Ahead of the Open (VIP) -- May 31, 2013

May 31, 2013 03:17 AM

Corn futures are expected to open with a mixed tone this morning.

  • Corn futures faded to a mixed close overnight after earlier posting gains. As a result, corn is expected to open mixed this morning.
  • Weekly export corn sales topped the guess range at 85,700 MT for 2012-13 and 789,600 MT for 2013-14. Included in the new-crop figure were sales of 483,000 MT to China.
  • Rains are falling on areas of the Corn Belt again this morning and are expected to linger into early Saturday morning. That will be followed by a couple days of dry, sunny weather, but more rain is forecast to enter the region next week.
  • With the calendar flipping to June tomorrow, traders are trying to sort out how many acres will get planted to corn, how many will switch to soybeans and how many may be claimed as prevent-plant.


Soybean futures called 7 to 11 cents higher this morning.

  • Soybean futures finished the overnight session with solid gains, led by old-crop contracts.
  • Recent price action signals traders are more concerned with the potential impact to soybeans from delayed plantings than they are with corn acres being switched to beans.
  • Rains continue to fall across areas of the Corn Belt, which will further delay planting efforts. A dry weekend is on tap, but more rains are forecast to return to the Corn Belt next week.
  • USDA reported a net sales reduction of 108,000 MT for 2012-13, with China canceling 207,500 MT of purchases. For 2013-14, weekly sales totaled 756,600 MT, including sales of 587,000 MT to China.
  • USDA announced a daily sale of 30,000 MT of soyoil to Germany for 2012-13.


Wheat futures are called to open 3 to 6 cents lower.

  • Wheat futures were under pressure overnight, with Chicago and Kansas City contracts leading the price decline.
  • Additional fallout from the GMO wheat discovery in Oregon continues to weigh on wheat futures. South Korea now says it will halt U.S. wheat shipments until tests are conducted on recent shipments, joining Japan in temporarily suspending U.S. wheat shipments. Taiwan says it is "reviewing" U.S. wheat shipments and may ask exporters to guarantee they are GMO-free.
  • Weekly wheat export sales were stronger than anticipated at 35,900 MT for 2012-13 and 728,300 MT for 2013-14. But given the concerns with the GMO situation, traders aren't focused on weekly sales data.
  • Strength in the U.S. index is also negative for wheat this morning.


Live cattle futures are called to open steady to firmer.

  • Price action is likely to be light and choppy in live cattle futures this morning as traders wait on active cash cattle trade to develop in the Plains.
  • Most traders are anticipating at least steady cash cattle bids compared with last week's $124 to $125 trade in the Plains given strong packer margins and tightening market-ready supplies. But cash negotiations may stretch deep into today.
  • Boxed beef prices, while off the recent all-time high, are still strong and post-holiday movement has been better than expected given lofty beef prices.
  • Feeder cattle futures are called mixed on the open. While live cattle may provide light support, a firmer tone in corn overnight will limit buying interest in feeders.


Lean hog futures are called to open steady to firmer.

  • Lean hog futures are expected to be supported this morning by strength in the cash hog market and bullish technical momentum.
  • But lean hog futures closed rather poorly Thursday and have strengthened recently, which could lead to some profit-taking today, especially on end-of-the-month positioning.
  • Cash hog bids are called steady to firmer across the Midwest. Some plants are still trying to fill in Saturday kill runs and nearly all plants need hogs for early next week.
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