Ahead of the Open (VIP) -- January 14, 2014

January 14, 2014 02:23 AM

Corn futures are called 2 to 4 cents lower as traders reevaluate positions.

  • Corn futures were weaker throughout the overnight session and ended mostly around 3 cents lower.
  • Weakness overnight follows yesterday's late-session price recovery. Traders are reevaluating positions following Friday's sharp move higher.
  • Importantly, March corn yesterday completed a 25% retracement of the decline from the August high but needs closes above this level ($4.35) -- to signal more than a short-term recovery has occurred.
  • News that China has renewed GMO registrations for several crops is good news, although approval of MIR 162 (Syngenta's Agrisure Viptera) remains stalled.
  • Gulf corn basis is steady for immediate delivery to stand 68 cents above March futures, with basis for March delivery up 1 cent.


Soybean futures are called 1 to 2 cents higher but could follow the lead of late overnight trade and open mixed.

  • Soybean futures ended the overnight session mostly around a penny higher, although some scattered selling was seen in late overnight trade in deferred contracts.
  • Nearby futures built slightly on yesterday's strong gains due to ongoing concerns about this week's hot and dry forecast in Argentina.
  • Weather is a mixed bag for Brazil, as there are rains are in the forecast for Rio Grande do Sul and Parana, but crops in Mato Grosso are seeing increased stress, although there is rain in the forecast later this week.
  • Chinese authorities have confirmed an outbreak of H5N1 bird flu in a chicken flock in the central province of Hubei and have quarantined the area after culling 46,800 chickens.
  • While traders remain concerned about the spread of bird flu in China, they note the country continues to actively buy U.S. soybeans.
  • Gulf soybean basis is steady this morning to stand $1.23 over March futures for immediate delivery.


Wheat is called 1 to 2 cents lower to maintain the bearish technical posture of the market.

  • SRW and HRW wheat ended the overnight session 2 to 3 cents lower, with HRS steady to 2 cents lower.
  • The U.S. dollar index is favoring a firmer tone this morning, raising concern about the competitiveness of U.S. wheat on the global market.
  • This follows signs yesterday that U.S. wheat is gaining competitiveness, as Egypt was a buyer of a small amount of U.S. wheat. The wheat market needs constant demand news to help stabilize prices.
  • Pressure on wheat this morning comes from news Russia has exported 16.384 MMT of grain so far this marketing year -- above the entire 2012-13 marketing year total. The ag ministry expects 2013-14 exports to total around 20 MMT.
  • Additionally, Ukraine's ag minister raised the country's 2013-14 grain export forecast by 1 MMT to 33 MMT.
  • Gulf SRW wheat basis is steady to stand 95 cents over March futures for immediate delivery.


Live cattle futures are called mixed as traders wait on the sidelines for cash bids.

  • Live cattle futures are expected to see a repeat of yesterday's performance, which featured choppy, two-sided price action.
  • But with this week's showlist tighter than last week and boxed beef prices continuing to surge, pressure on futures should be limited.
  • Choice and Select beef values rose to a record $216.94 per cwt. and $214.76 per cwt., respectively, yesterday. Movement was lackluster at 101 loads.
  • Cash bids are not expected to surface until at least tomorrow and cash trade will likely be delayed until later in the week. Packers are hesitant to raise bids due to negative profit margins.
  • As a result, traders are comfortable with the discount structure nearby futures hold to the cash market.
  • Key this morning will be if feeder futures build on yesterday's losses to signal a high has been posted, or if losses are viewed as a buying opportunity.


Lean hog futures are called steady to lower on followthrough pressure.

  • Lean hog futures are expected to see followthrough after yesterday's low-range close.
  • The cash hog market is expected to be mixed today due to variable demand, which should limit pressure on futures.
  • Winter weather moving across portions of the Corn Belt this morning is expected to slow marketings, although packers say they are having no difficulty securing this week's needs.
  • Pork cutout values slipped 12 cents yesterday on moderate movement of 372.44 loads. Strength in the product market is the missing ingredient behind sustained strength in futures and the cash markets.
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