Ahead of the Open (VIP) -- May 6, 2013

May 6, 2013 03:16 AM
 

Corn futures are called to open 15 to 20 cents lower on expectations corn planting will pick up this week.

  • Corn futures ended the overnight session with double-digit losses between 16 and 19 cents on expectations corn planting will pick up this week.
  • Sunday's computer-generated National Weather Service forecast for May 11-15 calls for below-normal temps and below-normal precip across the bulk of the Corn Belt.
  • December corn futures gapped sharply lower on the open and extended gains, making bears' next target the April low of $5.17.
  • Gulf corn basis for immediate delivery is steady to stand 48 cents above May futures and is 72 cents above July futures for June delivery.

 

Soybean futures are called to open 5 to 8 cents lower, with pressure limited by expectations corn planting will pick up soon.

  • Front-month May soybeans ended the overnight session 2 cents firmer, with the rest of the market down 3 to 8 cents.
  • Pressure is being limited by expectations corn planting will pick up across the Corn Belt this week, although there are chances of showers later this week.
  • News that Cargill will temporarily idle its Lafayette, Indiana, soy crushing plant due to poor margins and tight supplies raises concerns about demand destruction.
  • Gulf soybean basis is steady for first-half May delivery to stand 70 cents over May futures and is 10 cents higher for last-half May delivery to stand 60 cents over May futures.

 

Wheat futures are called to open 6 to 12 cents lower on spillover from corn.

  • Chicago and Kansas City wheat futures ended the overnight session 10 to 12 cents lower, with Minneapolis down 6 to 9 cents.
  • Otherwise there's little fresh news for the market to digest, as no weekend demand announcements were made.
  • Pressure is being limited by expectations this afternoon's crop condition data from USDA will show continued deterioration in the HRW wheat crop after another freeze event occurred last week.

 

Live and feeder cattle futures are called to open steady to firmer on ideas last week's losses were overdone.

  • Traders in the cattle pit will be focused on covering short positions on ideas last week's losses were overdone.
  • But traders are cautious about the beef market as Choice values rose to a record high last week, which has slowed demand.
  • But tighter market-ready supplies are expected to result in at least steady cash cattle trade this week and nearby futures are trading at a discount to last week's $128 to $129 cash trade on the Southern Plains.
  • Sharp pressure on corn futures is supportive for feeder futures this morning.

 

Lean hog futures are called to open mixed as traders gauge the cash market.

  • Lean hog futures favored a weaker tone to end last week. A continuation of the recent choppy trend is expected to start this week.
  • Upside potential will be limited to short-covering as packer demand for cash hogs has eased due to tighter supplies and margins.
  • Pork cutout values slipped 39 cents on Friday and movement slowed to 277.9 loads.
  • May lean hog futures are trading at around a $4.60 premium to the cash index, which stands at $86.79. Unless pork cutout values firm this week, traders will be working to narrow this spread as the contract is in delivery.
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