Ahead of the Open (VIP) -- June 4, 2013

June 4, 2013 03:17 AM
 

Corn futures are called to open 5 to 10 cents lower on profit-taking.

  • Corn futures ended the overnight session mostly 9 to 11 cents lower, with the front-month July contract down 6 1/4 cents.
  • Stepped up fund selling to start the month is weighing on corn futures. Key will be if this trend continues or if traders return their focus to the late planting situation.
  • USDA reported yesterday that about 8.76 million intended corn acres were unplanted as of Sunday and that 74% of the crop has emerged.
  • The first corn crop condition rating of the year showed the crop in worse shape than last year at this time. Our weighted Crop Condition Index showed the crop rated at 348 points (0 to 500 point scale), down around 33 points from year-ago.
  • Gulf corn basis is a penny softener for immediate delivery to stand 78 cents over July futures, signaling soft demand.

 

Soybean futures are called to open 10 to 20 cents lower on profit-taking.

  • Following yesterday's sharp gains, soybean futures are expected to see double-digit losses on profit-taking.
  • Key this morning will be if early losses are built upon due to fund selling or if weakness is viewed as a buying opportunity.
  • Traders also recognize there is an increased risk some corn acres could be switched to soybeans due to ongoing planting delays.
  • But traders are also concerned about the slow soybean planting progress. As of Sunday, USDA reports around 33.2 million intended soybean acres have yet to be seeded.
  • Gulf soybean basis has softened by 5 cents for immediate deliver to stand 75 cents over July futures to reflect a softening of demand.

 

Wheat futures are called to open 2 to 8 cents lower on spillover from neighboring pits.

  • Chicago wheat ended the overnight session mostly 7 to 8 cents lower, with Kansas City down 4 to 6 cents. Minneapolis wheat saw lighter losses of up to 2 cents.
  • Wheat saw spillover pressure from neighboring pits overnight, with little attention on declining winter wheat crop condition ratings.
  • Our weighted Crop Condition Index showed the HRW wheat crop slipped around 4 points last week while the SRW wheat crop declined by around 4.5 points.
  • Meanwhile, the first spring wheat condition ratings of the season shows a drop of 25.21 points from year-ago according to our Crop Condition Index.
  • USDA says it has expanded its investigation into the GMO wheat situation and so far has found no indication of GMO material in the commercial wheat supply.
  • Gulf SRW wheat basis is a penny softer for immediate delivery to stand 48 cents over July futures reflecting softer demand.

 

Live cattle futures are called to open mixed on the possibility of short-covering.

  • Live cattle futures are expected to see a mixed start following yesterday's losses on a combination of followthrough selling and short-covering.
  • Upside potential will be limited to short-covering due to indications the boxed beef market has posted a near-term high.
  • Choice beef values softened 48 cents yesterday and Select was down $1.76 on lackluster movement to start the week of 177 loads.
  • This week's cattle showlist is up slightly from last week in Kansas and Texas, but smaller in Nebraska.
  • Selling in cattle futures should be limited as June live cattle are trading at around a $3 discount to last week's $124 cash trade.

 

Lean hog futures are expected to be choppy this morning as traders reevaluate positions.

  • Lean hog futures were weaker yesterday in all but the front-month contract, which is trading at around a dollar discount to the cash index.
  • Price action is expected to be choppy again today as traders reevaluate positions.
  • While market-ready hog supplies have tightened, packers' demand has softened due to negative profit margins.
  • As a result, the cash hog market is expected to be steady to weaker today as many plants have trimmed their kill requirements to improve margins.
  • Pork cutout values firmed 15 cents yesterday on lackluster movement to start the week of 275.7 loads.
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