Ahead of the Open (VIP) -- February 18, 2014

February 18, 2014 02:16 AM

Corn futures are called 1 to 3 cents higher on spillover from soybean futures.

  • Corn futures ended the overnight session mostly around a penny higher, with much of the support coming on spillover from double-digit gains in nearby soybean futures.
  • A weaker tone in the dollar index and strength in crude oil and gold futures is also supportive of general commodity buying this morning.
  • Traders also have continued strong demand on their minds, as importers haven't slowed their pace of buys despite recent price improvement.
  • Gulf corn basis is 2 cents higher for immediate delivery this morning to stand 78 cents over March futures, but basis is down 3 cents for May delivery.


Soybean futures are called 7 to 15 cents higher, with nearbys leading gains.

  • Soybean futures ended the overnight session 6 to 15 cents higher, with the March through August contracts posting double-digit gains on followthrough from last week's gains.
  • Tight old-crop supplies and continued buying of old-crop supplies are the fuel behind the sharp price advance from the late January low.
  • AgRural has cut its Brazilian soybean forecast by 1.8 MMT to 87 MMT due to late-season drought impacts.
  • March soybean futures ended the overnight session above the key $13.50 level, which makes bulls' next major upside objective the September high of $13.77 3/4.
  • Gulf soybean basis is steady this morning to signal supplies and demand are in balance.


Wheat futures are called 2 to 4 cents higher on spillover from neighboring pits.

  • SRW and HRS futures ended the overnight session mostly 2 to 4 cents higher, with HRW steady to 2 cents higher.
  • Futures benefited from spillover from neighboring pits, as well as weakness in the U.S. dollar index.
  • Traders are also keeping a close eye on the drought situation in the HRW belt, as there's little in the way of meaningful precip in the near-term forecast and the condition of the crop has declined sharply from last fall.
  • Otherwise, there's little fresh news for the market to digest, as no weekend export business was announced.
  • Gulf SRW and HRW basis are steady this morning.


Live cattle futures are called higher on strength from the product market.

  • Live cattle futures are expected to be higher this morning in reaction to yesterday's sharp gains in the beef market.
  • Choice beef values started the week $3.30 higher and Select rose $2.06 on 153 loads changing hands.
  • Strength in the beef market, combined with last week's steady to firmer cash cattle trade, raises expectations for higher cash cattle trade this week.
  • Feeder futures are expected to be higher this morning based on spillover from live cattle as well as the fact March feeder cattle futures ended last week at $1 discount to the cash index.


Lean hog futures are called steady to firmer on followthrough from Friday's gains.

  • Lean hog futures are expected to see followthrough from Friday's gains and strength in the cash market.
  • Packers are expected to raise bids this morning after several plants were closed for Presidents Day and are short-bought on supplies.
  • Pork cutout values firmed 68 cents yesterday, but only 258.4 loads of product changed hands.
  • With packers' profit margins well in the black, there is incentive for them to raise bids today.
  • April lean hog futures are now the lead month contract and have the responsibility of following the cash market more closely. This raises the risk of profit-taking in the near-term as the contract holds around an $10 premium to the cash index.
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