Ahead of the Open (VIP) -- October 22, 2013

October 22, 2013 03:16 AM
 

Corn futures are called to open 1 to 2 cents lower amid building harvest pressure.

  • Corn futures ended the overnight session marginally to 1 cent lower due to expectations harvest-related hedge pressure will continue to build.
  • Yesterday's progress data showed corn harvest at 39% complete as of Sunday, which compares to 53% on average. Until harvest passes the halfway point, there is risk of hedge pressure.
  • Meanwhile, the U.S. dollar index softened due to disappointing monthly employment data that showed fewer jobs were added to the economy last month than expected. A weaker dollar could help to limit pressure on corn this morning.
  • Gulf corn basis is steady to 1 cent firmer this morning to reflect possible export business.

 

Soybean futures are called 5 to 10 cents lower amid profit-taking.

  • Soybean futures ended the overnight session mostly 7 to 8 cents lower due to profit-taking.
  • Yesterday's progress data from USDA came in about as expected with harvest 63% complete.
  • While this signals the bulk of harvest-related hedge pressure is behind the market, soybeans are vulnerable to some profit-taking following recent gains.
  • But a disappointing monthly employment report could help to limit pressure this morning as the U.S. dollar index has weakened.
  • China's Ministry of Commerce raised its soybean import forecast for October by 2.22 MMT to 5.85 MMT. If realized, it would be up sharply from September.
  • Gulf soybean basis is steady to 1 cent firmer this morning to reflect the need to get supplies in position for the export market or a possible export sale.

 

Wheat futures are called to open 2 to 3 cents weaker on spillover from neighboring pits.

  • Wheat futures ended the overnight session mostly 2 cents lower, although some scattered buying was noted in deferred contracts.
  • Pressure on wheat should be limited by weakness in the U.S. dollar, which has softened on disappointing monthly employment data.
  • Once USDA's first winter wheat condition ratings were plugged into our weighted table, they show the HRW crop at 368 and SRW at 376 (0 to 500 point scale).
  • The wheat market is in need of fresh export news to keep bulls interested.
  • Meanwhile, Gulf SRW basis for immediate delivery is up 2 cents, but basis is steady to 2 cents lower for delivery this winter.

 

Live cattle futures are called to open steady to higher on beef market strength.

  • Live cattle futures are expected to see a boost from strength in the boxed beef market and tighter market-ready supplies.
  • Choice beef values started the week $2.00 higher, with Select up $1.67. Movement was slow at 121 loads.
  • While packers are still cutting in the red, expectations are building for $1 higher cash cattle trade later this week.
  • A weaker tone in the corn market is supportive for feeder futures this morning.

 

Lean hog futures are called mixed amid position squaring.

  • Lean hog futures are expected to see a mixed start as traders even positions.
  • Traders are hesitant to extend long positions due to building supplies, but expectations for steady cash hog bids today will limit pressure on futures.
  • Meanwhile, pork cutout values improved $1.69 yesterday, but movement was slow at 285.28 loads.
  • Traders are also anxiously awaiting the release of the CME's lean hog index, which is due this morning. Traders will even positions according to the index.
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