Ahead of the Open (VIP) -- February 12, 2014

February 12, 2014 02:18 AM

Corn futures are called 1 to 2 cents lower on spillover from soybeans.

  • Corn futures ended the overnight session 1 to 2 cents lower on spillover from soybeans and on strength in the U.S. dollar index.
  • Otherwise, there's little fresh news for the market to digest this morning, which puts more focus on the longer-term outlook that supplies are rebuilding, as well as demand.
  • Traders are also awaiting tomorrow's weekly export sales data after recent reports have shown a surge buying. If that trend is confirmed tomorrow, it would give traders more confidence that prices are still at value levels.
  • Gulf corn basis is mixed this morning, with nearby delivery steady to 1 cent firmer. Immediate delivery stands 76 cents over March futures.


Soybean futures are called 5 to 10 cents lower on news of Chinese soybean cancellations.

  • Soybean futures were choppy in overnight trade but faded in late trade to end the session 3 to 6 cents lower.
  • Futures are expected to see stepped up selling this morning after USDA announced this morning that China has cancelled 272,000 MT of U.S. old-crop soybean purchases.
  • Traders believe this is just the start of China's cancellations, but USDA also announced China has purchased 240,000 MT of beans for 2014-15.
  • Some rains in the forecast for southern Brazil later this week are adding to the weaker tone, as are reports of strong yields in Mato Grosso.
  • Meanwhile, according to official customs data from China, the country imported 5.91 MMT of soybeans in January. While this is down 20.1% from December, it's still 23.7% more than year-ago.
  • Gulf soybean basis is 2 cents higher for immediate delivery this morning.
  • March soybean futures met resistance at $13.40 in overnight trade -- a level that has turned back buyers in the past.


SRW and HRW futures are expected to be marginally to 2 cents lower this morning, while HRS is called mixed.

  • SRW and HRW futures ended the overnight session mostly marginally to 1 cent lower, with HRS futures favoring a firmer tone in mixed trade.
  • Pressure on winter wheat markets was limited by concerns about winterkill and drought in the HRW wheat region.
  • Selling in corn and soybean futures overnight provided spillover pressure to wheat overnight.
  • Traders are also digesting news that Japan purchased 28,655 MT of Canadian milling wheat and tendered to buy 286,091 MT of U.S., Canadian and Australian wheat in its weekly tender.
  • Ongoing transportation problems have limited Japanese purchases of Canadian wheat this winter.
  • Gulf SRW basis is 5 to 10 cents higher for nearby delivery to suggest a burst in demand, while Gulf HRW basis slid 3 to 7 cents this morning for nearby delivery.


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

  • Live cattle futures are expected to be mixed on a combination of profit-taking following yesterday's gains and followthrough buying amid tight supplies.
  • Traders are also expected to take a more cautious approach to the market today as they wait on cash trade to develop.
  • Given this week's larger supplies and yesterday's softer tone in the beef market, most are expecting $1 lower cash trade this week compared to last week's $140 to $142 cash trade.
  • Choice beef values declined $2.02 yesterday and Select dropped 85 cents, but packers moved 166 loads of beef.
  • March feeder futures hold a small discount to the cash index and today's softer tone in the corn market is supportive for feeders, as well.


Lean hog futures are called mixed as traders reevaluate positions.

  • Following yesterday's losses, lean hog futures are expected to be choppy this morning as traders reevaluate positions.
  • There is risk of followthrough selling this morning, but strength in the cash hog market could encourage some buying this morning.
  • Pork cutout values firmed 13 cents yesterday on decent, but not impressive movement of 347.73 loads.
  • February lean hog futures hold a little more than a $1 premium to the cash index ahead of Friday's expiration, and April hogs, which will soon become the lead-month contract, hold around a $10 premium to the index.
  • Meanwhile, traders remain concerned about the porcine epidemic diarrhea virus (PEDV) further shrinking supplies this year, as well as news that a new coronavirus has been detected on farms in Ohio.
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