Ahead of the Open (VIP) -- June 5, 2013

June 5, 2013 03:18 AM

Corn futures are called 3 to 4 cents lower in all but the front-month contract amid bull spreading.

  • July corn futures ended the overnight session 2 3/4 cents higher, with the rest of the market down 1 to 4 cents on bull spreading.
  • Tight old-crop supplies limited selling in the front-month contract.
  • Gulf corn basis is 5 cents firmer this morning for immediate delivery to stand 83 cents above July futures to signal fresh demand news and/or improved ethanol production.
  • With rains moving across the Corn Belt again this morning, some producers say they won't be able to get into fields in time to plant remaining corn acres. This should help limit selling in new-crop futures.


Soybean futures are called to open mixed, with nearbys 2 to 3 cents higher and deferreds 2 to 8 cents lower.

  • July and August futures ended 2 to 3 cents higher in overnight trade, with deferred futures 2 to 9 cents lower.
  • Support for old-crop futures comes from tight supplies, as traders recognize the need to ration remaining supplies.
  • Meanwhile, Gulf soybean basis is steady to 3 cents weaker for June delivery to represent softening in demand.
  • With many producers saying the time is running out on planting remaining corn acres, the risk that some of those acres will be switched to soybeans is limiting buying for new-crop soybean futures this morning.
  • But with more rain in the forecast the remainder of the week, traders expect soybean planting delays to linger as well.


Wheat futures are called to open mixed as futures are in a follower's role to corn and soybeans.

  • Chicago and Kansas City wheat futures were narrowly mixed amid bull spreading overnight, with Minneapolis futures steady to a penny higher.
  • Minneapolis futures are seeing a boost from concerns about planting delays in the Northern Plains, while upside potential in Kansas City futures is being limited by the possibility of rain in western Kansas this week.
  • Russia's Deputy Ag Minister says it will work to keep 2013-14 grain exports in the 18 MMT to 20 MMT range. It says while it does not plan to add tariffs on exports, it could intervene with purchases for its state reserves. The minister pegs the country's wheat crop between 54 MMT and 55 MMT.
  • South Korea says it has not detected any GMO content in shipments of U.S. wheat and Japan says it may seek alternative supplies to U.S. western white wheat if USDA's investigation drags on.
  • The Korean Feed Association today bought 60,000 MT of wheat of optional origin today and said it would not accept the U.S. as an origin.
  • Gulf SRW wheat basis is steady this morning to stand 48 cents above July futures.


Live cattle futures are called to open mixed on a combination of short-covering and concerns about the boxed beef market.

  • Following yesterday's gains, live cattle futures are called mixed as there's still some upside potential due to the discount nearby contracts hold to last week's cash market.
  • But concerns about the boxed beef market are expected to limit buying and could result in fresh selling.
  • Choice beef values softened by 88 cents and Select dropped by $1.35 yesterday, but the good news is movement improved to 224 loads.
  • This week's showlist is up slightly in the Southern Plains but tighter in Nebraska and packers' profit margins are well in the black. Therefore, this week's cash trade will likely be dictated by packer demand.
  • A weaker tone in the corn market overnight is supportive for feeder futures, although feeders will likely follow the direction of live cattle futures.


Lean hog futures are called to open mixed following yesterday's slight to moderate gains.

  • Similar to live cattle, lean hog futures are vulnerable to profit-taking, but could see a mixed tone due to followthrough from yesterday's gains.
  • But upside potential will likely be limited as traders are concerned about packer demand for cash hogs due to negative profit margins.
  • Pork cutout values firmed 34 cents yesterday, but packer margins remain in the red.
  • The cash hog market is expected to be mostly steady today due to tighter market-ready supplies.
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