Ahead of the Open (VIP) -- November 7, 2013

November 7, 2013 02:13 AM
 

Corn futures are expected to open 1 to 2 cents higher on demand rebuilding.

  • Corn futures ended the overnight session marginally higher amid demand improvements, although buying was limited by sharp strength in the dollar index.
  • The U.S. dollar index has surged on news of better-than-expected third quarter economic growth. GDP grew by 2.8%.
  • This morning's weekly export sales report showed sales of 1,718,600 MT for 2013-14, with Japan the lead buyer. Sales were well above expectations and remind the market that prices are working to rebuild a strong demand base.
  • Traders are also working on even positions ahead of tomorrow's USDA reports. Traders look for USDA to raise the size of the crop to around 14.022 billion bu. and for carryover to climb above 2 billion bushels.

 

Soybean futures are called mixed as traders focus on evening positions.

  • Soybean futures ended the overnight session favoring a slightly weaker tone in mixed trade.
  • Improved demand is helping to limit price pressure, although traders are also focused on evening positions ahead of tomorrow's crop reports.
  • Traders look for USDA to raise the size of the crop to around 3.225 billion bu. and for carryover to rise to 183 million bushels.
  • Weekly soybean sales of 1,018,400 MT for 2013-14 were mostly to China and were at the top end of expectations. Sales of 18,700 MT were reported for 2014-15.
  • The strong sales tally should help to limit pressure on the market this morning as it reminds traders that China's appetite remains strong for U.S. soybeans.
  • Additionally, USDA announced China purchased 250,000 MT of soybeans for 2013-14 this morning.

 

All wheat flavors are called mixed amid bull spreading.

  • Nearby wheat futures ended the overnight session marginally higher, with deferred futures steady to slightly lower.
  • Wheat has returned to a follower's role to the corn market amid spread unwinding. Also, a recent increase in corn demand that raises concerns wheat is not competitive in the feed arena.
  • Traders are also focused on evening positions ahead of tomorrow's USDA reports. Traders look for USDA to trim wheat carryover to around 527 million bu. due to higher demand expectations.
  • Weekly wheat sales of 416,800 MT for 2013-14 were within expectations. Sales of 11,000 MT for 2014-15 were also reported.
  • The U.S. dollar index has surged on better-than-expected third quarter GDP, showing the economy grew by 2.8%.

 

Live cattle futures are called mixed as traders wait on cash trade to develop.

  • Live cattle futures are expected to see another choppy day of price action as traders wait on cash cattle trade to develop.
  • Traders are still cautiously optimistic packers will be forced to pay steady prices with last week's $132 for cash cattle.
  • But a larger showlist and signs the beef market is running out of upward momentum have packers hesitant to raise bids. As a result, late-week cash trade is expected.
  • December live cattle are trading in line with last week's cash market, which is limiting price action in the nearbys.
  • Meanwhile, weekly export sales data that showed net sales reductions of 18,500 MT for 2013 is a negative development after recent export improvements.
  • November feeder futures are trading in line with the cash index, which is also expected to lead to lackluster trade.

 

Lean hog futures are called lower on followthrough pressure.

  • Lean hog futures are expected to build on yesterday's negative price performance on signs of a market top.
  • Pork cutout values slipped 50 cents yesterday and market-ready hog supplies are building. This combination is expected to weigh on the cash market this morning.
  • Also, with hog weights on the rise, packers say they are having no difficulty securing needed supplies.
  • Key will be if futures build on yesterday's gap lower price performance or if short-covering enters the market. Bears currently have the technical advantage.
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