Ahead of the Open (VIP) -- February 4, 2014

February 4, 2014 02:17 AM

Corn futures are called 1 to 2 cents higher on demand improvements.

  • Corn futures ended the overnight session 1 to 2 cents higher on light followthrough from yesterday's gains.
  • Corn futures closed firmer yesterday, but off session highs. This morning, futures are testing yesterday's highs, which if cleared, would be a positive technical signal.
  • Traders are largely reacting to recent improvements in demand, although they fear if prices rise too far, it would slow demand rebuilding.
  • Gulf corn basis is steady for nearby deliver this morning to stand 80 cents over March futures.


Soybean futures are called 5 to 10 cents higher on weather concerns in Brazil.

  • Soybean futures ended the overnight session 4 to 10 cents higher in old-crop futures while new-crop contracts were mixed.
  • Nearby futures have moved above yesterday's highs on concerns about hot and dry conditions during the critical pod-filling stage for some of the crop in Brazil.
  • But with early planted soybeans making their way to Brazilian ports, buying from this weather concern will likely be limited.
  • Traders are looking for signs of soybean sales cancellations from China due to the fact large sales are still on the books and left to be shipped. But so far, only small cancellations have been officially reported.
  • Gulf soybean basis for nearby delivery is steady to stand 85 cents over March futures.


Wheat futures are called narrowly mixed, although some spillover from neighboring pits is likely.

  • SRW and HRS futures ended the overnight session narrowly mixed, with HRW steady to 3 cents higher.
  • Wheat could benefit from some spillover from neighboring pits.
  • HRW futures were supported by concerns about the crop, as yesterday's state reports showed further deterioration in Texas, Kansas and Oklahoma.
  • Statistics Canada reports total wheat stocks at 28.381 MMT, while still lofty, came in lower than traders' average guess of 28.9 MMT.
  • Gulf SRW wheat basis is steady this morning, while HRW Gulf basis is steady to 1 cent weaker.


Live cattle futures are called steady to weaker on plunging beef values.

  • Live cattle futures are expected to see followthrough from yesterday's losses as traders believe a major high has been posted.
  • Additionally, sharp pressure on beef values is a reminder prices rose too far too fast. Choice values fell another $3.40 yesterday and Select declined $5.43, but movement was an improved 122 loads.
  • Pressure should be limited to technical selling, however, as February live cattle ended yesterday at around a $5 discount to last week's $144 to $145 cash cattle trade.
  • Traders expect steady to weaker cash trade this week, although showlists are down slightly from last week and weather disruptions could artificially tighten supplies even more.
  • Slight strength in the corn market is also seen as negative for feeder futures, although the front-month March contract ended yesterday at around a $3 discount to the cash index.


Lean hog futures are called steady to firmer on short-covering.

  • Lean hog futures are expected to benefit from short-covering on ideas yesterday's losses were overdone.
  • Winter weather moving across the Corn Belt later today is also seen as supportive for futures as packers work to secure this week's needs.
  • Pork cutout values firmed 56 cents yesterday, but movement was a slow 236.24 loads.
  • The cash hog market is called steady to $1 higher given limited movement and solid packer demand for hogs.
  • February lean hog futures narrowed the premium it holds to the cash index yesterday to around $2.50, which is more in line with a steady to firmer cash market.
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