Ahead of the Open (VIP) -- February 14, 2014

February 14, 2014 02:20 AM
 

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

  • Corn futures ended the overnight session mostly around a penny higher, with far-deferred contracts narrowly mixed.
  • Corn benefited from spillover from soybeans as well as a weaker tone in the dollar index.
  • Traders are also encouraged by continued strong demand, which was once again reflected by yesterday's weekly export sales data.
  • Gulf corn basis is steady this morning to stand 76 cents over March futures for immediate delivery. This signals supplies and demand are in balance.
  • Otherwise, there's little fresh news for the market to digest today, so much of the focus will be on position squaring ahead of the extended holiday weekend.

 

Soybean futures are called 4 to 6 cents higher on followthrough buying.

  • Soybean futures ended the overnight session 4 to 6 cents higher, but off session highs.
  • March beans spent much of the overnight session pivoting around the $13.50 level and saw limited trade above $13.55. Bulls clearly have the near-term advantage and the bullish posture of the charts signals their next objective is September highs in the old-crop contracts.
  • China's Ministry of Commerce raised its February soybean import forecast from 3.42 MMT to 5 MMT.
  • China is expected to soon change gears and favor Brazilian supplies over U.S. supplies, but in yesterday's weekly export sales report, China was again the top buyer of old-crop U.S. soybeans.
  • Gulf soybean basis is steady this morning to stand 90 cents over March futures for immediate delivery.

 

Wheat futures are called 3 to 5 cents higher on spillover from neighboring pits.

  • All wheat flavors saw gains of 3 to 6 cents in overnight trade on spillover from neighboring pits and on help from a weaker U.S. dollar index.
  • Drought concerns in HRW wheat areas are also raising concerns about winter wheat crop prospects, although there is still time for moisture to be replenished before the crop comes out of dormancy.
  • But there's no significant moisture for the southern third of the U.S. in the 7- to 10-day forecasts.
  • The U.S. dollar index is pivoting around the 80.00 level, which helps to improve the U.S.'s competitiveness on the global market.
  • Meanwhile, the first official forecast from India's farm ministry calls for a record wheat crop of 95.6 MMT this year, up from last year's 92.46 MMT crop.
  • Gulf SRW wheat basis is 2 cents weaker for immediate delivery and HRW is steady to 3 cents firmer.

 

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

  • Live cattle futures are expected to see a lift from followthrough after yesterday's strong gains.
  • Traders are also encouraged by improved boxed beef movement this week, as it signals prices have fallen enough to encourage improvement in demand.
  • Choice values were 5 cents firmer yesterday and Select firmed 13 cents amid 201 loads. Choice values hold just a 34 cent premium to Select, which reminds of the tight supply situation.
  • Only light cash cattle trade in Kansas at $142 has been reported. Feedlots say this is $1 above last week's light trade. Other feedlots have passed on lower bids.
  • March feeder futures are trading in line with the cash index, which could limit followthrough buying this morning.

 

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

  • Lean hog futures are expected to see followthrough from yesterday's gains as well as support from strength in the product market.
  • Pork cutout values firmed 70 cents yesterday, but only 281.51 loads of pork changed hands. But for the week, packers are encouraged by strong pork movement.
  • Packers' profit margins remain well in the red, which is encouraging them to keep kill lines running as full as possible.
  • As a result, the cash market is called steady to $1 higher, especially with a fresh coat of snow in some Midwest areas that will slow marketings again today.
  • February lean hog futures expire today and ended yesterday at a 73-cent premium to the cash index. April hogs will become the lead-month contract next week and hold around a $9 premium to the index.
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