattle should provide support, a firmer tone in corn is price-negative.

 

Lean hog futures are seen opening steady to firmer this morning.

  • Nearby lean hog futures are expected to be supported by the discount they hold to the cash market. July hogs are trading at more than a $3 discount to the cash hog market.
  • Meanwhile, cash hog bids are expected to be mostly steady across the Midwest. While market-ready hog supplies are tight and cutting margins are positive, packer demand for cash hogs was limited Monday.
  • With summer-month lean hog futures trading near their contract highs, traders are on guard for a potential market top, especially since we are now into the timeframe when the cash and product markets typically top.
  • The pork product market showed price strength Monday as the cutout value firmed $1.09, though packers moved only 199.8 loads of product on the day, suggesting retailers may be starting to resist high prices.
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