Ahead of the Open (VIP) -- October 17, 2013

October 17, 2013 03:14 AM

Corn futures are called to open 1 to 2 cents higher on sharp dollar weakness.

  • Corn futures ended the overnight session 1 to 2 cents higher and near session highs.
  • Sharp weakness in the U.S. dollar index is supportive for commodity markets this morning.
  • Export sources say China has purchased around 1.2 MMT of U.S. corn so far this month, which is well above earlier reports. This signals U.S. corn is at "value" levels and should help the market secure a low.
  • Gulf corn basis is 1 to 3 cents firmer for fall and winter delivery, which represents improved demand.
  • But with corn harvest still far behind the average pace, traders fear the bulk of harvest-related hedge pressure is still ahead.


Soybean futures are called 2 to 4 cents firmer on hopes for export sales announcements.

  • Soybean futures ended the overnight session mostly 2 to 5 cents higher, with traders cautiously optimistic the reopening of the federal government will result in a flurry of export sales announcements.
  • While federal workers are returning to their jobs this morning, it's unclear when reports will be issued.
  • Gulf soybean basis is unchanged this morning, which doesn't signal fresh demand has surfaced.
  • Traders expect soybean harvest to have reached or passed the halfway point this week, which means the bulk of hedge-related pressure has passed.


Wheat futures are called 3 to 6 cents higher on dollar weakness.

  • All wheat flavors ended the overnight session mostly around 3 to 6 cents higher amid short-covering and dollar weakness.
  • The U.S. dollar index is sharply lower this morning and gold is higher in reaction to the federal government reopening.
  • Weakness in the dollar index is positive for the commodity markets as it helps to make U.S. goods more competitive on the global market.
  • Traders are also hopeful the reopening of the government results in a flurry of export activity being announced, as this has been the missing ingredient for continuing the rally in wheat futures.
  • But it's unclear when USDA will begin issuing daily and weekly reports.


Live cattle futures are called to open steady to higher on news of higher cash trade.

  • Live cattle futures are expected to build on yesterday's gains on news that cash cattle trade has begun at $1 higher levels than last week.
  • Cash trade began late Wednesday afternoon in Texas at $128 to $129, which is steady to $1 higher with last week. A few cattle were also purchased in Kansas at $2 higher on a dressed basis.
  • October live cattle ended yesterday at a slight premium to the top end of this week's cash trade range.
  • Feeder cattle futures are expected to find spillover from live cattle, as well as support from tightening market-ready supplies.
  • Traders are anxiously awaiting official boxed beef data from the government now that the shutdown is over. It's unclear when reports will be issued.


Lean hog futures are vulnerable to profit-taking following yesterday's gains.

  • Bulls have had clear control of the hog pit this week, but futures are at risk of profit-taking.
  • Traders have worked to get December lean hog futures in line with where the October contract expired.
  • Traders are anxiously awaiting the release of official government pork cutout data and the cash hog index, although it's unclear when the reports will be issued.
  • While packers say their margins are profitable, an increased number of market-ready animals gives them little reason to raise bids.
  • As a result, the cash market is called steady to weaker, which will limit buying enthusiasm in the hog pit.
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