Ahead of the Open (VIP) -- December 12, 2013

December 12, 2013 02:17 AM

Corn futures are called marginally to 1 cent lower on dollar strength.

  • Corn futures didn't stray too far from unchanged in overnight trade, but the market trimmed losses into the close and ended the session mostly marginally to 1 cent lower.
  • A firmer start could be seen as traders digest this morning's weekly export sales data. The report showed sales of 695,400 MT for 2013-14 and 109,400 MT for 2014-15 -- coming in slightly above expectations.
  • Also this morning, USDA announced an 120,000-MT corn sale to an unknown buyer for 2013-14.
  • This follows yesterday's weekly ethanol data which was a high for the year thanks to improved margins for ethanol plans.
  • A stronger dollar weighed on corn futures overnight.
  • Gulf corn basis is steady for immediate delivery, but is 1 to 2 cents stronger for January and February shipment to reflect improved demand.


Soybean futures are called mixed amid bull spreading.

  • Nearby soybean futures ended the overnight session around a penny higher, with deferred futures weaker amid bull spreading.
  • Strength in the dollar index limited buying overnight, but a much-higher-than-expected weekly export sales report should help to support futures this morning.
  • Sales of 1,108,600 MT for 2013-14 and 413,900 MT for 2014-15 were reported, with China (no surprise) the lead buyer. This was well above expectations.
  • However, Gulf soybean basis is 1 cent weaker for immediate delivery this morning to reflect increased cash sales.
  • Deferred futures are being pressured by the outlook for a record South American crop, as well as expectations 2014 U.S. soybean acres will be higher.


Wheat are called mixed in lackluster trade.

  • SRW and HRW wheat ended the overnight session narrowly mixed, with HRS marginally to 2 cents higher.
  • Strength in the U.S. dollar index is limiting buying this morning, although other outside markets are providing mixed signals. Gold is sharply lower this morning and crude oil is firmer.
  • This morning's weekly export sales showed sales of 372,200 MT for 2013-14, which came in within lackluster expectations.
  • Wheat needs a dose of fresh demand news to stabilize the market. Increased global competition -- especially with Canada -- opens additional near-term downside price risk.
  • Gulf SRW wheat basis is steady this morning to stand 92 cents over March futures.


Live cattle futures are called mixed as traders wait on cash trade to begin.

  • Live cattle futures are expected to see a choppy start on a continuation of yesterday's mixed price tone.
  • Traders are waiting on cash cattle trade to begin, with most expecting steady to weaker trade given this week's slightly larger showlist.
  • But stressful feedlot conditions across the Plains and Midwest are giving feedlots some bargaining power in this week's cash negotiations, although packers so far haven't bid aggressively for cattle as they are dealing with negative profit margins.
  • Choice beef values firmed 49 cents and Select softened by 91 cents yesterday on improved movement of 236 loads.
  • December live cattle are trading in line with last week's $132 cash cattle trade.


Lean hog futures are called steady to firmer on improved pork movement.

  • Following yesterday's price weakness in many contracts, lean hog futures are expected to benefit from short-covering.
  • On top of evening positions, futures are expected to see a boost from improved pork movement. While pork cutout values slipped 60 cents yesterday, packers moved 565.74 loads of pork.
  • With packers' profit margins well in the black, traders aren't very concerned about slight weakness in pork values, although the cash market is expected to be steady with a weaker tone due to building supplies and lofty carcass weights.
  • December lean hog futures are trading in line with the cash index ahead of tomorrow's expiration. But the February contract, which soon becomes the lead-month contract, holds a sizable premium to the index.
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