Ahead of the Open (VIP) -- October 31, 2013

October 31, 2013 03:16 AM

Corn futures are called to 2 to 4 cents higher on strong exports.

  • Corn futures ended the overnight session 3 to 5 cents higher as a lofty export sales tally helped to lift futures in late trade.
  • Key this morning is whether or not traders extend overnight gains, as the weekly export sales data signals demand has strengthened at current prices.
  • USDA released weekly export sales data for the weeks ending Oct. 10, 17 and 24 this morning. Corn sales of 4,555,500 MT for 2013-14 and 738,000 MT for 2014-15 were well above lofty expectations.
  • USDA included a note that for the week ending Oct. 17, 2013, corn sales for Mexico (1,568,800 MT) and unknown destinations (304,800 MT) for delivery during the 2013-14 marketing year would have been reported as daily sales if the government had been open.
  • Additionally, USDA this morning announced 123,040-MT corn sale to Japan and a 174,000-MT corn sale to South Korea for 2013-14.
  • Combined with recent gains in ethanol production, demand improvements should help to secure a near-term low in the market in the near-term.


Soybean futures are called mixed, with nearbys firmer.

  • Soybean futures were choppy overnight, with nearbys ending the overnight session steady to 5 cents higher and deferreds favoring a weaker tone.
  • The three-week combined weekly export sales data initially lifted nearby futures, but buying then diminished into the end of the session.
  • Key will be if funds return as buyers this morning as prices attracted demand while the government was shut down.
  • Weekly sales of 4.742 MMT for 2013-14 topped lofty expectations. Exports of roughly 5.123 MMT were primarily to China.
  • Traders are hesitant to aggressively extend long positions as planting is picking up in Brazil, although the recent pickup in Chinese buying suggests they will remain a major player in the market until the South American crop is available.


Wheat futures are called 1 to 2 cents lower amid dollar strength.

  • SRW and HRW wheat futures ended the overnight session mostly 1 to 2 cents weaker, with HRS mixed.
  • Strength in the dollar index weighed on wheat futures overnight, as well as a lack of fresh news.
  • This morning's weekly export sales report showed sales of 1.309 MMT for 2013-14, which was within expectations. Exports topped 1.6 MMT.
  • With corn and soybean sales surging while the government was shutdown, traders are a little disappointed the same wasn't true for wheat sales.
  • After being in a leadership role, wheat has moved into a follower's role as it recognizes the recent uptick in corn demand.
  • As a result, traders are evening corn/wheat spreads.


Live cattle futures are expected to favor a firmer tone in mixed trade.

  • Live cattle futures are expected to be mixed as traders even positions ahead of the Cattle on Feed Report, but should favor a firmer tone amid tightening supplies.
  • The report is expected to show On Feed at 92.6%, Placements at 100.7% and Marketings at 104.3% of year-ago levels.
  • Strength in the boxed beef market this week is a reflection of tightening supplies, as Choice values are now at $205.68. Movement, however, has been lackluster this week, with just 159 loads changing hands yesterday.
  • Very light cash cattle trade was reported at higher prices yesterday, although the sales were isolated and doesn't necessarily set the tone for the week. Most packers say they are waiting on report data before bidding for cattle.
  • A firmer tone in the corn market overnight could result in some additional light profit-taking this morning in feeder cattle futures.


Lean hog futures are called steady to weaker on building supplies.

  • Following yesterday's sharp losses, lean hog futures are vulnerable to followthrough pressure, especially amid seasonally building supplies.
  • Pork cutout values slipped $1.58 yesterday, but movement improved as 476.79 loads changed hands.
  • Packers are still enjoying very profitable margins, but are planning on a small Saturday kill. This reduced demand is expected to result in a steady to weaker tone in the cash market this morning.
  • Traders are also evening positions to close their books for the month, as well as preparing for the Cold Storage Report that is scheduled for this afternoon (delayed from earlier in the month).
  • Traders expect total frozen pork stocks at the end of September to be up 4% from last month, but down 10% from year-ago.
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