Ahead of the Open (VIP) -- January 15, 2014

January 15, 2014 02:17 AM

Corn futures are called 2 to 3 cents lower on light followthrough selling.

  • Corn futures ended the overnight session mostly 2 to 3 cents lower on followthrough profit-taking on ideas Friday's gains were overdone.
  • While traders recognize last week's USDA reports were price friendly, they also note that carryover for 2013-14 is still up sharply from the previous year.
  • Additionally, news reports that China has rejected more shipments of U.S. DDGs due to the presence of unapproved GMO material brings trade concerns with the country back to the market's attention.
  • Last week, reports signaled China would relax inspections of U.S. DDGs, but restrictions remain strict.
  • Hot and dry conditions in Argentina are being noted by the market, but the Chinese trade situation has traders' focus this morning.
  • Gulf corn basis is steady to 1 cent weaker to stand 67 cents over March futures for immediate delivery.


Soybean futures are called mixed as traders reevaluate positions.

  • Soybean futures favored a firmer tone overnight and ended the session narrowly mixed.
  • The ability of the market to find followthrough buying after yesterday's strong gains signals traders are concerned about South American crop prospects.
  • Hot and dry weather conditions across Argentina have resulted in some private forecasters lowering their crop pegs.
  • Dry pockets have also developed in central Brazil, although there is rain in the weekend forecast.
  • Also this morning, USDA announced a 106,000-MT sale of U.S. soybeans to China for 2014-15.
  • Gulf soybean basis is steady this morning, and traders are anxiously anticipating tomorrow's Weekly Export Sales Report given indications of strong post-holiday demand.


Wheat is called 1 to 2 cents lower amid profit-taking.

  • All wheat flavors saw light profit-taking following yesterday's gains as funds remain hesitant about rebuilding a long position.
  • Futures were supported yesterday by forecasts for dry conditions across the Central and Southern Plains, as it raises concerns about the condition of the HRW crop.
  • Additional pressure this morning comes from sharp strength in the dollar index this morning due to better-than-expected retail sales data.
  • Traders are also reacting to news that India's farm ministry expects its wheat crop to top 100 MMT. If realized, it would be a record.


Live cattle futures are called higher due to ongoing strength in the beef market.

  • Live cattle futures are expected to build on yesterday's gains after beef values surged to new highs yesterday.
  • Choice values rose $4.10 and Select rose $4.59 on solid movement of 144 loads.
  • Packers have seen profit margins improve this week, although they remain in the red.
  • Due to tighter market-ready supplies and the boxed beef surge, expectations are for $1 to $2 higher cash cattle trade later this week.
  • February live cattle ended yesterday at a $1 to $2 discount to last week's $139 to $140 cash cattle trade, which opens the door for significant near-term upside potential.
  • Slight weakness in the corn market is expected to support feeder futures this morning.


Lean hog futures are called steady to firmer on strength in the pork market.

  • Lean hog futures enjoyed spillover from live cattle futures yesterday and futures are expected to see followthrough buying this morning.
  • Traders are building the case for a near-term low being posted, as pork cutout values firmed $1.65 yesterday on strong movement of 471.94 loads.
  • The cash hog market is expected to be mostly steady this morning, although traders expect some firmer bids to surface as some packers say they need additional supplies this week.
  • February lean hog futures ended yesterday at more than $5 premium to the cash index, which should limit buying in futures.
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