Ahead of the Open (VIP) -- May 23, 2013

May 23, 2013 03:13 AM
 

Corn futures are called to open 2 to 3 cents lower on light profit-taking.

  • Corn futures ended the overnight session 2 to 3 cents lower on profit-taking following yesterday's strong gains.
  • Cool and wet conditions across the Corn Belt are limiting pressure on new-crop futures this morning as this raises the risk remaining unplanted corn acres will be switched to another crop.
  • This morning's weekly export sales data showed demand for old-crop corn remains very light, with sales of 104,600 MT reported.
  • But demand for new-crop corn has picked up, with weekly sales of 341,600 MT reported for 2013-14.

 

Soybean futures are called 2 to 4 cents lower on profit-taking following yesterday's sharp gains.

  • Soybean futures saw followthrough in overnight trade from yesterday's gains, but ended the overnight session 2 to 4 cents lower as profit-taking set in.
  • Adding to the negative tone was concerns about China's manufacturing sector. China's flash purchasing manager's index was disappointing again this month as it declined from last month and dropped below the 50-point level for the first time since October.
  • New-crop futures could see a lift this morning from indications of strong demand, as USDA noted weekly sales of 838,900 MT for 2013-14.
  • But demand for old-crop soybeans has softened, with sales of 183,500 MT reported and exports of 100,800 MT hitting a new marketing year low.
  • Also this morning, USDA announced a daily sale of 115,000 MT of soybeans to China for 2013-14.

 

Wheat futures are called to open 1 to 3 cents higher on help from dollar weakness.

  • Chicago and Kansas City wheat futures ended the overnight session mostly 2 to 3 cents higher, with Minneapolis 1 to 2 cents higher.
  • Gains in wheat will be hard fought unless corn and soybean futures build on yesterday's gains as wheat has been in a follower's role.
  • This morning's weekly export sales of 239,400 MT for 2012-13 and 713,600 MT for 2013-14 were above expectations, which is supportive for futures this morning.
  • The National Drought Monitor reflects little change in drought in Kansas, but shows expansion of drought in wheat areas of Oklahoma and Texas.

 

Live cattle futures are called to open mixed on a combination of followthrough from yesterday's losses and short-covering.

  • Live cattle futures extended losses into the close yesterday to finish sharply lower. This opens the door for some short-covering this morning, although traders remain concerned about beef demand.
  • The rise to record Choice boxed beef values (up another 54 cents yesterday to $211.20 per cwt.) has traders concerned consumers will balk at high prices. However, packers moved 192 loads of beef cuts yesterday.
  • Yesterday's USDA Cold Storage Report also was more favorable than expected as it showed a slight drawdown in stocks from last month when traders were expecting a build in stocks. Beef stocks at the end of April came in at 510 million pounds.
  • But traders are discouraged by news that cash cattle trade began yesterday in Texas at $124, which is down $1 from last week.

 

Lean hog futures are called to open steady to weaker on profit-taking and a bearish Cold Storage Report.

  • Following yesterday's sharp gains, lean hog futures are expected to see light profit-taking.
  • Additional pressure is expected from yesterday's USDA Cold Storage Report, as it showed stocks above expectations at a record-large (for the month) 698.8 million pounds.
  • But pressure will be limited by strength in the pork cutout market after values firmed 40 cents yesterday on strong movement of 441.8 loads.
  • Packers have seen profit margins improve dramatically this week, which is raising demand for supplies.
  • But nearby futures have moved to a premium to the cash index, which will have traders reevaluating positions.

 

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