Ahead of the Open (VIP) -- October 23, 2013

October 23, 2013 03:15 AM
 

Corn futures are called to open 1 to 3 cents higher on short-covering.

  • Corn futures ended the overnight session mostly 1 to 3 cents higher on short-covering to continue this week's trend of back-and-forth price action.
  • Monday's gains were followed by losses yesterday. But yesterday's low-range close failed to attract followthrough selling to keep futures within the boundaries of the recent narrow consolidation range.
  • There's little fresh news for the market to digest this morning, with buying interest still being limited by expectations the bulk of harvest-related hedge pressure is not yet behind the market.
  • Gulf corn basis is steady for immediate delivery and steady to a penny weaker for delivery this winter.

 

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

  • Soybean futures ended the overnight session mostly 3 to 5 cents higher on indications of demand.
  • Gulf soybean basis is steady to 1 cent firmer this morning to stand $1 over November futures for nearby delivery. Gulf basis firmed yesterday as well.
  • The U.S. dollar index has been choppy this morning, but recent sharp pressure on the dollar helps to keep U.S. goods competitively priced on the global market.
  • Also supportive this morning is news from USDA that Russia has purchased 120,000 MT for soybeans for 2013-14.
  • Technical indications soybean futures have posted seasonal lows are also a positive factor for the market moving forward. November beans so far this week have closed above the psychological $13.00 level and are above that level again this morning.

 

Wheat futures are called to open 5 to 6 cents higher on global crop concerns.

  • All wheat flavors were firmer overnight, with nearbys ending 4 to 8 cents higher. Deferred futures were mostly higher in mixed trade.
  • Futures are being supported this morning by global crop concerns. Concerns about freeze damage in Argentina, dryness in Australia and reduced acreage in the Black Sea region raise expectations demand for U.S. wheat will strengthen this year.
  • While the U.S. dollar index is mixed this morning, recent pressure on the greenback helps to keep U.S. wheat competitive on the global market.
  • Wheat futures are also benefiting from improved technicals, as December SRW wheat closed above $7.00 yesterday and the contract is stronger this morning.

 

Live cattle futures are called to open steady to higher on bullish cash hopes.

  • Live cattle futures are expected to build on yesterday's gains due to strength in the boxed beef market that's lifting cash expectations.
  • Choice beef values rose $1.04 yesterday and Select rose $1.38. But only 151 loads changed hands, which suggests high prices are slowing demand.
  • But given tighter market-ready supplies and strength in the beef market, expectations are for $1 higher cash cattle trade later this week.
  • Slight strength in the corn market could limit followthrough buying in the feeder pit, although tight calf supplies remain a supportive factor.

 

Lean hog futures are called mixed amid position squaring.

  • Lean hog futures are called mixed on a combination of followthrough buying after yesterday's gains and profit-taking.
  • Futures were lifted yesterday by the discount nearbys hold to the cash index. CME Group released its first cash index since the government shutdown yesterday, which didn't decline as much as traders feared.
  • Meanwhile the pork cutout market continues to soften, which will limit buying as traders suspect a cash high has been posted.
  • Pork values slipped 31 cents yesterday, but movement was solid at 365.74 loads.
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