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

December 23, 2013 02:13 AM

Corn futures are expected to open the day session with mixed tone.

  • Corn futures ended narrowly mixed overnight following a light and choppy session. More of the same is expected this morning.
  • Fresh news is limited and trading volume is expected to be light. That's likely to lead to quiet trade, though it takes less to get the market moving in these conditions.
  • China imported 787,043 MT of U.S. corn last month, according to official customs data, which was up 108% from year-ago. But those imports were short of expectations, due in part to rejections of some U.S. cargoes.
  • Funds are still sitting on a sizable net short position in corn, but have so far shown little willingness to cover shorts. In fact, funds expanded their short position in the week ended Dec. 17.


Soybean futures are called 1 to 2 cents higher on the open this morning.

  • Soybean futures were finished the overnight session fractionally to 2 cents higher. That was in the lower portion of the overnight trading range.
  • Traders are monitoring weather in Argentina after conditions turned hot and dry last week. Forecasts call for rain chances on Wednesday, though the rest of the 10-day outlook shows heat and dryness.
  • Argentina's ag ministry said Friday the country's soybean crop is rated mostly "good" to "very good," though heat and dryness would negatively impact the crop.
  • USDA reported a daily sale of 120,000 MT of soybeans to unknown destinations for 2013-14. The fresh demand news should add support to the market this morning.
  • Funds built their net long position in the soybean market in the week ended Dec. 17. Despite holding a sizable net long position, funds have shown little urgency to trim that position thus far.


Wheat futures are expected to open 2 to 4 cents lower this morning.

  • Wheat futures ended the overnight session with losses of 1 to 5 cents in light trade.
  • Bears continue to dominate market action amid a lack of supportive news. Futures held above last week's fresh contract lows overnight, but a drop through that support during the daytime hours could trigger sell stops. Given expected light volume, it won't take as much to move the market.
  • Traders are ignoring bitterly cold temps across winter wheat areas of the United States. Concern with winterkill is limited as much of the crop is insulated by snow/ice.
  • A weaker U.S. dollar index may help limit selling, though that wasn't the case overnight, as traders aren't excited by U.S. wheat export prospects.


Live cattle futures are called to open steady to firmer. Feeder cattle are also seen opening with a firmer tone.

  • Live cattle futures are expected to find support from last Friday's Cattle on Feed Report. Much of the anticipated price strength should be in far-deferred contracts as Placements were nearly four percentage points below the average pre-report guess, while the On Feed and Marketings categories were close to the average guesses.
  • But the runup in cattle futures into the report could limit buying interest and may even trigger some light profit-taking in nearby contracts.
  • Aside from the report data, traders are watching the weather in the Plains and Midwest. Bitterly cold conditions are stressful to cattle and should provide light support.
  • Cash cattle trade is up in the air this week plants will again be buying animals for a holiday-shortened slaughter schedule next week. But given adverse weather conditions and tight market-ready supplies, it's uncertain how many cattle feedlots will move at lower bids.
  • Feeder cattle futures are expected to follow live cattle higher. A lack of buying interest in the corn market is also mildly supportive.


Lean hog futures are expected to open the week with a mixed tone.

  • Lean hog futures are expected to be choppy this morning as trade is likely to be thin ahead of Christmas. Some traders are taking an extended break.
  • The premium February lean hog futures hold to the cash market will limit buying and could keep pressure on the lead-month contract.
  • Cash hog bids are expected to be steady to weaker across the Midwest today on limited packer demand. While Midwest roads are snow/ice covered and temps are bitterly cold, plants are working with reduced operating hours due to Christmas.
  • Traders will also be evening positions ahead of this afternoon's Cold Storage Report.
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