Ahead of the Open (VIP) -- January 10, 2014

January 10, 2014 02:18 AM

The Labor Department reports fewer non-farm payrolls were added than expected at 74,000 in December, but the unemployment rate declined from 7% to 6.7%. The U.S. dollar index immediately weakened, which is supporting crude oil and gold futures this morning.

Corn futures are called 2 to 4 cents lower as traders prepare for a larger 2013 crop peg.

  • Corn futures ended the overnight session off the session lows thanks to weakness in the dollar index, ending mostly 2 to 3 cents lower.
  • Traders' focus is also on evening positions ahead of this morning's USDA reports. Traders look for USDA to raise the size of the 2013 crop and for 2013-14 carryover to rise to around 1.84 billion bushels.
  • Meanwhile, traders expect the Gain Stocks Report to reflect near-record quarterly corn usage.
  • Also this morning, USDA announced an unknown destination purchased 180,000 MT of corn for 2013-14.
  • Gulf corn basis is steady to 2 cents lower this morning to reflect a softening of demand.


Soybean futures are called 1 to 5 cents higher amid short-covering.

  • Soybean futures were firmer throughout the overnight session, although some scattered buying was seen in far deferred contracts. January beans ended the overnight session 5 1/4 cents higher, with March and May up 2 1/2 cents.
  • Weakness in the dollar index is supportive for the commodity sector this morning.
  • But focus in the market is on position squaring ahead of the 11:00 a.m. CT USDA reports.
  • Traders look for USDA to raise the size of the 2013 crop slightly from last month and for carryover to be up nearly 1 million bu. from last month's 150-million-bu. peg.
  • According to official customs data, China imported 7.4 MMT of soybeans in December -- the highest for any month ever. For the year, the country imported a record 63.38 MMT of soybeans, up 8.6% from year-ago.
  • Also this morning, USDA announced China purchased 216,000 MT of soybeans for 2014-15.


Wheat futures are called mixed, with pressure limited by weakness in the dollar.

  • SRW wheat ended 1 to 2 cents lower, with HRW and HRS ending the overnight session narrowly mixed.
  • Weakness in the U.S. dollar index is helping to limit losses as traders put their finishing touches on positions ahead of the 11:00 a.m. CT USDA reports.
  • The winter wheat acreage data this morning will be trend-setting and is expected to show acreage of around 43.7 million, up from 43.1 million acres last year.
  • Meanwhile, traders look for USDA to raise its 2013-14 U.S. carryover peg by around 16 million bu. to 558.8 million bushels.
  • USDA also announced this morning that Venezuela purchased 125,700 MT of U.S. wheat for 2013-14.


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

  • Live cattle futures are expected to see a choppy start as traders wait on cash trade to begin as well as this morning's monthly USDA Supply & Demand Report.
  • Surging boxed beef prices are raising expectations for at least $1 higher cash cattle trade compared with last week's $137 trade.
  • But with packers' profit margins well in the red, they remain hesitant to raise bids. As a result, late-day trade is expected.
  • February live cattle are trading at a discount to last week's cash trade, signaling traders believe a near-term high is in the works or near.
  • Weakness in the corn market this morning is expected to support feeder futures.


Lean hog futures are called mixed as traders even positions ahead of the weekend.

  • Lean hog futures are expected to see a choppy start as traders even positions ahead of the weekend after a volatile week of trade.
  • Pressure on futures should be limited by yesterday's 64-cent improvement in the pork cutout market amid solid movement of 349.11 loads.
  • But packer demand is varied this morning, as some are in need of supplies for tomorrow's kill and are working to make up for early week downtime.
  • February lean hog futures are trading at around a $4.50 premium to the cash index, which raises the risk of additional near-term pressure.
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