Ahead of the Open (VIP) -- November 26, 2013

November 26, 2013 02:17 AM

Corn futures are called to open 3 to 4 cents lower this morning.

  • Corn futures ended the overnight session mostly 3 to 4 cents lower amid a lack of supportive news and overall bearish attitudes.
  • Traders have recently covered some short positions, but there's no willingness to actively do so given the record U.S. crop.
  • While export demand has improved, it's going to be a long process for the demand base that was dramatically slashed by the 2012 runup to record prices to be rebuilt. Therefore, sustained buying interest will be hard to come by.
  • Thin, pre-holiday trade is likely to limit market activity the remainder of the week. Traders are unlikely to add new positions ahead of Thanksgiving and some are taking an extended holiday break.


Soybean futures are called 4 to 6 cents lower this morning.

  • Soybean futures ended the overnight session 4 to 5 cents lower on profit-taking following recent gains.
  • USDA announced sales cancellations of 300,000 MT of soybeans to China for 2013-14. However, there were also daily sales of 360,000 MT of soybeans to an unknown destination for 2013-14.
  • The daily sale to "unknown" should help limit pressure from the cancellation by China.
  • With soybean futures pushing above resistance at the top of the recent broad, choppy range, near-term price action will determine if there's an upside breakout or if this turns into a bull trap.


Wheat futures are expected to open 2 to 5 cents lower this morning.

  • Wheat futures ended the overnight session steady to 5 cents lower, with SRW contracts leading the price decline.
  • While USDA's final weekly crop condition ratings of the fall showed a 1-percentage-point decline in the portion of crop rated "good" to "excellent" and the Pro Farmer Crop Condition Index (0 to 500 point scale) dropped 3 points for HRW and 2 points for SRW, overall condition ratings are very solid heading into dormancy.
  • Spillover pressure from corn and soybeans along with a lack of fresh export demand is expected to weigh on wheat futures this morning.
  • A weaker U.S. dollar index should help limit selling.


Live cattle futures are expected to open with a mixed tone. Feeder cattle are called steady to firmer.

  • Choppy trade is expected in the live cattle market as traders wait on cash cattle trade to develop in the Plains.
  • Showlist estimates are up across the Plains this week. Given negative cutting margins, packers will likely resist raising cash cattle bids.
  • Boxed beef prices were sharply higher Monday, though movement was light at just 135 total loads. Unless movement dramatically improves, packers have little incentive to raise cash cattle bids.
  • Weakness in the corn market is expected to give feeder cattle a mildly firmer tone, though an expected lack of buying interest in live cattle may limit gains in feeders.


Lean hog futures are called steady to firmer this morning.

  • Light short-covering is expected in lean hog futures this morning. But the premium futures hold to the cash index, which continues to decline, should limit buying interest and may weigh on front-month December lean hog futures.
  • Cash hog bids are expected to be steady to weaker across the Midwest today as packers are working with a holiday-shortened slaughter schedule this week and market-ready hog supplies and kill weights are on the rise.
  • The pork cutout value was 67 cents lower Monday, though movement was strong at 386.95 loads. With hog supplies building, packers are having to lower prices to keep product moving through the pipeline.
  • Pre-holiday trade is likely to keep price action relatively calm the remainder of the week.
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