Ahead of the Open (VIP) -- November 18, 2013

November 18, 2013 02:08 AM
 

Corn futures are called 3 to 5 cents lower on followthrough pressure.

  • Corn futures ended the overnight session 3 to 4 cents lower on followthrough from Friday's losses.
  • Traders are still digesting news the EPA is proposing a reduction in the corn for ethanol component in the Renewable Fuels Standard for 2014 compared to 2013 levels.
  • While the EPA proposal is discouraging to the market, if market conditions warrant (competitive corn prices in relationship to crude oil), ethanol production will continue to improve well into 2014.
  • Gulf corn basis is 2 cents weaker for immediate delivery to suggest softening demand and/or the availability of new-crop supplies.

 

Soybean futures are called 1 to 5 cents higher amid short-covering.

  • Soybean futures were choppy overnight, but ended 1 to 5 cents higher on short-covering following Friday's sharp decline.
  • Traders are beginning to shift their attention to potential for a record South American crop, with favorable weather encouraging planting and establishing the crop.
  • The inability of January beans to close last week above the $13.00 level after spending most of the week above that level is a negative technical signal.
  • Gulf soybean basis is steady for nearby delivery to stand 97 cents over January futures.
  • A weaker U.S. dollar index is also supportive for soybean futures this morning.

 

Wheat futures are expected to favor a firmer tone this morning.

  • SRW and HRS favored a firmer tone overnight, but ended the overnight session mixed. HRW ended the overnight session marginally to 1 cent higher.
  • Upside potential in the wheat pit was limited by weakness in the corn market.
  • But a weaker U.S. dollar index helped the market favor a firmer tone.
  • Traders look for this afternoon's crop condition data to show further improvement in the winter wheat crop, which is another limiting factor for the market this morning.

 

Live cattle futures are called mixed on a continuation of last week's trend.

  • Live cattle futures ended last week mixed, with nearbys supported by improvement in the cash market.
  • On Friday afternoon cash cattle trade began in Texas and Kansas at $132, which was up $1 from the previous week. Total volume levels are still unknown, although most believe trade was light to moderate.
  • Key this morning will be how the boxed beef market performs. Traders will be comfortable with the premium nearby contracts hold to the cash market if Choice beef prices remain above $200.
  • Weakness in the corn market is supportive for feeder futures this morning.

 

Lean hog futures are called steady to lower on weakness in the pork market.

  • Lean hog futures are expected to be pressured by weakness in the pork cutout market.
  • Pork cutout values slipped $1.83 on Friday on solid movement of 303.91 loads.
  • On a brighter note, packers' profit margins remain well in the black to keep demand for cash supplies strong.
  • But packers say they are having no difficulty securing needed supplies. As a result, the cash market is called mostly steady with some mixed bids possible.
  • Bears hold the technical advantage heading into the week after uptrending support levels were violated last week.
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