Ahead of the Open (VIP) -- October 1, 2013

October 1, 2013 03:18 AM

Corn futures are called to open 2 to 5 cents lower on followthrough from yesterday's losses.

  • Corn futures ended the overnight session mostly around a penny lower but there is risk of stepped up price pressure at the start of daytime trade.
  • Traders still have yesterday's bearish Quarterly Grain Stocks Report on their minds.
  • Mild risk-aversion in outside markets comes amid the partial shutdown of the federal government. Investors don't expect the shutdown to be long-lasting, but gridlock in Congress is reason for concern.
  • Yesterday's progress report showed harvest running behind the five-year average, which raises concerns that seasonal price pressure could be long-lasting.
  • December corn futures violated key support by closing below the August low yesterday. A low-range close again today would confirm the downside breakout and make bears' next target $4.20 and then $4.00.


Soybean futures are called to open 10 to 20 cents lower on followthrough pressure.

  • Soybean futures ended the overnight session 10 to 15 cents lower on followthrough from yesterday's losses.
  • Traders still have yesterday's larger-than-expected grain stocks data on their minds.
  • A slight uptick in the condition of the soybean crop is also a negative factor for the market this morning.
  • Wire services are reporting a daily soybean sale to China of 113,000 MT for 2013-14 delivery.
  • While a weaker U.S. dollar index is positive for grain markets, gold and crude oil are also lower amid mild risk aversion due to the partial government shutdown.
  • November soybean futures gapped slightly lower in overnight trade and extended losses. The next landing area for bears is the psychological $12.50 level.


Wheat futures are called 1 to 5 cents lower on spillover from neighboring markets.

  • SRW and HRW wheat ended the overnight session 1 to 5 cents lower, with HRS narrowly mixed.
  • Risk-aversion in outside markets and pressure on corn and soybean futures is expected to weigh on wheat futures during daytime trade.
  • While a weaker U.S. dollar index helps to keep U.S. wheat competitive on the global market, sharp weakness in gold futures this morning signals investors are moving to the sidelines.
  • Yesterday's USDA reports were fairly neutral for the wheat market, as there were no major surprises and the stocks data reflected strong demand in the latest quarter.
  • Wheat is vulnerable to some profit-taking following recent gains. Key will be if uptrending support levels are violated, as that would suggest near-term highs are in place.


Live cattle futures are called to open mixed as traders are cautiously optimistic about the cash market.

  • Live cattle futures saw light profit-taking yesterday, but futures finished well off session lows.
  • There is risk of additional profit-taking this morning due to the partial government shutdown and the risk-aversion it creates in the marketplace.
  • But tighter market-ready supplies and strength in the beef market to start the week are positive developments for this week's cash trade.
  • Choice beef values were 62 cents firmer yesterday and Select rose $1.46. Movement was lackluster at 147 loads, however.
  • Weakness in the corn market is positive for feeder futures this morning, although nearby contracts hold a sharp premium to the cash index, which raises the risk of profit-taking.


Lean hog futures are called to open mixed on a combination of followthrough pressure and short-covering.

  • Lean hog futures run the risk of followthrough from yesterday's sharp losses as traders still have Friday's Quarterly Hogs & Pigs Report on their minds.
  • But some short-covering is also possible as traders reevaluate positions.
  • Pork cutout values firmed 31 cents yesterday and 268.95 loads changed hands. Traders will watch to see if pork demand picks up this week, as a slowdown would suggest high prices are slowing demand.
  • The cash hog market is called steady to weaker as packers say this week's supplies are largely booked and they are enjoying profitable margins.
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