Ahead of the Open (VIP) -- November 12, 2013

November 12, 2013 02:18 AM

Corn futures are called 1 to 2 cents higher on followthrough buying.

  • Corn futures enjoyed light followthrough buying after yesterday's strong gains in overnight trade, ending the session mostly around a penny higher.
  • Traders are working to lighten their short exposure to the market due to the recent pickup in demand.
  • Traders also have Friday's smaller-than-expected crop peg on their minds. Although USDA raised its corn crop estimate from September, the increase was less than traders feared.
  • Meanwhile, France's farm ministry trimmed its corn production forecast by 300,000 MT from last month to 15.2 MMT, which still represents a 1.2% increase from 2012.
  • Gulf corn basis is steady this morning to stand 75 cents over December futures.


Soybean futures are called 3 to 5 cents higher on followthrough buying.

  • Soybean futures built on yesterday's late-session recovery and ended the overnight session mostly 3 to 4 cents higher.
  • Spread unwinding with corn yesterday limited buying in soybean futures and could limit buying again this morning.
  • January soybean futures rose above the $13.00 level yesterday and ended above that level in overnight trade.
  • Meanwhile, China's Ministry of Commerce has more than doubled its November soybean import forecast to 5.95 MMT. However, it lowered its October forecast by 680,000 MT to 4.53 MMT.
  • Also this morning, USDA announced China purchased 116,000 MT of soybeans and an unknown buyer purchased 35,000 MT of soyoil -- all for 2013-14 delivery.
  • Favorable weather in South America is limiting buying, as the crop is off to a solid start and planting has increased.
  • Gulf soybean basis is steady to 1 cent firmer this morning.


Wheat futures are called 1 to 3 cents higher on spillover from corn.

  • SRW and HRS ended the overnight session mostly 1 cent higher, with HRW up 1 to 3 cents.
  • Wheat futures are enjoying spillover from the corn market, but buying is being limited by indications corn is more competitively priced as a feed ingredient.
  • Also limiting buying this morning is a firmer tone in the U.S. dollar index, although the greenback has moved off its earlier high.
  • Also reminding the market of global competition is a report the Prime Minister of Kazakhstan says since July 1, the country has exported a total of 2.8 MMT of grain and flour in grain equivalent, according to its prime minister, with 1 MMT in business occurring in October.
  • Traders will also be reminded of the solid start for the winter wheat crop in this afternoon's crop condition report. The report was delayed due to yesterday's federal holiday.


Live cattle futures are expected to be mixed amid position squaring.

  • Live cattle are called mixed on a combination of followthrough buying from yesterday's gains and uncertainty about this week's cash market.
  • Concerns about packers' negative margins impacting demand for cash supplies is expected to result in traders evening positions.
  • This week's showlist is down slightly in Texas, but up slightly elsewhere across the Plains.
  • December live cattle are trading at a slight premium to last week's cash market, which signals traders remain cautiously optimistic about the near-term trend in the market due to the overall tightness of supplies.
  • Traders are anxiously awaiting the first boxed beef report of the week to gauge demand.


Lean hog futures are called mixed as traders even positions.

  • Lean hog futures ended yesterday firmer in all but the front-month contract, which has the responsibility of following the cash market closely.
  • December hogs ended yesterday at around a $2 premium to the cash index, which could result in followthrough pressure for the contract this morning.
  • Meanwhile, the cash market is expected to be mostly steady amid strong demand for hogs due to packers enjoying profitable margins.
  • But building supplies will make it difficult for the cash market to rally too far too fast, as packers are having no difficulty securing needed supplies.
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