Ahead of the Open (VIP) -- September 23, 2013

September 23, 2013 03:13 AM

Corn futures are called 2 to 3 cents lower on light followthrough pressure.

  • Corn futures favored a weaker tone in overnight trade, ending the session mostly 2 cents lower as seasonal pressure continues to limit buying to short-covering.
  • The start of harvest across the Corn Belt and more active harvest across southern growing regions is limiting traders' willingness to rebuild long positions.
  • Otherwise, there's little fresh news for the market to digest, which is also a negative for near-term price direction.
  • A close below the $4.50 level in December corn would be psychologically damaging and make the $4.30 level bears' next target.
  • USDA announced a 197,200-MT corn sale to Mexico for 2013-14 this morning.


Soybean futures are called to open 2 to 5 cents lower after futures posted a low-range close on Friday.

  • Soybean futures ended the overnight session 1 to 3 cents lower, which was mid-range for the session.
  • Friday's low-range weekly close is telling of near-term price action, as it sets the stage for additional price weakness after important support levels were violated last week.
  • Traders suspect a pickup in the harvest pace this week will add to seasonal price weakness.
  • But continued strong demand should help the market find a level of support and limit near-term downside risk.
  • China's flash HSBC purchasing managers' index came in at a six-month high, signaling economic activity has picked up.


Wheat futures are called to open steady to 1 cent higher on positive export developments.

  • Wheat futures were lackluster overnight, but favored a firmer tone on signals U.S. wheat is competitive on the global market.
  • Recent weekly export sales data has shown the marketing year is off to a strong start and this morning traders are reacting to news that China could be expanding its purchases.
  • The China National Grains and Oils Information Center says the county will import 7.5 MMT of wheat in 2013-14, up 1 MMT from its previous forecast.
  • But buying in wheat futures will be limited by seasonal weakness in the corn and soybean markets.
  • Recent weakness in the U.S. dollar index is also supportive of traders' belief that U.S. wheat is globally competitive. The dollar is slightly weaker this morning.


Live cattle futures are called to open higher in reaction to Friday's friendly Cattle on Feed Report.

  • Live cattle futures are expected to see a boost from Friday's Cattle on Feed Report, which showed all categories on the bullish side of expectations.
  • The report reminded the market that supplies will continue to tighten well into 2014.
  • Additional support is expected from $1 higher cash cattle trade that occurred late on Friday.
  • However, traders are also awaiting the release of the Cold Storage Report later this afternoon, which is expected to reflect lackluster demand.
  • Feeder futures should see a boost from tightening calf supplies and seasonal weakness in the corn market.


Lean hog futures are called to open steady to weaker on followthrough pressure.

  • Lean hog futures are expected to see followthrough from Friday's losses and as traders ready for this afternoon's Cold Storage Report as it is expected to remind that supplies are ample.
  • Additional pressure is expected to come from packers reducing kill hours to adjust to tighter supplies. This is also due to cutting margins moving into the red.
  • As a result, the cash hog market is called steady to weaker.
  • Followthrough from Friday's losses would signal a near-term high is in the works, which could add to technical selling pressure.
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