Ahead of the Open (VIP) -- May 1, 2013

May 1, 2013 03:17 AM
 

Corn futures are called 8 to 10 cents lower on followthrough from yesterday's losses.

  • Corn futures ended the overnight session 7 to 10 cents lower amid profit-taking as funds continue to lighten their long positions.
  • Talk that the last 48 hours of improved weather has resulted in a pickup in the planting pace is adding to pressure, although another shot of wintry weather is moving into the upper Midwest and widespread rains are expected across the remainder of the Belt the rest of the week.
  • While the U.S. dollar index is weaker this morning, crude oil and gold futures are also lower amid widespread commodity selling.

 

Soybean futures are called to open 10 to 30 cents lower as funds continue to lighten long positions.

  • Soybean futures ended the overnight session 31 3/4 cents lower in the May contract, 20 cents lower in the July contract and 10 to 15 1/4 cents lower in deferred futures.
  • Traders are opting to lighten their long positions, with additional pressure coming from expectations some corn acres -- especially in the northwest Corn Belt -- will be switched to soybeans.
  • Adding to the weaker tone across the commodity sector this morning is news China's official manufacturing purchasing mangers' index dipped 0.3 points from last month to 50.6 in April -- coming in below expectations. This raises questions about the country's demand for raw goods.

 

Wheat futures are called 8 to 10 cents lower on spillover from neighboring pits.

  • Wheat futures at all three exchanges ended the overnight session mostly 9 to 11 cents lower on spillover from neighboring pits.
  • But wheat futures managed to post sharp gains yesterday in the face of weakness in the corn and soybean markets; traders could opt to do the same again today given concerns about the HRW wheat crop.
  • The first day of the Wheat Quality Council's HRW wheat tour found yield potential in central and northern Kansas and far southern Nebraska below last year and the five-year average. Scouts will take samples from western and southern Kansas today -- where crops suffered greater drought and freeze damage.
  • Additionally, another wintry blast is moving across the Northern Plains today, dumping snow on the already-saturated region. Spring wheat planting remains stalled.

 

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

  • Live cattle futures finished slightly lower yesterday, which raises the risk of followthrough selling this morning.
  • But pressure should be limited by improvement in the boxed beef market which suggests retailers are preparing for May Beef Month features.
  • Choice beef values improved $1.60 yesterday (to $196.39 per cwt.) and Select rose $1.82. Movement of 160 loads, however, wasn't strong.
  • Given tighter market-ready supplies, traders expect $1 higher cash cattle trade compared with last week's mostly $128 trade.

 

Lean hog futures are called to open steady to lower as traders work to narrow the premium nearbys hold to the cash index.

  • Lean hog futures favored the upside most of the day and ended high-range. This morning futures are expected to take back some of those gains as traders work to narrow the premium nearby contracts hold to the cash index.
  • May lean hog futures are trading at more than a $6 premium to the cash index.
  • Additional pressure on lean hog futures is expected after pork cutout values fell $1.64 yesterday to tighten packers' profit margins.
  • Still, with margins in the black and market-ready supplies tightening, the cash market is expected to be steady to firmer again today, which should limit pressure on futures.
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