Ahead of the Open (VIP) -- October 25, 2013

October 25, 2013 03:13 AM
 

Corn futures are called mixed in lackluster trade.

  • Corn futures ended the overnight session narrowly mixed amid a lack of fresh news.
  • This week's back-and-forth price action has extended the month-long consolidation range.
  • While export demand has picked up, traders fear the bulk of harvest-related hedge pressure is not yet behind the market.
  • Gulf corn basis is steady this morning, with immediate delivery standing 70 cents over December futures.

 

Soybean futures are called 2 to 5 cents lower amid profit-taking.

  • Soybean futures ended the overnight session 2 to 7 cents lower on light profit-taking pressure.
  • Soybean futures are working on weekly gains but so far this week November beans haven't been able to close above the $13.20 level.
  • Gulf soybean basis is steady this morning to stand 98 cents over November futures for October delivery.
  • Favorable harvest weather is expected across the bulk of the Corn Belt this weekend, which will help harvest to move into its final leg.
  • Pressure on futures should be limited this morning by news that China purchased 120,000 MT of soybeans and Taiwan purchased 120,000 MT of soybeans, both for 2013-14.

 

Wheat futures are called to open 1 to 3 cents higher on global crop concerns.

  • All wheat flavors finished mostly 1 to 3 cents higher overnight on short-covering following yesterday's losses.
  • Additional support this morning comes from concerns about frost damaging wheat in Australia as harvest begins.
  • Australia weather concerns, combined with ideas winter wheat acreage has been reduced in the Black Sea Region due to poor weather during planting raises expectations demand for U.S. wheat will remain strong this winter.
  • The U.S. dollar index is choppy this morning but is working on sharp weekly losses, which is supportive for the commodity markets.

 

Live cattle futures are called to open mixed amid bull spreading.

  • Nearby live cattle futures are expected to build on yesterday's gains due to tightening market-ready supplies.
  • Cash cattle trade this week has been light and has largely occurred between $131 and $132, which is up from $129 to $130 last week.
  • With cash trade rising to record levels this week, traders are uncertain about how much more upside there is in the near-term as packers' profit margins are in the red.
  • Continued strength in the boxed beef market is also supportive for futures this morning. Choice values rose above $201 yesterday.
  • Tyson Foods Inc. has announced it has stopped buying slaughter-ready cattle from Canada due to expenses related to Country of Origin Labeling (COOL), which further tightens supplies to the U.S. market.

 

Lean hog futures are called steady to higher on followthrough buying.

  • Lean hog futures are expected to enjoy followthrough from yesterday's gains, although some pre-weekend profit-taking is possible.
  • Futures were lifted yesterday by talk of additional PEDV cases, which would tighten supplies further.
  • Traders are also working to narrow the discount nearbys hold to the cash index. December lean hogs ended yesterday at around a $2 discount to the cash index.
  • Also supportive is the recovery in pork cutout values yesterday, which rose $1.04 on solid movement of 327.33.
  • Packers have had no difficulty securing supplies this week and the cash market has been steady to lower to lift packers' profit margins.
  • Cash bids are expected to be mostly steady today, with focus on securing supplies for early next week.
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