Ahead of the Open (VIP) -- May 22, 2013

May 22, 2013 03:17 AM

Corn futures are called to open 2 to 3 cents higher on short-covering.

  • Corn ended the overnight session mostly 3 cents higher on short-covering, with the exception being a 2-cent slide in front-month July futures.
  • Corn is expected to benefit from short-covering this morning in the face of recent technical deterioration.
  • Yesterday, December corn futures moved to their lowest level since last June.
  • Meanwhile, this week's wetter weather has delayed corn planting in areas of the upper and central Corn Belt, although traders remain impressed with last week's weekly record-setting pace.
  • While July corn is weaker this morning, Gulf basis for immediate delivery is a penny firmer to stand $1.01 over July futures, signaling a pickup in demand.
  • New-crop futures should also see a boost from indications prices are attracting fresh demand. This morning USDA announced China purchased 360,000 MT of new-crop corn and an unknown destination purchased 180,000 MT of new-crop corn.


Soybean futures are expected to favor a firmer tone in mixed trade amid bull spread unwinding.

  • Nearby soybean futures ended the overnight session steady to 3 cents lower, while new-crop futures were 1 to 3 cents higher on short-covering.
  • With little fresh news for the market to digest, traders are focused on evening spreads.
  • Gulf basis for immediate delivery softened 5 cents this morning to stand at a still-strong $1.15 over July futures.
  • While producers made strong corn planting progress last week, traders say there is still a risk of an acreage shift to soybeans in the Upper Midwest given this week's wetter conditions.
  • The state-run China National Grain and Oils Information Center says the country has canceled up to 150,000 MT of South American soyoil purchases due to more competitive prices for domestic supplies.


Wheat futures are called to open 3 to 4 cents higher on short-covering.

  • Chicago and Kansas City wheat ended the overnight session mostly 3 to 4 cents higher on short-covering, with Minneapolis narrowly mixed.
  • With little fresh news for the market to digest, wheat is enjoying light short-covering and spillover from neighboring pits.
  • Traders have given little credence to last week's deterioration in the condition of the HRW wheat crop as areas of the Wheat Belt have received moisture this week and the poor condition of the crop is known.
  • A pickup in planting of spring wheat on the Canadian Prairies is limiting buying in Minneapolis wheat futures.


Live cattle futures are called to open firmer on expectations for stronger cash cattle trade this week.

  • Live cattle futures are expected to build on yesterday's gains due to continued strength in the boxed beef market, which is raising expectations for higher cash cattle trade.
  • Choice boxed beef values rose 41 cents to a new high of $210.66 yesterday, with Select values down 44 cents to widen the spread.
  • Meanwhile, beef movement of 145 loads suggests demand remains lackluster.
  • June live cattle ended yesterday at around a $4 discount to last week's $125 to $12.50 cash cattle trade.
  • Feeder futures are expected to be enjoy spillover from live cattle as well as followthrough from yesterday's sharp gains in all but the front-month contract.


Lean hog futures are called to open steady to firmer on strength in the pork cutout market.

  • Lean hog futures are expected to build on yesterday's slight gains as futures continue to recover from recent technical deterioration.
  • Pork cutout values improved $1.14 yesterday to lift packers' profit margins. Pork movement improved to 324.4 loads, which suggests a pickup in demand.
  • Still, the cash hog market is expected to be mostly steady today as packers say they are having no difficulty securing needed supplies.
  • June lean hog futures are trading at nearly a $1 discount to the cash index.
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