Ahead of the Open (VIP) -- October 4, 2013

October 4, 2013 03:14 AM

Corn futures are expected to open steady to 2 cents higher this morning.

  • Corn futures ended the overnight session around 1 cent higher.
  • The corn market is expected to see light short-covering ahead of the weekend. But with harvest season upon the market, the upside is limited to corrective buying.
  • Rains rolling across the Corn Belt this morning will slow harvest activity and may support basis in some areas as supplies are tight. More rains are in the forecast through the weekend, with heavy totals expected in some locations.
  • There has been a pickup in export demand this week, signaling foreign buyers see value on the price break. But South Korea passed on a tender to buy 140,000 MT of optional origin corn overnight.
  • Informa Economics will update its corn crop estimate at 10:30 a.m. CT.


Soybean futures are called to open 3 to 5 cents lower this morning.

  • Soybean futures ended the overnight session 3 to 6 cents lower on a pullback from corrective gains posted Thursday.
  • Seasonal pressure is weighing on the market as harvest activity has picked up this week. But rains will drive combines out of fields in many areas of the Corn Belt through the weekend as rains are falling this morning and expected to continue through Saturday.
  • The demand front has been relatively quiet this week as USDA is not announcing daily sales due to the government shutdown and China has been on public holiday. Taiwan tendered to buy 40,000 to 60,000 MT of soybeans each from the U.S. and Brazil overnight.
  • Informa Economics will update its soybean crop estimate at 10:30 a.m. CT.


Wheat futures are expected to open with two-sided trade this morning.

  • Wheat futures ended narrowly mixed overnight after earlier favoring the upside.
  • Support is coming from planting woes in Ukraine and Russia, which will cut exportable supplies from the Black Sea region for 2014-15. Ukraine's ag minister says the country's wheat crop could be cut by one-third to around 15 MMT from around 22 MMT this year as excessive rains are lowering planted acreage. Russia is also suffering from excessive fall rains in central and southern growing regions.
  • Given the reduced production potential in the Black Sea region, demand for U.S. wheat is expected to be stronger.
  • Statistics Canada raised its wheat crop estimate to a record 33.026 MMT, which is 22% higher than year-ago and above the average pre-report guess of 32.9 MMT. This helped ease buying interest late in the overnight session.
  • A firmer U.S. dollar index is price-negative for wheat this morning.


Live cattle futures are called to open steady to weaker. Feeder cattle are seen opening with a mixed tone.

  • Live cattle futures are expected to face light selling pressure given the premium futures hold to the cash market after cash cattle trade was disappointing late Thursday.
  • Cash cattle trade got started at steady $126 prices in Texas and Kansas, while Nebraska cash trade was mostly $1 lower than last week. Traders were expecting steady to firmer cash cattle trade this week.
  • In the absence of government-based wholesale beef trade data, traders are turning to private sources for information. Urner Barry reported Choice boxed beef prices were 72 cents higher Thursday, while Select beef was $1.03 higher. That should help ease selling pressure this morning.
  • Feeder cattle futures are expected to show two-sided trade. While fundamentals are bullish, traders may opt to take some profits ahead of the weekend given expected weakness in live cattle and mild strength in corn.


Lean hog futures are called to open with a slightly firmer tone.

  • Lean hog futures are seen opening with a firmer tone as the market tries to rebound from Monday's sharp losses, which came in reaction to last Friday's bearish Quarterly Hogs & Pigs Report.
  • Traders feel USDA's hog data didn't fully account for losses from porcine epidemic diarrhea virus (PEDV). Therefore, followthrough selling has been absent after the initial wave of selling on Monday and traders are covering short positions.
  • Cash hog bids are expected to be steady to weaker across the Midwest on limited packer demand despite strong cutting margins.
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