Ahead of the Open (VIP) -- September 10, 2013

September 10, 2013 03:18 AM
 

Corn futures are called to open marginally to 3 cents lower as traders remain concerned about demand.

  • Corn futures ended the overnight session marginally lower in most contracts, with the front-month down around 2 cents.
  • Traders say a smaller crop is factored into prices and they remain concerned about demand.
  • According to our weighted Crop Condition Index (0 to 500 point scale), the corn crop dropped 4 points.
  • Traders will also be focused on evening positions ahead of Thursday's second survey-based production report from USDA, which could trigger some short-covering.
  • According to pre-report expectations, traders look for USDA to peg the corn crop at 13.646 billion bu., with a yield of 153.9 bu. per acre.
  • Because of smaller crop expectations, traders expect USDA to trim 2013-14 carryover to around 1.7 million bu., down from 1.837 million bu. last month.

 

Soybean futures are called to open 6 to 10 cents lower, with the front-month expected to post steeper losses.

  • Soybean futures ended the overnight session mostly 6 to 7 cents lower, with the September contract down 18 cents.
  • Traders say weather concerns are factored into prices, so they ignored yesterday's crop in condition ratings. Our weighted Crop Condition Index (0 to 500 point scale) shows the soybean crop dropped 6 points to 336.
  • Traders' focus is also on evening positions ahead of Thursday's USDA Crop Production Report.
  • According to pre-report expectations, traders look for USDA to peg the soybean crop at 3.149 billion bu., with a yield of 41.3 bu. per acre.
  • Due to the smaller crop estimate, traders look for USDA to trim 2013-14 carryover to around 161 million bu., down from 220 million bu. last month.
  • Also this morning, USDA announced a 121,000-MT soybean sale to an unknown destination for 2013-14.

 

All wheat flavors are called mixed in lackluster trade.

  • All wheat flavors ended the overnight session narrowly mixed after a lackluster session that resulted in little price movement.
  • Traders will continue to take their cue from neighboring pits.
  • Due to the recent damaging freeze event, Brazil has increased duty-free wheat imports by 400,000 MT through the end of November, which pushes the quota to 2.7 MMT.
  • The Australian Bureau of Agricultural and Resource Economics and Sciences has lowered its wheat production peg by 932,000 MT to 24.467 MMT, but it's still up from 22.1 MMT last season. The group also trimmed its Australian wheat export forecast by 100,000 MT to 19.5 MMT.
  • Traders are also working to even positions ahead of Thursday's USDA reports. Traders look for USDA to raise carryover by around 5 million bu. from last month to 556 million bushels.
  • Traders are also waiting on results from an Egyptian wheat tender.

 

Live cattle futures are called to open slightly lower on followthrough pressure.

  • Live cattle are expected to build on yesterday's slight losses as traders wait on direction from the cash market.
  • Additional pressure is expected from the beef market, as Choice values slipped 90 cents and Select declined $1.33 yesterday, though movement was strong at 202 loads.
  • This week's cattle showlist is up slightly across the Central and Southern Plains.
  • Despite tight market-ready supplies, traders remain concerned about lackluster beef demand.
  • Slight weakness in the corn market this morning is supportive for feeder futures.

 

Lean hog futures are called to open mixed as futures are vulnerable to profit-taking.

  • Lean hog futures ended yesterday mostly higher, with December posting a fresh contract high.
  • As a result, futures are vulnerable to profit-taking, although bulls still have momentum on their side.
  • Pork cutout values improved 32 cents yesterday on solid movement of 309.3 loads changing hands.
  • Another hot day across the Corn Belt is limiting weight gains and marketings, which is expected to result in a steady to firmer cash tone.
  • October lean hog futures are trading at $1 discount to the cash index and the contract has moved into overbought territory according to the Relative Strength Index.
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