Ahead of the Open (VIP) -- October 29, 2013

October 29, 2013 03:15 AM
 

Corn futures are called to open 1 to 2 cents lower on a lack of fresh news.

  • Corn futures ended the overnight session mostly around a penny lower in lackluster trade.
  • Yesterday's progress data from USDA showed harvest was 59% complete as of Sunday, which suggests the bulk of hedge-related pressure is behind the market.
  • Rains are expected to stall harvest progress the remainder of the week as a system enters the western Corn Belt later today.
  • Meanwhile, the China National Grain and Oils Information Center expects the country to import 5 MMT of corn from all sources in 2013.
  • But indications that demand is improving are largely being ignored by the market. Gulf corn basis improved 3 cents for immediate delivery, but is down a penny for November delivery.

 

Soybean futures are called mixed amid bull spread unwinding.

  • Nearby soybean futures ended the overnight session marginally to 2 cents lower, with deferred futures mostly up around a penny.
  • USDA reports as of Sunday that 77% of the nation's soybean crop was harvested, but futures are instead focused on evening positions following yesterday's sharp decline.
  • A weakening of Gulf soybean basis could result in stepped up profit-taking this morning.
  • Gulf basis is down a dime for immediate delivery to stand 90 cents over November futures and is down 4 cents for November delivery to reflect supplies are meeting needs.

 

HRW and SRW are expected to open slightly lower, with HRS firmer.

  • HRW and SRW wheat ended the overnight session marginally to a penny lower, with HRS steady to a penny firmer.
  • Strength in the U.S. dollar index is limiting buying in wheat this morning, with HRW and SRW seeing spillover from the corn market.
  • Once USDA's crop condition ratings were plugged into our weighted table, it shows the condition of the SRW crop improved slightly, while the HRW crop deteriorated.
  • Global crop concerns are also expected to limit pressure on futures, although the market needs a dose of fresh demand news to keep bulls interested.
  • Gulf SRW basis is steady this morning to stand 95 cents over December futures.

 

Live cattle futures are called to open mixed amid position squaring.

  • Live cattle are called mixed on a combination of followthrough from yesterday's gains and some profit-taking.
  • Bull have the clear technical advantage, with fundamentals also strengthening.
  • Choice beef values surged $2.15 yesterday to $203.12, with Select up $2.10. Movement, however, slowed to just 116 loads.
  • This week's showlist is up slightly from week-ago, which gives feedlots less bargaining power, although overall supplies remain tight.
  • Slight weakness in the corn market overnight is supportive for feeder futures.

 

Lean hog futures are called steady to weaker on profit-taking.

  • Following yesterday's sharp gains, lean hog futures are vulnerable to some profit-taking as futures are overbought according to the Relative Strength Index.
  • December lean hog futures moved to nearly a $1 premium to the cash index yesterday, which could also result in some position squaring.
  • Meanwhile, pork cutout values firmed 68 cents on strength in the belly market, but only 281.07 loads changed hands.
  • The cash hog market is expected to be mostly steady today as packers are working to keep kill lines as full as possible due to profitable margins. But packers say they are having no difficulty securing needed supplies.
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