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

December 17, 2013 02:16 AM
 

Corn futures are called narrowly mixed in lackluster trade.

  • Corn futures ended the overnight session marginally higher in most contracts amid lackluster trade.
  • Spread unwinding with soybean is slightly supportive for corn this morning, although buying enthusiasm remains limited to position squaring.
  • Given funds' large net short position, there is more room to the upside amid corrective trade, but export concerns continue to loom over the market.
  • Traders remain concerned that China will reject additional cargoes of U.S. corn headed to their shores due to recent findings of unapproved GMO material.
  • Also this morning, USDA announced Japan purchased 278,384 MT of corn for 2014-15.
  • Gulf corn basis is steady to 1 cent firmer for nearby delivery to suggest exporters are in need of corn.

 

Soybean futures are called 2 to 4 cents lower amid corrective trade.

  • Soybean futures ended the overnight session mostly around 3 cents lower amid spread unwinding.
  • A lack of fresh news limited buying after yesterday's high-range close. Traders are reevaluating positions as they lighten their exposure to the markets ahead of the holidays.
  • Favorable weather in South America is being noted as a limiting factor this morning, and it appears producers in Mato Grosso are keeping rust in check.
  • Traders are nervous that China will announce large soybean cancellations, although that has yet to be seen. There's no doubt China has front-loaded U.S. purchases.
  • Gulf soybean basis is 1 cent weaker for immediate delivery to stand $1.02 above January futures.

 

All wheat flavors are called mixed in lackluster trade.

  • All wheat flavors didn't stray too far from unchanged in overnight trade.
  • Prices are being pulled between slight weakness in the bean pit and marginal strength in the corn market.
  • Traders are reevaluating positions after contracts did more technical chart damage yesterday, signaling bears still hold the near-term advantage.
  • Wheat needs a dose of fresh demand news to help stabilize prices.
  • Gulf SRW wheat basis is not a good sign for export demand, as it is 5 cents softer for near-term delivery this morning.

 

Live cattle futures are called steady to firmer on followthrough buying.

  • Live cattle future are expected to build on yesterday's price turnaround as bulls have near-term momentum on their side.
  • Futures recovered yesterday on strength in the beef market. Choice beef values firmed $1.08 yesterday and Select rose $1.40. Movement was light at 125 loads, however.
  • This week's showlist is down considerably from last week, giving feedlots more bargaining power and rising expectations for steady to $1 higher cash cattle trade compared with last week's $131 trade.
  • But with packer profit margins well in the red, cash trade isn't expected to begin until later in the week, putting more uncertainty regarding at what price trade will occur this week.
  • Tight calf supplies are supportive for feeder futures this morning.

 

Lean hog futures are called steady to higher on strength in the pork market.

  • Sharp gains in the pork cutout market should encourage some short-covering in lean hog futures this morning.
  • Pork cutout values surged $3.81 yesterday, with all cuts higher. Ham values lead the way by posting gains of $7.61. Pork movement was decent considering price gains at 326.27 loads.
  • The cash hog market is expected to be mixed today amid variable demand. Some locations are in need of supplies, but most have hogs secured for the week and do not need to raise bids.
  • Upside potential will be limited by the sizable premium nearbys hold to the cash index.
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