Ahead of the Open (VIP) -- February 5, 2014

February 5, 2014 02:18 AM

Corn futures are called 1 to 2 cents lower as traders reevaluate positions.

  • Corn futures ended the overnight session 1 to mostly 2 cents lower as traders reevaluated positions after recent technical improvement.
  • Yesterday, March corn futures inched above the December high, but futures weren't able to move above yesterday's high in overnight trade.
  • There's little fresh news for the market to digest this morning, but traders anticipate tomorrow's weekly sales report to reflect strong export demand.
  • Also this morning, USDA announced an unknown buyer purchased 185,928 MT of old-crop corn and 50,800 MT for 2014-15.
  • Gulf basis for immediate delivery is down 3 cents, but basis is up 1 cent for March delivery.


Soybean futures are called 2 to 3 cents lower on light corrective selling.

  • Soybean futures ended the overnight session mostly 2 to 3 cents lower, with scattered buying seen in the November contract and far-deferreds posting marginal to 1 cent losses.
  • Following two sharp days of price gains, nearby soybean futures are seeing a slight setback as traders reevaluate positions. But two-sided trade was seen in overnight trade, which signals buying has not been exhausted.
  • The weather remains a mixed bag for Brazil, as conditions are mostly favorable across Mato Grosso, but dry conditions are stressing pod-filling beans in southern growing regions like Rio Grande do Sul.
  • Gulf soybean basis is steady for nearby delivery but up 3 cents for May and June delivery.


Wheat futures are called 1 to 3 cents weaker this morning on spillover from neighboring pits.

  • SRW and HRW wheat futures ended the overnight session mostly 1 to 3 cents lower, with HRS favoring a weaker tone in the nearbys and a firmer tone in the deferred months.
  • With little fresh news to digest this morning, wheat is taking its cue from the neighboring corn and soybean markets that are seeing light profit-taking.
  • Traders are also reevaluating positions after adding some weather premium into the market yesterday due to concerns about winterkill in winter wheat areas of the country.
  • Gulf SRW wheat basis is steady across the delivery months this morning, but HRW basis for nearby delivery is 2 cents softer this morning.


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

  • Live cattle futures are vulnerable to followthrough from yesterday's losses, although ideas the market has fallen far enough (for now) as traders wait on cash bids from packers could bring more stable price action.
  • Providing some encouragement for short-covering is a firmer tone in Choice beef values, as they rose 40 cents yesterday, but movement was again light at 115 loads. Select values softened 21 cents.
  • Packers are thought to be short bought and this week's showlist is smaller than last week, which has some looking for steady cash trade later this week.
  • Winter weather across the Plains and Midwest are stressing feedlots and there is no weather premium built into the market, which should help limit pressure.
  • Light pressure on corn futures could spur some light buying in feeder futures this morning.


Lean hog futures are called steady to firmer on winter weather and improvement in the product market.

  • Lean hog futures are expected to see a lift this morning from expectations packers will be forced to raise bids due to winter weather.
  • Another blast of winter weather is moving across the Midwest this morning, which will slow hog marketings.
  • Additionally, pork cutout values firmed $1.40 yesterday and movement improved to 424.65 loads to improve packer demand for hogs.
  • But buying in February hogs could be limited as the contract holds around a $2.50 premium to the cash index, and the contract needs to be more in line with the index ahead of expiration next week.
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