Ahead of the Open (VIP) -- November 21, 2013

November 21, 2013 02:14 AM
 

Corn futures are called 1 to 3 cents higher on continued strong export sales.

  • Corn futures were firmer overnight and got a late-session boost from the export sales report to end mostly 2 to 3 cents higher.
  • Weekly export sales of 945,100 MT for 2013-14 and sales of 37,600 MT for 2014-15 came in above expectations. Exports of 756,300 MT were mostly to China.
  • Continued strong export demand signals importers view U.S. corn prices as a value. This is encouraging funds to cover their near-record short position.
  • Corn futures still have a lot of work ahead to signal a near-term low has been posted. At minimum, December corn needs to rise above the November high of $4.38.
  • Gulf corn basis is steady for delivery the remainder of 2013 and mixed for early 2014 delivery.

 

Soybean futures are called 5 to 10 cents higher on strong export demand.

  • Soybean futures were stronger overnight and rose in late trade to finish 5 to 10 cents higher in reaction to the stronger-than-expected weekly export sales data.
  • Weekly export sales of 1,376,400 MT for 2013-14 were mostly to China. Exports of 2,488,600 MT were also strong.
  • The strong sales data should calm some concerns about rumors that China has cancelled sales recently. While it's still possible, sales cancellations are more likely when Brazil's crop moves into exportable position.
  • January soybeans are trading near the middle of the month-long consolidation range.
  • Gulf soybean basis is down 2 to 4 cents for delivery the remainder of 2013 to reflect softening demand and the arrival of new-crop supplies.

 

SRW and HRW wheat are called 1 to 3 cents higher, with HRS wheat expected to be mixed.

  • SRW and HRW wheat futures ended the overnight session 1 to 3 cents higher, with HRS wheat favoring a firmer tone in mixed trade.
  • Wheat is benefiting from spillover from the corn market.
  • Additional support is coming from this morning's stronger-than-expected Weekly Export Sales Report. The report showed sales of 618,100 MT for 2013-14, with Japan as the top buyer.
  • Weekly exports of 551,500 were also strong.
  • But wheat has a lot of work ahead to signal near-term lows have been posted. But on a bright note, no further technical chart damage has been seen so far this week.
  • Gulf SRW wheat basis is steady to 5 cents higher for delivery the remainder of 2013 to reflect a pick up in demand.

 

Live cattle futures are called mixed as traders even positions.

  • Live cattle futures ended slightly higher yesterday on short-covering and aren't expected to stray too far from unchanged this morning.
  • December live cattle have priced in $131 cash cattle trade, which would be down $1 from last week.
  • Packers have not yet begun to actively bid for cash supplies, but general expectations are for steady to weaker bids.
  • Traders will also begin to more actively even positions ahead of tomorrow's Cattle on Feed Report. The report is expected to show On Feed at 94.2%, Placements at 110% and Marketings at 101.5% of year-ago levels.
  • Meanwhile, beef prices were mixed yesterday on improved movement of 258 loads.
  • Slight strength in the corn market will limit buying in feeder cattle futures this morning.

 

Lean hog futures are called steady to weaker on concerns about building supplies.

  • Lean hog futures are expected to be pressured this morning by concerns that building supplies will continue to pressure pork prices.
  • Pork cutout values have dropped sharply this week and prices slipped another $1.04 yesterday. The good news is lower prices are resulting in a surge in demand, with more than 500 loads changing hands yesterday.
  • Packers have seen several dollars come off margins this week, but the cash market has avoided sharp pressure given the fact margins still remain well in the black.
  • The cash market is called steady to $1 lower today as packers are having no difficulty securing needed supplies and weights are record heavy.
  • December lean hog futures ended yesterday at around a $3.50 premium to the cash index, which opens the door to more near-term price pressure.
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