Ahead of the Open (VIP) -- January 16, 2014

January 16, 2014 02:18 AM

Corn futures are called 2 to 3 cents higher on a pickup in export sales.

  • Nearby corn futures ended the overnight session mostly 2 to 3 cents higher, with deferred futures up around a penny.
  • This morning's weekly export sales data showed corn sales of 821,000 MT for 2013-14, which came in above expectations. The top buyer was Egypt, which is traditionally a value buyer, signaling U.S. corn is "cheap."
  • Corn exports of 674,500 MT were up 12% from the previous week.
  • Also this morning, USDA announced an unknown buyer canceled 126,000 MT of U.S. corn for 2013-14. Traders suspect this is China given ongoing issues with unapproved GMO material being found.
  • Meanwhile, Strategies Grains has raised its forecast for the 2014-15 EU corn crop by 100,000 MT to 64.8 MMT.
  • Gulf corn basis is steady this morning to stand 67 cents over March futures for immediate delivery.


Soybean futures are called 5 to 10 cents higher as China continues to buy old-crop U.S. soybeans.

  • Soybean futures began the overnight session mixed but firmed to finish 5 to 9 cents higher.
  • Continued strong demand is largely behind this morning's price strength, as the weekly export sales data shows China continues to aggressively buy old-crop U.S. soybeans.
  • USDA announced weekly sales of 701,500 MT for 2013-14 and sales of 525,300 MT for 2014-15.
  • Exports topped 1.563 MMT, with China the primary destination.
  • With China the lead buyer of old-crop soybeans, traders are reevaluating general trade ideas that the country will soon begin to cancel U.S. purchases as South American supplies become available.
  • Also this morning, USDA announced China purchased 60,000 MT of U.S. soybeans for 2013-14 and 405,500 MT for 2014-15.
  • China's Ministry of Commerce has nearly doubled its forecast for January soybean imports to 4.61 MMT based on the strong pace the first half of the month.
  • Gulf soybean basis is up 10 cents for immediate delivery to stand $1.25 over March futures to reflect ongoing strong demand.


Wheat is expected to be mostly 1 to 2 cents higher this morning on spillover from neighboring pits.

  • SRW and HRW wheat futures ended the overnight session mostly 1 to 2 cents higher, with HRS narrowly mixed.
  • Futures generally benefited overnight from spillover from corn, as well as sharp weakness on the U.S. dollar index.
  • However, this morning's Weekly Export Sales Report showed sales of 319,900 MT for 2013-14 and 82,000 MT for 2014-15, which came within expectations.
  • Wheat needs a constant dose of demand news to stabilize futures.
  • Meanwhile, India's government is expected to raise its authorization for wheat exports due to plentiful supplies after a record crop.
  • Strategie Grains has trimmed its forecast for the 2014 EU soft wheat crop by 300,000 MT to 137.7 MMT.
  • Traders are also keeping an eye on the drought situation in the Central and Southern Plains. Little change was made in the region last week according to the Drought Monitor.


Live cattle futures are called higher due to record cash cattle trade beginning.

  • Live cattle futures are vulnerable to profit-taking after posting new contract highs yesterday, but are called higher based on reports of cash cattle trade at record levels.
  • Light cash trade began in Kansas and Texas between $141 and $142, which is up $2 from last week.
  • February live cattle continue to trade at a discount to the cash market, which opens the door to followthrough buying this morning.
  • Choice beef values have surged $14.49 over the last week to a record $224.62 per cwt. yesterday. This has improved packer profit margins dramatically.
  • Feeder futures are called higher based on spillover from live cattle, but could see gains capped by strength in the corn market.


Lean hog futures are called steady to firmer on spillover from live cattle.

  • Lean hog futures are expected to benefit from spillover from live cattle as well as followthrough from yesterday's gains.
  • But with nearby futures trading at a premium to the cash index, upside potential could be limited.
  • Pork cutout values fell $1.19 yesterday, although movement was strong. Pork values have firmed 87 cents over the past week.
  • The cash hog market is mixed this morning amid variable demand. Some locations have lowered bids due to plentiful supplies while other are still in need of additional hogs for Saturday's kill.
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