Ahead of the Open (VIP) -- February 10, 2014

February 10, 2014 02:18 AM
 

Corn futures are called 1 to 3 cents lower amid light pre-report trade.

  • Corn futures ended the overnight session mostly around 2 cents lower as traders even positions ahead of this morning's USDA reports.
  • Traders expect USDA to trim its 2013-14 carryover figure by around 25 million bu. from last month to 1.606 billion bu. due to the recent uptick in export demand.
  • Otherwise, there's little fresh news for the market to digest this morning, with no fresh export business reported over the weekend.
  • Gulf corn basis is steady for immediate delivery but 2 cents softer for March delivery.

 

Soybean futures are called 2 to 5 cents higher on followthrough from overnight gains.

  • Soybean futures ended the overnight session mostly 2 to 5 cents higher, which was near session highs. The late-session push in overnight trade could result in even stronger gains this morning.
  • Traders look for USDA to trim 2013-14 soybean carryover by around 7 million bu. from last month to 143 million bu., which if realized, would be just 2 million bu. above 2012-13 carryover.
  • The lack of large Chinese soybean cancellations has traders expecting USDA to raise its export forecast to trim carryover.
  • Above-normal temps and little rain in the forecast for the next three days across southern Brazil will maintain stress on the filling crop. But conditions are favorable for harvesting in Mato Grosso.
  • Gulf soybean basis is steady this morning to stand 86 cents over March futures for immediate delivery.

 

Wheat futures are called 2 to 4 cents lower on light profit-taking.

  • SRW futures ended the overnight session mostly around 4 cents lower, with HRW and HRS down 1 to 4 cents.
  • Focus in the market is on position squaring ahead of this morning's USDA reports, as well as some light profit-taking after futures posted week-over-week gains.
  • According to pre-report average trade guesses, the market is expecting a 6-million-bu. drop in 2013-14 wheat carryover from last month to 602 million bu. due to the solid export pace.
  • The U.S. dollar index has been choppy this morning, but it is currently weaker on followthrough from last week's losses on disappointing jobs data.
  • No weekend export business was announced, which is a disappointment after Japan increased its purchases of U.S. wheat last week.
  • Gulf SRW and HRW wheat basis is mostly steady this morning to signal supplies and demand are aligned.

 

Live cattle futures are called mixed on residual buying versus concerns about the beef market.

  • Live cattle futures are expected to see a choppy start thanks to a combination of followthrough buying from Friday's gains and concerns about the beef market.
  • Choice beef values softened $2.74 on Friday to $210.77, but movement improved to 198 loads, which raises some hope the sharp slide in beef values will soon be over.
  • Cash cattle trade was very light last week, meaning this week's showlist may be larger than last week, but also that packers start the week extremely short bought.
  • As a result, cash trade is expected by midweek, if not earlier, but expectations are for lower bids.
  • Slight weakness in the corn market is supportive for feeder futures this morning, although feeders are likely to follow fed cattle.

 

Lean hog futures are called steady to firmer on strength in the cash market.

  • Lean hog futures are expected to see a boost this morning from expectations of higher cash hog bids to start the week.
  • Packers are short bought heading into the week after last week's weather delays and frigid temps across the Midwest again this morning could curb movement.
  • Additionally, pork cutout values firmed 86 cents on Friday to keep packers' profit margins strong.
  • However, February lean hog futures ended last week at around a $2 premium to the cash index ahead of this week's expiration, which will limit buying in the nearbys. April hogs hold around a $10 premium to the index.
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