Ahead of the Open (VIP) -- September 19, 2013

September 19, 2013 03:12 AM
 

Corn futures are called 3 to 5 cents higher on help from dollar weakness.

  • Corn futures enjoyed short-covering overnight and ended the session 3 to 4 cents higher.
  • Weakness in the U.S. dollar index is supportive for commodity markets this morning. The FOMC's decision not to taper its $85 billion-a-month bond-buying program caught the market by surprise.
  • But rains moving across the Midwest this week are a price-limiting factor for bulls. Even though much of the corn crop has shut down, rains are a negative factor.
  • This morning's weekly export sales report showed corn sales of 437,400 MT for 2013-14, which came in below expectations. This keeps demand concerns on traders' minds.
  • Early harvest results will also limit buying to short-covering.
  • Gulf corn basis for immediate delivery has firmed by 3 cents to stand 63 cents over December futures to signal end users are still in need of corn.

 

Soybean futures are called 6 to 10 cents higher on help from outside markets.

  • Soybean futures ended the overnight session 5 to 10 cents higher, with nearby futures leading gains.
  • Futures are expected to see a boost from outside markets, although the dollar has moved off its early lows. Crude oil and gold futures remain stronger.
  • This morning's weekly export sales data showed soybean sales of 923,300 MT for 2013-14, which came in stronger than traders expected.
  • Also this morning, USDA announced a 120,000-MT soybean sale to an unknown destination for 2013-14.
  • Rains moving across the Corn Belt this week are helping late-filling crops fill pods, which could limit buying interest this morning.
  • Gulf soybean basis is steady for immediate delivery to stand 92 cents over November futures. Basis across the country, however, continues to deteriorate as buyers expect new-crop supplies to become readily available soon.

 

Wheat futures are called 5 to 8 cents higher on improved demand prospects.

  • Wheat futures ended the overnight session mostly 7 to 8 cents higher on help from positive outside markets.
  • Dollar weakness is supportive for wheat futures as it helps to make U.S. supplies more competitive on the global market.
  • This morning's weekly export sales report showed wheat sales of 704,400 MT for 2013-14 and a net sales reductions of 2,500 MT for 2014-15. Combined, the tally came in stronger than traders expected.
  • Gulf SRW wheat basis is steady this morning to stand 60 cents over December futures.
  • Wheat futures have their work cut out in order to signal near-term lows have been posted. December SRW wheat has risen above last week's high, but the contract needs closes above $6.76 1/2 to signal a low is in the works.

 

Live cattle futures are expected to favor a firmer tone in mixed trade.

  • Live and feeder cattle futures are expected to be mixed as traders wait on cash cattle trade to begin, but the markets should favor a firmer tone due to positive outside markets.
  • The U.S. dollar index is weaker again this morning and the Dow Jones Industrial Average posted a new high yesterday in reaction to the Federal Reserve's decision to keep its asset-buying plan in place for now.
  • Traders are also more aggressively evening positions ahead of Friday's Cattle on Feed Report. The report is expected to show On Feed at 93.46%, Placements at 91.6% and Marketings at 95.46% of year-ago levels.
  • Choice beef values firmed 28 cents yesterday and Select rose 75 cents on a slight improvement in movement of 202 loads.
  • Cash cattle trade is expected to wait until tomorrow as asking prices and bids are several dollars apart.

 

Lean hog futures are called to open mixed amid position squaring.

  • Following yesterday's gains, lean hog futures are vulnerable to profit-taking as traders believe a near-term high has been posted or is close.
  • But ongoing strength in the pork cutout market and tighter-than-expected market-ready hog supplies should limit pressure on futures.
  • Pork cutout values improved just 16 cents yesterday, but packers moved 443.34 loads of product.
  • The cash hog market is called mixed amid variable demand. Some packers are in need of additional supplies this week and others have scaled back needs due to negative profit margins.
  • October lean hog futures ended yesterday at a $3-plus discount to the cash index.
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