Ahead of the Open (VIP) -- October 3, 2013

October 3, 2013 03:12 AM
 

Corn futures are called to open 1 to 2 cents higher on short-covering.

  • Corn futures ended the overnight session 1 to 3 cents higher on short-covering and spillover from soybeans.
  • While interior basis levels continue to deteriorate, traders note the pace of the decline has slowed, which signals demand is improving.
  • Sources report Asian feedmakers are using the price break to increase coverage.
  • Meanwhile, due to the federal government partial shutdown, USDA did not release its weekly export sales data this morning.
  • The path of least resistance remains down in the corn market and bears still clearly hold the reins. Futures need more than a short-covering bounce to signal a seasonal low is in place.

 

Soybean futures are called to open 5 to 9 cents higher on signs demand is improving.

  • Soybean futures ended the overnight session 3 to 9 cents higher with the front-month contract leading gains.
  • Export sources report Asian feed buyers have stepped up their purchases on the recent price slide.
  • Meanwhile, sources say China has been mostly absent from the market this week due to a national holiday that runs through the end of the week.
  • Traders will not have weekly export sales data to digest this morning due to the government shutdown, but expectations were for the report to show reflect strong demand.
  • November soybeans ended the overnight session near session highs amid short-covering but have some work ahead in order to signal a seasonal low has been posted.

 

Wheat futures are called 3 to 5 cents higher on signs a low has been posted.

  • SRW wheat finished the overnight session 5 to 7 cents higher with other markets up 3 to 5 cents on followthrough from yesterday's gains.
  • There's little fresh news for the market to digest this morning, especially with the weekly export sales data from USDA postponed due to the partial shutdown of the federal government.
  • But expectations are that demand for U.S. wheat remains strong, especially given recent weakness in the U.S. dollar index.
  • Traders are also watching global weather developments due to problems with delayed seeding of the winter wheat crop in Ukraine and areas of Russia and concerns about freeze damage in Argentina.

 

Live cattle futures are called to open mixed as traders remain cautiously optimistic about the cash market.

  • Live cattle futures favored a firmer tone yesterday and more of the same is expected today.
  • But buying will be limited as traders have little data to digest given the partial shutdown of the federal government.
  • This week's market-ready supplies are smaller than last week, but without boxed beef prices it's more difficult for traders to form cash opinions.
  • Bids and asking prices are several dollars apart, which signals cash trade will be delayed until tomorrow afternoon.
  • Tight calf supplies should limit pressure on feeder futures this morning, with weakness in the corn market also a positive factor.

 

Lean hog futures are called to open mixed with a downside bias amid position squaring.

  • Lean hog futures are expected to be mixed this morning due to position squaring, but the lack of fresh data due to the government shutdown is expected to result in a downside bias.
  • Without daily slaughter and pork cutout data traders are expected to trim their long exposure to the market.
  • However, futures benefited from light short-covering yesterday following back-to-back days of sharp price pressure.
  • The cash hog market is called steady to $1 lower as packers say they are having no difficulty securing supplies.
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