Ahead of the Open (VIP) -- October 18, 2013

October 18, 2013 03:13 AM

Corn futures are called to open 2 to 3 cents higher amid short-covering.

  • Corn futures ended the overnight session mostly around 2 cents higher on short-covering and end-of-the-week position squaring.
  • Traders are waiting to see if USDA data confirms that China has made large corn purchases recently, but they are still waiting on an official announcement regarding when the weekly sales report will be released.
  • Despite an expected uptick in demand, upside potential this week has been limited by expectations the bulk of hedge-related pressure is still ahead of the market.
  • December corn has spent much of the week pivoting around $4.45 but has not been able to climb back above $4.50.


Soybean futures are called 3 to 5 cents higher on demand rumors.

  • Soybean futures ended the overnight session mostly 3 to 5 cents higher, with meal and soyoil seeing spillover support.
  • News reports that China booked at least six cargoes of U.S. soybeans yesterday helped to support the market overnight.
  • USDA confirmed this morning that China has purchased 222,000 MT of U.S. soybeans for 2013-14, with a sale of 140,000 MT for unknown destations.
  • Soybeans are working on strong weekly gains, with support also coming from expectations the bulk of harvest-related hedge pressure is now behind the market.


Wheat futures are called 9 to 11 cents higher on demand expectations.

  • All wheat flavors ended the overnight session mostly around 8 to 11 cents higher and near weekly highs.
  • Futures were supported overnight by news the Argentine ag ministry pegs its 2013-14 wheat crop at 8.8 MMT, which is lower than most private estimates.
  • This renews concerns about the South American crop and raises expectations it will bring more demand to the U.S.
  • The U.S. dollar index is choppy this morning but is working on sharp weekly losses, which helps to keep U.S. commodities competitive on the global market.


Live cattle futures are called to open slightly to moderately lower on followthrough pressure.

  • Live cattle futures are expected to see followthrough from yesterday's sharp losses that resulted in bearish reversals in most contracts.
  • Weakness in futures came despite news of $129 to $130 cash cattle trade, which suggests traders believe a near-term cash high is near.
  • Traders are concerned that packer demand will soften due to negative profit margins.
  • Traders are also disappointed they will have to wait until month's end to receive the Cattle on Feed Report, that was originally slated for this afternoon.
  • Slight strength in the corn market is expected to weigh on feeder futures this morning.


Lean hog futures are called mixed as traders even positions ahead of the weekend.

  • Lean hog futures are vulnerable to followthrough from yesterday's losses, but traders will be focused on evening positions ahead of the weekend.
  • The return of some government-issued reports shows that pork cutout values have deteriorated, which has resulted in a sharp tightening of packer profit margins.
  • However, pork values didn't slip as much as data from Urner Barry had suggested, which could attract some short-covering this morning.
  • The cash hog market is expected to be mostly steady today as packers say demand and supplies are in balance. But packers haven't had any difficulty securing supplies this week as they are more abundant.
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