Ahead of the Open (VIP) -- May 24, 2013

May 24, 2013 03:15 AM
 

Corn futures are called to open 1 to 3 cents lower on light profit-taking.

  • Corn futures ended the overnight session 1 to 3 cents lower after yesterday's firmer, but mid-range close.
  • Focus in the market will be on evening positions ahead of the Memorial Day weekend.
  • Pressure on new-crop futures will be limited as there's a nearly daily chance of rain in the forecast for the Midwest the next five to seven days.
  • As a result, expectations some acres -- especially in the Upper Midwest -- will be switched from corn production are rising.
  • News that Taiwan has purchased 60,000 MT of Brazilian corn for August shipment doesn't come as a surprise given the availability of new-crop supplies.
  • Gulf corn basis is 2 cents softer for immediate delivery to stand $1 over July futures.

 

Soybean futures are expected to be mixed amid bull spread unwinding following yesterday's turbulent day.

  • Old-crop soybean futures ended the overnight session 2 to 8 cents lower and new-crop futures were 1 to 3 cents higher amid bull spread unwinding.
  • Following yesterday's 59 1/4-cent trading range in July soybean futures and the fact that the contract posted a low-range close suggests a high has been posted.
  • Country and Gulf basis levels have softened this week to further suggest a near-term high is in place. This morning Gulf soybean basis is 15 cents softer for immediate delivery to stand 85 cents over July futures.
  • New-crop futures are also being pressured this morning from news the Argentine port strike has been settled for now, although lengthy shipping delays could still result in some fresh demand for U.S. soybeans.

Wheat futures are expected to be mixed as traders even positions ahead of the holiday weekend.

  • Chicago wheat futures ended the overnight session mostly 2 to 3 cents higher, with Kansas City favoring a marginally lower tone in mixed trade and Minneapolis favoring a firmer tone.
  • Upside potential is being limited by this week's more favorable planting conditions across the Northern Plains, with some showers this weekend expected to benefit the emerging crop, but slow remaining planting activity.
  • Meanwhile, warmer conditions across the HRW Wheat Belt are adding to stress on the crop and increasing moisture requirements.
  • Gulf SRW wheat basis is steady to 2 cents softer for nearby delivery to reflect a return to lackluster demand.

 

Live cattle futures are called to open steady to firmer on short-covering ahead of the Memorial Day weekend.

  • Following yesterday's losses, live and feeder cattle futures are due for a short-covering bounce as traders even positions ahead of the holiday weekend.
  • June live cattle are trading at around a $5 discount to this week's $124 cash cattle trade, which gives bears room to cover short positions and maintain their bearish stance.
  • For the ninth straight day, Choice beef boxed beef values rose to a record high, to $211.37 per cwt. Movement has improved this week, with 145 loads changing hands yesterday.
  • Traders expect beef demand to plummet with the spike in prices given high gasoline prices and more competitive pork and poultry prices.
  • A softer tone in the corn market this morning is expected to provide support to feeder futures this morning.

 

Lean hog futures are called to open steady to firmer on short-covering.

  • Lean hog futures saw a fairly quiet session yesterday after Wednesday's spike higher, with focus today on evening positions ahead of holiday weekend.
  • June lean hog futures are trading at less than a dollar premium to the cash index, which should limit today's price move as traders expect demand for cash hogs to improve next week.
  • Pork cutout values slipped 27 cents yesterday on decent movement of 265.7 loads, but packers' profit margins have tightened -- although they are still in the black.
  • The cash hog market is expected to be mostly steady today as packers have scaled back their Saturday kill requirements.
  • But if pork movement is strong over the weekend, packers' demand for cash hogs will improve early next week.
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