Ahead of the Open (VIP) -- September 17, 2013

September 17, 2013 03:06 AM
 

Corn futures are called 6 to 10 cents higher on short-covering.

  • Corn futures ended the overnight session 7 to 10 cents higher and near session highs.
  • Short-covering was inspired by updated Prevent Plant acreage totals released by USDA's FSA. The data reveals Prevent-Plant corn acreage now stands at 3.573 million acres, up from 3.411 million acres in August.
  • Our weighted Crop Condition Index for corn is virtually unchanged from last week at 342 on a 0 to 500 scale (top being perfect).
  • December corn futures need to climb back above the $4.80 level to signal a near-term low is in the works.
  • Gulf corn basis has slipped 5 cents for immediate delivery to stand 60 cents over December futures as new-crop supplies are available in the South.

 

Soybean futures are called to open 10 to 15-plus cents higher on an increase in certified Prevent-Plant acres.

  • Soybean futures ended the overnight session 11 to 16 cents higher and near session highs.
  • Traders are reacting to news FSA says Prevent-Plant soybean acreage is now 1.687 million versus 1.619 million last month.
  • Also supportive this morning is news Chinese importers signed non-binding letters of intent to buy 4.83 MMT of U.S. soybeans valued at $2.8 billion.
  • Yesterday's condition ratings also showed more deterioration than expected, with our weighted Crop Condition Index slipping by 2 points to 334 (scale of 0 to 500).
  • But forecasts for more rains this week across the Corn Belt could serve as a wet blanket over a rally attempt, as traders expect next week's condition ratings to improve.
  • Gulf soybean basis has softened by 2 cents for immediate delivery to stand 95 cents over November futures.

 

Wheat futures are called 2 to 5 cents higher on spillover from neighboring markets.

  • SRW futures ended the overnight session 5 to 6 cents higher, with HRW up 4 to 5 cents. HRS futures ended the overnight session mostly 2 cents higher.
  • Wheat is enjoying spillover from neighboring corn and soybean markets. Therefore, if corn extends gains in daytime trade, it should also help wheat to build its short-covering efforts.
  • Upside potential is being limited by improved moisture prospects for the Central and Southern Plains this week, which are raising thoughts that producers will expand winter wheat acreage.
  • Gulf SRW wheat basis is steady for immediate delivery to stand 45 cents over December futures and is 5 cents firmer for October delivery.

 

Live cattle futures are called to open mixed as traders wait on signals from the cash market.

  • Live cattle are expected to continue where prices left off yesterday -- trading mixed.
  • Traders are waiting on clearer direction from the cash market, but tightening market-ready supplies should give feedlots an upper hand.
  • Meanwhile, the boxed beef market started the week with lackluster trade. Choice values firmed 33 cents and Select declined 25 cents on moderate movement of 144 loads.
  • Traders are comfortable with October live cattle trading at a premium to the cash market, but will be hesitant to push futures too much higher unless they are hopeful the cash market will improve this week.

 

Lean hog futures are called to open steady to weaker on profit-taking.

  • Following yesterday's sharp gains in the nearby contracts, lean hog futures are vulnerable to profit-taking.
  • The pork cutout value slipped 93 cents yesterday on solid movement of 340.49 loads.
  • Packers' profit margins slipped deeper into the red, raising ideas a near-term high is in the works.
  • As a result, the cash hog market is called steady to weaker. Many producers are catching up on marketings due to cooler temps after the recent heatwave.
     
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