Ahead of the Open (VIP) -- September 20, 2013

September 20, 2013 03:10 AM

Corn futures are called 1 to 2 cents lower amid a lack of fresh news.

  • Corn futures ended the overnight session 1 to 2 cents lower in lackluster trade.
  • Corn saw spillover from double-digit losses in the soybean market, but losses were limited as traders are unwinding long soybean/short corn spreads.
  • Rains across the Corn Belt continue to supply psychological pressure to the market, as some Midwest farmers have already begun to open fields for harvest.
  • Gulf corn basis softened by a penny for immediate delivery to stand 61 cents over December futures to reflect expectations that supplies will soon be readily available.


Soybean futures are called 8 to 12 cents lower on help from outside markets.

  • Soybean futures ended the overnight session 10 to 12 cents lower as sell stops were triggered due to slight chart deterioration.
  • November soybean futures have filled the late-August gap area and a low-range weekly close would signal bears have claimed near-term momentum.
  • Rains moving across the Corn Belt are helping to stabilize soybean conditions and could benefit some of the green Midwest fields.
  • Gulf soybean basis is 2 cents softer for immediate delivery to stand 91 cents over November futures to reflect new-crop supplies becoming available in southern locations.


Wheat futures are called 3 to 5 cents lower on profit-taking following yesterday's gains.

  • SRW and HRW wheat ended the overnight session 3 to 4 cents lower, with HRS marginally to 2 cents lower.
  • Futures saw light profit-taking overnight after yesterday's gains. Key will be if losses are extended or if fresh buying reappears as a high-range close would suggest the market is working on a near-term low.
  • The U.S. dollar index is mostly firmer this morning, but for the week has posted sharp losses.
  • As a result, traders will be interested to see if next week's report shows a pickup in export demand, as it would signal U.S. supplies are highly competitive on the global market.
  • But if corn and soybean futures remain weaker throughout daytime hours, it will be difficult for wheat bulls to gain momentum.
  • Gulf SRW wheat basis is steady this morning to stand 60 cents over December futures.


Live cattle futures are called slightly higher as traders prepare for the Cattle on Feed (COF) Report.

  • Live cattle are expected to enjoy light followthrough from yesterday's gains as traders focus on evening positions ahead of this afternoon's COF 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.
  • With packers' bids and feedlots' asking prices several dollars apart, cash sources don't expect cash trade to begin until after the COF Report.
  • Given lackluster beef movement this week, expectations are for mostly steady cash trade with $123 seen last week. This week's showlist is down from last week.
  • Feeder futures are expected to benefit from tight calf supplies as well as slight weakness in the corn market.


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

  • Lean hog futures are expected to continue on yesterday's choppy tone and trade mixed as traders even positions ahead of the weekend.
  • Pressure on nearby futures will be limited given the sharp discount those contracts hold to the cash index.
  • But increased price volatility at high prices is a sign the market is working on a top, which makes traders hesitant to add to long positions.
  • Packers are working on improving profit margins that have tightened this week. As a result, the cash hog market is called mixed amid varied demand.
  • Some packers are willing to raise bids due to tighter-than-expected supplies, while others have scaled back their kill requirements.
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