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

December 19, 2013 02:13 AM

Corn futures are called 1 to 2 cents higher on strong weekly sales.

  • Corn futures ended the overnight session fractionally to 1 cent higher in lackluster trade.
  • Gains were limited by sharp gains in the U.S. dollar, as investors react to yesterday's Fed announcement to scale back its asset purchases beginning in January.
  • Weekly export corn sales of 827,100 MT for 2013-14 and 45,200 MT for 2014-15 were above expectations and should provide mild support this morning.
  • China was listed as a buyer of 124,000 MT, including 180,000 MT switched from unknown destinations, 60,000 MT switched to South Korea and decreases of 4,700 MT. There were 245,500 MT of corn shipped to China the week ended December 12.
  • Also this morning, USDA announced export sales of 130,000 MT of corn to South Korea for 2013-14. A daily sale of 127,536 MT of corn was also announced to an unknown destination, with 111,280 MT for 2013-14 and 16,256 MT for 2014-15.
  • Gulf corn basis is down 2 to 4 cents for nearby delivery to stand 66 cents above March futures for December delivery.


Soybean futures are called 5 to 10 cents lower on disappointing weekly sales.

  • Soybean futures ended the overnight session 6 to 7 cents cents lower in most contracts.
  • Weekly soybean export sales of 415,500 MT for 2013-14 were a new marketing-year low, with sales of 80,200 MT reported for 2014-15. Combined, sales were well below expectations.
  • The report notes that an unknown destination canceled 576,300 MT of 2013-14 soybean purchases, which traders believe is China.
  • Meanwhile, China has announced another case of the H7N9 strain of bird flu in the Guangdong province, bringing the total number of cases to four since Sunday.
  • Gulf soybean basis is down 1 cent for immediate delivery to signal a softening of demand ahead of the holidays.


All wheat flavors are called 1 to 2 cents higher on stronger-than-expected weekly export sales.

  • Wheat futures ended the overnight session fractionally to 1 cent higher in the most actively traded contracts, which some scattered selling seen in deferred contracts.
  • This morning's weekly wheat export sales data is supportive. USDA announced wheat sales of 656,100 MT for 2013-14 and 3,000 MT for 2014-15, which came in well above expectations.
  • Export sales signal U.S. prices have dropped to a level that will spur increased demand.
  • Gulf SRW wheat basis is steady for nearby deliver, but is down 5 cents for February and March delivery.
  • Wheat futures are holding up well considering this morning's sharp strength in the U.S. dollar index.


Live cattle futures are called steady to weaker on the start of lower cash cattle trade.

  • Live cattle futures are expected to see followthrough from yesterday's losses as well as pressure from the start of cash cattle trade.
  • Light cash cattle trade was reported in Nebraska yesterday at $1 to $2 lower prices than last week. This suggests activity could begin in Kansas and Texas today, with most expecting trade below last week's $131 level.
  • December live cattle are trading in line with last week's cash trade, which raises the risk of followthrough pressure this morning.
  • Traders are also working to even positions ahead of tomorrow's Cattle on Feed Report, which is expected to show On Feed at 95.4%, Placements at 100.9% and Marketings at 94.6% of year-ago levels.
  • Choice boxed beef values softened by 25 cents yesterday and Select was down 40 cents, but movement picked up slightly to 174 loads.


Lean hog futures are expected to be weaker on a softer tone in the pork market.

  • Lean hog futures are called lower on building supplies and weakness in the pork market.
  • The pork cutout value plunged $2.02 yesterday, but movement was strong at 427.76 loads. Ham values led the decline, with bellies also down sharply.
  • Gains in lean hog futures have been limited to corrective buying recently, as bears clearly hold the near-term downside advantage.
  • February lean hog futures hold more than a $6 premium to the cash index, which raises the risk of more price pressure.
  • The cash hog market is called steady to weaker again today as packers have supplies secured into next week.
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