Ahead of the Open (VIP) -- June 27, 2013

June 27, 2013 03:15 AM
 

Corn futures are called mixed amid bull spreading.

  • July corn futures ended the overnight session 1 cent higher, with the rest of the market mostly 1 cent lower amid bull spreading.
  • Traders' focus is on evening positions ahead of tomorrow's key USDA reports. Traders look for USDA to trim planted corn acreage from its March intentions to around 95.34 million acres.
  • Meanwhile, traders look for USDA to peg June 1 corn stocks at 2.856 billion bu., down from 3.148 billion bu. a year ago.
  • This morning's weekly export sales data showed corn sales of 336,700 MT for 2012-13 and 153,600 MT for 2013-14 -- coming in at the top end of expectations.
  • The Argentine government has authorized 16 MMT of corn exports for 2013-14 (1 MMT more than the previous year) to encourage producers to expand acreage in the coming season.
  • Gulf corn basis is 5 cents firmer this morning for immediate delivery to stand 90 cents over July futures to suggest some fresh demand has surfaced.

 

Soybean futures are called to open 2 to 8 cents higher amid bull spreading.

  • Nearby soybean futures ended the overnight session 4 to 8 cents higher, with deferred futures 1 to 3 cent higher amid bull spreading.
  • Traders are focused on evening positions ahead of tomorrow's reports, which are expected to reflect a slight increase in planted soybean acreage from USDA's March intentions to around 78.024 million acres.
  • Traders look for USDA to peg June 1 soybean stocks at 441 million bu., down from 667 million bu. a year-ago.
  • Meanwhile, this morning's weekly export sales data showed sales of just 14,500 MT for 2012-13, but sales of 451,100 MT for 2013-14 pushed the combined tally above expectations.
  • Also, USDA this morning announced at 172,500 MT soybean sale to unknown destinations for 2013-14.
  • Gulf soybean basis is steady to 5 cents lower for nearby delivery to stand $1.00 over July futures.

 

Wheat futures are called to open 3 to 6 cents higher on signals demand has improved.

  • Wheat futures ended the overnight session mostly 2 to 4 cents higher at all three exchanges on improved demand prospects and pre-report position squaring.
  • Traders are working to even positions ahead of tomorrow's key USDA reports; the acreage report is expected to reflect a significant drop in spring wheat acreage from March intentions to around 12.117 million acres.
  • Traders look for USDA to peg June 1 wheat stocks at 750 million bushels.
  • Although no official announcement has been made, the Argentine government has told exporters it will not authorize more shipments of wheat/flour for 2012-13 due to soaring domestic bread prices. This could boost demand for U.S. wheat.
  • This morning's weekly sales report reflect demand improvement, with sales of 731,800 MT for 2013-14 coming in above expectations, with Brazil the lead buyer.
  • According to the Kansas Association of Wheat Growers, harvest is approaching the Nebraska border and results have been mixed.
  • Gulf SRW wheat basis has softened by 5 cents for immediate delivery in response to new-crop supplies being available.

 

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

  • Live cattle futures ended yesterday slightly to moderately higher and near session highs, which gives bulls the upper hand this morning.
  • But two-sided trade is likely as traders wait on cash cattle trade to begin. Cash trade will likely be delayed until tomorrow as packers and feedlots are several dollars apart in negotiations.
  • Boxed beef prices have softened this week, but showlists are smaller and packers' profit margins are well in the black. As a result, opinions are split as to which direction cash will trade compared to last week's $120 trade.
  • Weekly beef export sales of 20,000 MT for 2013 were more than double the previous week, with Hong Kong and Mexico the lead buyers.
  • Feeder cattle futures rose sharply yesterday in response to smaller calf supplies, but August feeder futures ended the day at more than an $11 premium to the cash index.

Lean hog futures are expected to be mixed as traders begin to more actively even positions ahead of Friday's Hogs & Pigs Report.

  • Lean hog futures ended the day yesterday steady to weaker and near session lows, which gives bears the upper hand this morning.
  • Traders will begin to more actively even positions ahead of tomorrow afternoon's Hogs & Pigs Report, which is expected to reflect slight expansion in the industry. All Hogs & Pigs are expected at 100.6% of year-ago levels.
  • Pork cutout values improved 91 cents yesterday on solid movement of 307.92 loads of cuts. Strength in the belly market led price gains among the meat cuts.
  • But even though packers' profit margins have improved this week, demand for cash hog supplies has softened, which has traders preparing for a seasonal high being in place.
  • Strong weekly pork sales of 18,600 MT were up from 8,300 MT last week, with Mexico the lead buyer.
  • July lean hog futures ended yesterday at around a $3.50 discount to the cash index, which should limit pressure this morning for nearby futures.
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