Ahead of the Open (VIP) -- June 28, 2013

June 28, 2013 03:11 AM
 

Corn futures are called to open narrowly mixed this morning amid bull spreading.

  • Nearby corn futures ended steady to marginally lower overnight and new-crop futures were mostly 2 cents lower amid bull spreading ahead of this morning's key USDA reports to be released at 11:00 a.m. CT.
  • 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.
  • December corn futures are working on sharp weekly losses this week as traders have removed some weather premium due to the non-threatening early July forecast.
  • Today is the start of the delivery process for July corn futures, and as expected, no deliveries were posted.
  • Gulf corn basis is 2 cents softer for immediate delivery to stand 88 cents over July futures, which suggests a softening of demand.

 

Soybean futures are called to open steady to 2 cents higher as traders have largely moved to the sidelines ahead of USDA's reports.

  • Soybean futures were choppy overnight, but firmed in late trade to end the session mostly 1 to 2 cents higher.
  • Traders are focused on evening positions ahead of this morning's key USDA 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.
  • November soybean futures are trading just above last week's closing levels as the market has largely consolidated as it awaits USDA's data.
  • As expected, no deliveries were posted against July soybean futures.
  • Gulf soybean basis is steady this morning to stand $1.00 over July futures for immediate delivery.

 

Wheat futures are called to open mixed ahead of USDA's key reports.

  • Following yesterday's losses, wheat futures favored a firmer tone in mixed trade on short-covering.
  • Traders are working to even positions ahead of USDA's reports. Some support this morning is coming from expectations USDA will sharply drop 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.
  • But buying in wheat futures is being limited by harvest-related hedge activity. Harvest has reached northern Kansas with mixed results.
  • July Chicago wheat had just two deliveries posted on the first day of deliveries.
  • Also, Japan is looking to replace U.S. western white wheat for the first time in over 50 years due to the limited discovery of GMO material in one field in Oregon. But trade sources say Japanese mills are used to handling U.S. wheat and don't want to switch.
  • Gulf SRW wheat basis is steady this morning to stand 15 cents over July futures for immediate delivery.

 

Live cattle futures are expected to be mixed this morning as traders wait on cash trade to develop.

  • Live cattle were slightly higher in all but the front-month contract yesterday, which faced light pressure as it holds a premium to last week's $120 cash cattle trade.
  • Cash opinions are widely mixed, but there is momentum building toward $1 higher trade due to this week's tighter showlists and packers being in need of additional supplies ahead of next week's holiday-reduced kill schedules.
  • Traders are also encouraged by improvement in boxed beef prices, as Choice values rose 87 cents yesterday and Select was up $1.11. But only 170 loads of cuts and trim changed hands yesterday.
  • Technical have also improved for live and feeder cattle futures, which has bottom pickers looking to extend long positions. But traders will be hesitant to extend long positions ahead of this morning's key USDA grain reports in case of a surprise.

 

Lean hog futures are called to open slightly lower on profit-taking.

  • Following yesterday's sharp gains, lean hog futures are expected to see light profit-taking this morning.
  • Traders are also focused on evening positions ahead of this afternoon's Hogs & Pigs Report, which is expected to reflect mild expansion. Traders look for All Hogs & Pigs to come in at 100.6%, Kept for Breeding at 99.9% and Kept for Marketing at 100.7% of year-ago.
  • Meanwhile, traders are concerned about the pork cutout market after values plunged $2.05 yesterday due to double-digit losses in belly prices.
  • The cash hog market is called mostly steady this morning as packers have reduced kill requirements.
  • July lean hog futures ended yesterday at around a $1.50 premium to the cash index. This should help to limit pressure on futures, although there are concerns the market is nearing a seasonal high.
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