Ahead of the Open (VIP) -- February 21, 2014

February 21, 2014 02:11 AM

Corn futures are called 1 to 2 cents lower on a pullback from recent gains.

  • Corn futures ended the overnight session mostly 2 cents lower on light profit-taking.
  • The U.S. dollar index is slightly firmer this morning, which is encouraging traders to take some profits ahead of the weekend. Corn futures are still working on solid weekly gains.
  • Plus, there's little in the way of positive fundamental news this morning to encourage market bulls.
  • USDA, at its Outlook Forum, this morning released its full 2014-15 S&D tables. It sees the potential for a 13.985-billion-bu. corn crop and carryover rising to 2.111 billion bushels.
  • Weekly corn sales of 691,400 MT for 2013-14 were below expectations. Exports of 745,000 MT were down 22% from the previous week.
  • Gulf corn basis is 1 cent firmer for immediate delivery to stand 85 cents over March futures. This signals demand remains strong.


Soybean futures are expected to be mixed this morning after a choppy tone in overnight trade.

  • Soybean futures ended the overnight session fractionally to 2 cents lower in the nearby contracts, with deferred futures narrowly mixed.
  • At its Outlook Forum, USDA projected the 2014 soybean crop at 3.55 billion bu., and 2014-15 carryover at 285 million bushels.
  • Weekly export soybean sales of 86,300 MT for 2013-14 were a marketing-year low. But combined with sales of 749,100 MT for 2014-15, total weekly export sales were within the pre-report guess range.
  • Soybean exports topped 1.3 MMT, with China the top destination. The report notes China canceled 145,600 MT of old-crop beans.
  • Gulf soybean basis is steady for immediate delivery but has slipped 4 cents for March delivery to signal a softening of old-crop demand.


SRW and HRW wheat futures are called 1 to 2 cents lower, while HRS futures are seen opening mixed this morning.

  • SRW and HRW futures were mostly 1 to 2 cents lower in overnight trade, with HRS narrowly mixed.
  • There's little in the way of positive fresh news for the market to digest this morning, which leaves futures vulnerable to profit-taking, especially after recent gains.
  • At its Outlook Forum, USDA projected the 2014 wheat crop at 2.16 billion bu. and 2014-15 carryover at 587 million bushels.
  • Weekly wheat export sales of 424,500 MT for 2013-14 and 67,000 MT for 2014-15 were within expectations. But exports were a new marketing-year low.
  • Gulf HRW wheat basis is up 10 cents for immediate delivery and 5 cents for March delivery to signal a surge in demand, but Gulf SRW basis is steady to 1 cent lower this morning.


Live cattle futures are called steady to higher amid bullish fundamentals.

  • Live cattle futures are called to open steady to firmer on stressful feedlot conditions that are expected to result in higher cash cattle trade today.
  • But cash trade could be limited after a winter storm moved across portions of the Plains and Midwest yesterday.
  • Strength in the boxed beef market this week is also supportive for futures, as Choice beef values have risen back above $214 and movement has been solid this week.
  • Traders are evening positions ahead of this afternoon's Cattle on Feed Report, which is expected to show On Feed at 96%, Placements at 102.6% and Marketings at 95.4% of year-ago.
  • The Cold Storage Report this afternoon is expected to show beef stocks at the end of January up marginally from December, but 9% below year-ago.
  • Tight calf supplies and expected slight weakness in the corn market this morning are supportive factors for feeder futures.


Lean hog futures are called steady to firmer amid travel disruptions.

  • Lean hog futures are expected to see a lift from expected strength in the cash market due to a winter storm disrupting travel across the Midwest.
  • Packers have had to bid up for hogs all week to keep kill lines running as full as possible amid profitable margins.
  • However, futures are at risk of profit-taking as some contracts are severely overbought according to the Relative Strength Index.
  • But concerns about the spread of PEDV raises questions about how tight supplies will be this summer, which has resulted in sharp weekly gains in those contracts.
  • Traders expect this afternoon's Cold Storage Report to show pork stocks at the end of January up 9.3% from last month and in line with year-ago levels.
  • Also supportive is yesterday's surge in the pork cutout value, which were up $2.88 on strong movement of over 400 loads.
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