Ahead of the Open (VIP) -- May 21, 2013

May 21, 2013 03:18 AM
 

Corn futures are called to open 5 to 10 cents lower on strong corn planting progress.

  • Old-crop corn futures ended the overnight session 13 cents lower, with new-crop futures mostly around 7 cents lower.
  • USDA reports as of Sunday, 71% of the corn crop was planted, which is a record 43-percentage-point gain from the previous week.
  • Meanwhile, USDA reports 19% of the crop has emerged, which is well behind 46% on average.
  • Unplanted areas of the Upper Midwest face prolonged delays after heavy rains the past two days. Additionally, the latest NWS 6-10 day outlook calls for above-normal precip for this area.
  • Yesterday December corn futures violated support at the April low of $5.17 but closed above it. The contract opened below this level this morning to do more technical chart damage.
  • Meanwhile, Gulf corn basis is 8 cents higher this morning for immediate delivery to stand $1 above July futures, reflecting tight old-crop supplies and the possibility of more demand announcements.

 

Soybean futures are called 3 to 8 cents lower on spillover from corn and negative outside markets.

  • July corn saw two-sided trade overnight but ended the overnight session around 2 cents lower. The rest of the market was 6 to 8 cents lower.
  • With corn planting making strong gains last week, traders expect producers to focus on soybean planting this week.
  • As of Sunday, USDA reports 24% of the bean crop was planted, which compares to 42% on average. Wet conditions across the Upper Midwest will stall planting this week.
  • Traders are also monitoring news out of Argentina that port workers at the export hub of Rosario went on strike over wages on Monday. Ships are not being loaded, which could shift some demand back to the U.S.
  • Gulf soybean basis has softened by a dime for immediate delivery to stand $1.20 over July futures, suggesting weaker demand.

 

Wheat futures are called to open 7 to 9 cents lower on a negative tone in the commodity world.

  • Chicago and Kansas City wheat futures ended the overnight session mostly 9 to 10 cents lower, with Minneapolis futures 5 to 7 cents lower.
  • With little fresh news for the market to digest, wheat futures are vulnerable to spillover from neighboring pits.
  • Strength in the U.S. dollar index is also contributing to the weaker tone in the commodity world this morning. Crude oil and gold are lower.
  • Traders aren't focused on concerns about the HRW wheat crop in the Plains despite deterioration of the crop.
  • Our weighted Crop Condition Index shows the HRW wheat crop declined by 5.3 points from last week to stand 87.31 points below year-ago, while the SRW wheat crop improved by nearly 5.5 points from last week to stand about 6.4 points above year-ago.

 

Live cattle futures are called to open steady to firmer on followthrough from yesterday's gains.

  • Live cattle futures started yesterday with a weaker tone but firmed due to strength in the boxed beef market.
  • Choice boxed beef values firmed 53 cents and Select rose $1.10 on solid movement to start the week of 147 loads.
  • This week's cash cattle showlist is slightly larger than last week, so the key to firmer cash cattle bids will be if boxed beef movement improves.
  • Nearby live cattle are also expected to be supported by the $5-plus discount those contracts hold to last week's cash cattle.
  • Feeder futures should find support this morning from weakness in the corn market.

 

Lean hog futures are called to open mixed as traders are cautious about pork demand.

  • Following yesterday's gains, lean hog futures are called mixed as traders are cautious about pork demand.
  • Tightening market-ready supplies will limit price pressure, but focus is on concerns the recent increase in pork prices has slowed demand.
  • Pork cutout values softened 63 cents yesterday to tighten packers' profit margins and just 234.6 loads of pork changed hands yesterday.
  • The cash hog market is called steady to lower as packers say they have this week's kill needs secured and demand for cash hogs is lighter for early next week due to the Memorial Day holiday.
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