Ahead of the Open (VIP) -- June 26, 2013

June 26, 2013 03:13 AM
 

Corn futures are expected to be mixed this morning, with nearbys firmer.

  • July corn futures ended the overnight session around 4 cents higher, with the rest of the market favoring a firmer tone in narrowly mixed trade.
  • Strength in the dollar index is limiting buying, although traders' focus is on evening positions ahead of Friday's key USDA reports.
  • According to pre-report guesses, traders look for USDA to lower planted corn acreage by around 1.9 million acres from its March intentions figure to 95.34 million acres. Guesses range from 94.2 million to 96.4 million acres.
  • Localized flooding across the central Corn Belt this morning is raising questions about crop prospects, but traders view the near-term forecast as non-threatening as we head into the key July Fourth timeframe.
  • Gulf corn basis has declined by a penny to stand 85 cents above July futures, which reflects a softening of demand.

 

Soybean futures are called to open 2 to 4 cents lower this morning on negative outside markets and non-threatening weather.

  • Soybeans ended the overnight session mostly 3 cents lower due to strength in the dollar index, which is expected to lead to a risk-off stance this morning.
  • Futures are also seeing some profit-taking following yesterday's gains.
  • While there is more rain in the near-term forecast, traders generally view the forecast as non-threatening for early crop development.
  • Traders are also beginning to more actively even positions ahead of Friday's key acreage report. Traders expect the report to show around a 900,000-acre increase in planted soybean acres compared to March intentions to 78.024 million acres. Guesses range from 77.1 million to 79.24 million acres.
  • Gulf soybean basis is 8 cents stronger for immediate delivery to stand $1.00 over July futures. This reflects an increase in demand for old-crop soybeans, which could help support nearby futures this morning.

 

Wheat futures are called to open 1 to 2 cents higher on spillover from corn futures.

  • Wheat futures ended the overnight session marginally to mostly around 1 cent higher, although Chicago wheat was 2 to 3 cents higher in the nearby contracts.
  • Wheat is enjoying light spillover from corn futures, although strength in the dollar index is limiting buying.
  • Traders are beginning to even positions ahead of Friday's key acreage report. Traders look for USDA to trim spring wheat acreage from March intentions by around 584,000 acres to 12.117 million acres. Guesses range from 11.7 million to 12.7 million acres.
  • Ongoing winter wheat harvest is limiting buying, although some producers in northern Kansas are waiting for fields to dry out.
  • Gulf SRW wheat basis is steady to 1 cent firmer for nearby delivery and mixed for deferred delivery.

 

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

  • More of the same is expected following yesterday's choppy day of price action as traders gauge cash market signals.
  • Concerns about the boxed beef market will limit buying in futures as it raises concerns about more near-term pressure on the cash market.
  • Choice boxed beef values slipped $1.68 and Select declined by 66 cents, although movement picked up to 172 loads yesterday.
  • This week's cattle showlist is up slightly from last week in Kansas and Texas, although marketings are expected to be smaller in Nebraska.
  • June live cattle ended yesterday at around a $1 premium to last week's $120 cash cattle trade.
  • Mild strength in the corn market will limit buying in the feeder cattle pit, as well as the sharp premium nearby futures hold to the cash index.

 

Lean hog futures are expected to be mixed as traders anticipate a seasonal high being posted soon.

  • Lean hog futures were choppy yesterday, with buying limited by expectations the market is near a seasonal high.
  • But ongoing strength in the pork cutout market could trigger fresh buying. Pork cutout values improved 79 cents yesterday on moderate pork movement of 296.7 loads.
  • The cash hog market is called steady to $1 lower as packers say they have needs filled ahead of the July Fourth holiday. Packers are reluctant to raise kill requirements.
  • July lean hog futures are trading at a $3-plus discount to the cash index, which signals traders believe the cash market has posted a near-term high.
  • Mexico announced it is blocking imports of U.S. live pigs in response to the PEDV situation, but the ban does not involved meat exports.
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