Ahead of the Open (VIP) -- October 9, 2013

October 9, 2013 03:16 AM

Corn futures are called to open mixed in lackluster trade.

  • Corn futures favored a firmer tone overnight but weakened to end the session narrowly mixed.
  • Buying was limited by strength in the U.S. dollar index.
  • But news from export sources a private Chinese firm purchased 420,000 MT of U.S. corn last week to take advantage of price deterioration should remind traders that demand is returning.
  • The Brazilian crop estimating agency, Conab, estimates the country's upcoming corn crop will be between 78.4 MMT and 79.6 MMT, which is down from its estimate of this year's crop of 81.3 MMT.


Soybean futures are called 1 to 3 cents lower amid light profit-taking.

  • Soybean futures ended the overnight session 1 to 3 cents lower on profit-taking due to strength in the U.S. dollar index.
  • Soybeans saw light followthrough from yesterday's low-range close and the inability of the November contract to close above the $13.00 level so far this week.
  • Traders are also being reminded of Brazil's larger crop potential in the year ahead. Brazil's crop-estimating agency, Conab, forecast the upcoming crop between 87.6 MMT and 89.7 MMT. If realized, this would be well above last season's 81.3 MMT crop.


Wheat futures are called 1 to 2 cents lower on light profit-taking.

  • All wheat flavors ended the overnight session mostly 1 to 2 cents lower amid light profit-taking.
  • Strength in the U.S. dollar index also weighed on futures, although the index remains in a short-term downtrend.
  • Helping to limit pressure is news that Brazil's supply estimating agency, Conab, has cut its forecast for the 2013-14 wheat crop to 4.77 MMT, down from 4.95 MMT last month.
  • Forecasts for dry weather to return to southern Russia are expected to allow for a resumption of winter wheat seeding. But total winter grains area is still seen down from earlier expectations as some areas are still dealing with excessive moisture and cold temps.


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

  • Nearby live cattle futures are expected to benefit from light followthrough after yesterday's gains and due to spreading.
  • Pressure on deferred futures should be limited given prospects that supplies will continue to tighten well into 2014.
  • However, news that South Korea has banned imports of U.S. beef from a Colorado Swift Beef Co. plant could increase pressure on futures.
  • This week's tighter showlist gives feedlots more bargaining power in this week's cash negotiations.
  • Nearby futures are trading at a premium to last week's mostly steady cash cattle trade.
  • Feeder futures are expected to build on yesterday's positive price performance.
  • Traders are hesitant to extend positions aggressively due to the lack of information caused by the government shutdown.


Lean hog futures are called to open mixed amid spreading.

  • Lean hog futures are expected to see another choppy day of price action as traders are hesitant to extend positions given the lack of information caused by the government shutdown.
  • Upside potential for nearbys will be limited by steady to weaker cash hog bids due to a gradual increase in market-ready hogs.
  • Private sources report pork cutout values weakened yesterday to trim packers' profit margins.
  • There is also some nervousness about the cash settlement process ahead of the expiration of October lean hog futures next week.
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