Ahead of the Open (VIP) -- October 21, 2013

October 21, 2013 03:15 AM

Corn futures are called to open steady to 1 cent lower in lackluster trade.

  • Corn futures favored a firmer tone but slipped in late overnight trade to end the session mostly around a penny lower.
  • The corn market is having a difficult time gaining traction due to expectations the bulk of harvest-related hedge pressure is still ahead.
  • According to official Chinese customs data, the country imported just 1,537 MT of corn in September, down sharply from year-ago.
  • Gulf corn basis for nearby delivery has softened by 2 cents, which reflects the availability of new-crop supplies to the market.
  • Corn has a lot of work ahead in order to suggest a low is in place, especially after
    December corn tested $4.50 and failed last week.


Soybean futures are called 1 to 5 cents higher on short-covering.

  • Soybean futures favored a firmer tone overnight and ended the session 1 to 5 cents higher.
  • Traders expect this afternoon's progress data from USDA to show at least half of the crop has been harvested, which would signal the bulk of hedge-related activity has been absorbed by the market.
  • According to official customs data, Chinese soybean imports of 4.8 MMT in September were down 5.4% from year-ago.
  • Also this morning, USDA announced a 235,000-MT soybean sale to an unknown destination for 2013-14.
  • Gulf soybean basis is steady this morning.


Wheat futures are called to open mixed with a downside bias.

  • SRW wheat ended the overnight session 4 to 5 cents lower in the nearbys, with deferreds mixed. HRW ended 3 cents lower to 5 cents higher, while HRS was 3 cents lower to 3 cents higher.
  • A firmer tone in the U.S. dollar index is limiting buying to short-covering this morning.
  • Wheat is watching for fresh demand developments, and given the lack of fresh news, traders are opting to even positions.
  • But bulls still hold the technical advantage after contracts posted strong weekly gains last week. Key this week will be if futures can return above last week's highs after some profit-taking was seen on Friday.
  • Gulf SRW wheat basis is steady to a penny lower this morning.


Live cattle futures are called to open mixed as traders reevaluate positions.

  • Live cattle futures are expected to see a choppy start as traders reevaluate positions following last week's losses in all but the front-month contract.
  • Traders reacted to news of higher cash cattle prices with profit-taking, which signals traders believe a near-term cash high is in the works.
  • Cash cattle traded as high as $131 in the Plains last week, with packers forced to raise bids due to tight market-ready supplies.
  • But with packers' profit margins in the red, traders expect packers to resist raising bids this week.
  • A choppy tone in the corn market is expected to limit pressure on feeder futures.


Lean hog futures are called weaker on followthrough pressure.

  • Lean hog futures are called to open slightly to moderately lower on followthrough from Friday's losses, although contracts posted gains for the week.
  • Additional pressure is expected to come from weakness in the pork cutout market, as it slipped $1.53 on Friday due to sharp weakness in belly and loin values.
  • Packers have seen profit margins tighten dramatically, which is expected to result in a steady to weaker start to the cash market for the week.
  • Cash sources say packers don't expect to have any difficulty securing needed supplies this week.
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