Ahead of the Open (VIP) -- May 17, 2013

May 17, 2013 03:14 AM
 

Corn futures are called mixed after a choppy overnight session.

  • Corn futures ended the overnight session marginally lower, but didn't stray too far from unchanged.
  • Buying in the corn pit is being limited by expectations producers made strong planting progress across the Corn Belt this week. Traders expect Monday's report to show at least 60% of the crop has been planted.
  • Rains are moving across the Upper Midwest this morning and more rain is in the forecast for the heart of the Corn Belt this weekend, which will slow planting progress.
  • December corn futures are hovering above important support at the April low of $5.17. Violation of this support could trigger sell stops.
  • Gulf corn basis is up 3 cents for immediate delivery to stand 90 cents above July futures to reflect the tight stocks situation and/or fresh demand.

 

Soybean futures are called to open 2 to 5 cents higher amid bull spreading.

  • Soybean futures finished the overnight session marginally to 5 cents higher, with nearbys leading gains amid bull spreading.
  • Soybean futures are seeing a lift from the tight old-crop stocks situation and news Brazil's congress has passed its port modernization bill. Traders believe the bill increases the risk of prolonged port strikes.
  • Traders believe strong corn planting progress made this week across the Corn Belt lowers the risk of acres being switched to soybeans. However, rains moving across the Upper Midwest this morning make this area more vulnerable to acreage shifts.
  • Gulf soybean basis has softened by 5 cents for immediate delivery, but still stands at $1.50 over July futures.
  • USDA announced a 138,000-MT soybean sale to an unknown destination this morning, with 18,000 TM for 2012-13 and 120,000 MT for 2013-14, as well as a 120,000-MT sale to China for 2013-14.

 

Wheat futures are called to open 2 to 4 cents lower on strength in the dollar index.

  • Wheat futures ended the overnight session weaker due to the surging U.S. dollar index that raises questions about the competitiveness of U.S. wheat prices on the global market.
  • Wheat futures need a dose of fresh news, as crop concerns in the HRW Wheat Belt are well known and eastern portions of the region received rains this week.
  • Stepped-up planting progress in the Northern Plains and the Canadian Prairies this week is adding to pressure in the wheat complex, although the crop remains off to a much slower-than-usual start.
  • Wheat is due for a short-covering bounce, but a close near weekly lows would be a bearish technical signal.

 

Live cattle futures are called to open mixed as traders even positions ahead of the Cattle on Feed Report.

  • Live cattle futures are due for some short-covering following yesterday's slight losses, but upside potential will be limited due to concerns about demand.
  • While Choice boxed beef prices continue to rise, product movement has slowed to keep demand concerns on traders' minds.
  • Light cash cattle trade at $125 was reported out of Texas yesterday, which is down $1 from last week. June live cattle are trading at around a $5 discount to the start of this week's cash trade.
  • Traders will be focused on evening positions ahead of this afternoon's Cattle on Feed Report, which is expected to show On Feed at 96.3%, Placements at 112.1% and Marketings at 102.9% of year-ago levels.

 

Lean hog futures are called mixed as traders even positions ahead of the weekend.

  • Lean hog futures are expected to be choppy following yesterday firmer close as traders focus on evening positions ahead of the weekend.
  • June lean hog futures are trading in line with the cash index and the cash market is expected to be mostly steady today.
  • Pork cutout values have surged this week on strength in the beef market. Pork values improved $1.43 yesterday to lift packers' profit margins back into the black. But pork movement moderated to 336.3 loads of cuts.
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