Ahead of the Open (VIP) -- January 17, 2014

January 17, 2014 02:23 AM

Corn futures are called 1 to 2 cents lower on a lack of fresh positive news.

  • Corn futures ended the overnight session mostly around 2 cents lower, which was near session lows.
  • Corn is working on weekly lows after last Friday's key bullish reversal. The lack of followthrough buying this week signals a near-term high may be in place.
  • The ongoing Chinese corn trade situation continues to weigh on traders' minds, as it's becoming increasingly clear to the market it will take "time" for China to clear the way for the unapproved GMO corn variety to enter its market.
  • Adding to the negative tone this morning is strength in the U.S. dollar index.
  • USDA announced a 204,000-MT corn sale to Egypt for 2013-14 this morning. Given this country is a value buyer, this signals U.S. corn is "cheap."
  • Gulf corn basis is 1 to 5 cents higher this morning to signal improved export demand. Basis for immediate delivery is 72 cents over March futures.


Nearby soybean futures are called 3 to 10 cents lower, with deferreds mixed amid spreading.

  • Soybean futures ended the overnight session mixed, with nearbys 3 to 9 cents lower and deferreds favoring a firmer tone in mixed trade.
  • Nearby soybean futures are seeing some profit-taking, with traders turning their focus to concerns about the rising number of bird flu classes in China. The country's health officials continue to say the risk of a major outbreak in humans is low.
  • Meanwhile, the head of China's State Grain Administration says rising imports are negatively impacting the domestic market. This also makes traders cautious even though China continues its strong pace of U.S. soybean buys.
  • Gulf soybean basis is 5 cents weaker for immediate delivery to stand $1.20 over March futures, with basis for February delivery steady.


Wheat is called 1 to 3 cents lower on strength in the dollar.

  • All wheat flavors ended the overnight session mostly 1 to 3 cents lower on spillover from neighboring pits and on strength in the U.S. dollar index.
  • Wheat needs fresh demand news to help solidify a low. Yesterday's weekly export sales data showed sales within expectations, but the tally was not impressive.
  • Otherwise, there's little fresh news for the wheat market to digest this morning.
  • Gulf HRW wheat basis is down 5 cents this morning for immediate delivery to stand $1.60 over March futures for immediate delivery. Gulf SRW basis is steady this morning.


Live cattle futures are called steady to higher on strength from the record rise in the beef market.

  • Live cattle futures set back into yesterday's close yesterday, which raises the risk of followthrough profit-taking this morning.
  • But futures should benefit from this week's rocket ride higher in the boxed beef market. Choice values rose another $4.17 to a record $228.79 yesterday and Select rose $3.60 to $225.51.
  • Also impressive is that packers moved 120 loads of cuts and trim yesterday, which signals demand is solid at record prices.
  • This week's cash cattle trade is not yet complete, with light trade reported so far in the Southern Plains mostly $142. With packers cutting in the black, some feedlots are asking $144 today.
  • Slight weakness in the corn market and tight calf supplies are expected to provide a boost to feeder futures this morning.


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

  • Lean hog futures are expected to benefit from followthrough buying, spillover from live cattle and strength in the pork market.
  • Pork values improved $1.39 yesterday to strengthen packer profit margins and movement was decent at 357.9 loads.
  • The pork market is seeing a lift from surging beef values, as pork is still viewed as a value in the meatcase.
  • The cash hog market is expected to be mostly steady today, but some firmer bids are possible as demand for cash hogs is strong due to profitable margins.
  • Upside potential in nearby futures, however, will be limited as those contracts hold a sharp premium to the cash index.
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