Ahead of the Open (VIP) -- October 14, 2013

October 14, 2013 03:13 AM
 

Corn futures are called to open marginally lower on light followthrough selling.

  • Corn futures didn't stray too far from unchanged overnight, but the market favored a weaker tone due to a lack of fresh news.
  • With harvest progressing, traders expect hedge-related pressure to build this week.
  • Traders are keeping a closer eye on basis levels given the lack of government data. A slight uptick in Gulf basis last week raised expectations foreign buyers had increased purchases to take advantage of softer prices.
  • Next support for December corn is $4.30. The contract is hovering just above that level; violation of it could trigger sell stops.

 

Soybean futures are called 5 to 10 cents higher on rumors of Chinese buying.

  • Soybean futures ended the overnight session posting gains of 3 to 11 cents.
  • Rumors that China is buying U.S. soybeans lifted futures overnight. Individual sales will remain unreported until the government reopens.
  • Meanwhile, according to official Chinese data, the country imported 4.7 MMT of soybeans in September, down 26.2% from August and 5.4% below year-ago.
  • Through the first nine months of this calendar year, China has imported 45.75 MMT of soybeans, a 3.3% increase from year-ago.
  • Stepped up harvest progress resulted in a weaker start in overnight trade and initially limited buying to short-covering.

 

Wheat futures are called 3 to 5 cents lower amid profit-taking.

  • SRW and HRW wheat ended the overnight session mostly 2 to 4 cents lower, with HRS mixed with a weaker bias.
  • Weakness in the U.S. dollar index is helping to limit pressure to profit-taking.
  • But there are concerns the recent rally in wheat has priced the U.S. out of the global market for now.
  • Meanwhile, China says it will raise the price it pays farmers for wheat in 2014 by 5% in hopes of raising production.

 

Live cattle futures are called to open steady to stronger amid tightening supplies.

  • Nearby live cattle futures posted gains last week, which is expected to attract followthrough buying this morning.
  • Futures are also expected to see a boost from $2 higher cash cattle trade in Texas and Kansas on Friday at $128.
  • Tightening market-ready supplies have traders expecting at least steady cash trade later this week. But given negative packer margins, they will be hesitant to raise bids.
  • October live cattle are trading at a slight premium to the cash market.
  • Feeder futures are expected to be supported by weakness in the corn market.

 

Lean hog futures are called mixed, with buying limited to short-covering.

  • Bears have a slight advantage to start the week after futures posted losses last week.
  • Traders are also nervous about how the settlement process for October hogs will go this week, which could result in stepped up liquidation pressure.
  • The cash hog market is called steady to lower due to a slight uptick in market-ready supplies.
  • The lack of government information is also a drag on the market, as traders are relying on private information on slaughter and pork trade.
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