Ahead of the Open (VIP) -- November 27, 2013

November 27, 2013 02:17 AM
 

NOTE: Grain and livestock markets will observe normal trading hours today ahead of the Thanksgiving holiday.

Corn futures are called to open 1 to 3 cents higher this morning.

  • Corn futures ended the overnight session around 2 cents higher through the December 2014 contract.
  • Based on overnight price action, traders are looking to cover some short positions ahead of Thanksgiving. But buying interest will likely be limited to mild corrective buying. Funds have shown no willingness to actively cover short positions despite holding a large net short position.
  • South Korea bought a total of 118,000 MT of U.S. corn overnight. While export demand is improving, it's not to the point where it's highly price-supportive, suggesting traders feel foreign demand will ease if prices rise.

 

Soybean futures are expected to open mostly 4 to 7 cents higher this morning.

  • Soybean futures ended the overnight session with gains of 2 to 7 cents through the August 2014 contract.
  • Futures' ability to move well off session lows into the close yesterday triggered some buying interest overnight, which is expected to carry over to the open this morning, especially given fresh demand news.
  • USDA announced daily soybean sales of 235,000 MT to unknown destinations. Of that total, 180,000 MT is for 2013-14 and 55,000 MT is for 2014-15. Despite yesterday's cancellation from China, traders view export demand as strong.
  • Funds, who hold a sizable long position, have shown no willingness to actively trim their net long exposure ahead of Thanksgiving. But pre-holiday positioning could cause some profit-taking today.

 

Wheat futures are expected to open 2 to 4 cents lower this morning.

  • Wheat futures ended the overnight session mostly 2 to 4 cents higher with SRW contracts leading price gains.
  • Traders are waiting on results of Egypt's tender for at least one cargo of optional origin wheat. There's hope the U.S. may get some of the business. While U.S. wheat is priced below others' supplies, shipping costs may keep Egypt from buying U.S. wheat.
  • Without fresh demand news, buying interest will be limited in the wheat market as the U.S. winter wheat crop heads into dormancy in favorable condition.
  • The U.S. dollar index is mildly weaker this morning, but not enough to support wheat futures on its own.

 

Live cattle futures are expected to open with a mixed tone. Feeder cattle are also called mixed this morning.

  • The strong close in live cattle futures Tuesday would typically lead to followthrough buying. But price action is likely to be light and two-sided this morning as traders wait on cash cattle trade to develop in the Plains.
  • While packer margins remain solidly in the red, traders' expectations for steady to firmer cash cattle prices this week are building. There's a sense packers don't want to be caught short-bought on slaughter supplies coming out of Thanksgiving. Traders are expecting cash cattle trade at some point today.
  • Boxed beef prices were firmer Tuesday and beef movement improved to 181 total loads, though there are concerns about how retailers will respond with Choice boxes back above the $200 mark -- a level that has stalled retailer buying in the recent past.
  • Feeder cattle futures are expected to open with a mixed tone. The strong close Tuesday should trigger some followthrough buying, though a mildly firmer tone and the upcoming holiday break may deter traders from actively buying.

 

Lean hog futures are called mixed this morning.

  • Light and choppy price action is anticipated in lean hog futures as traders are unlikely to add new positions ahead of what will be an extended holiday break for some.
  • Cash hog bids are expected to be steady at most Midwest locations. While market-ready hog supplies and slaughter weights are on the rise, packers are planning a full Saturday kill amid strong cutting margins to make up for tomorrow's downtime due to Thanksgiving.
  • Packers continue to sell a lot of pork, moving a strong 521.89 loads yesterday at a price that was only a penny lower than Monday. Strong movement in the face of building supplies is keeping the cash market from facing more pressure.

 

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