Ahead of the Open (VIP) -- January 22, 2014

January 22, 2014 02:20 AM

Corn futures are called 1 to 2 cents higher amid short-covering.

  • Corn futures ended the overnight session mostly around a penny higher as funds worked to cover some of their large net short position.
  • With little fresh news for the market to digest, traders are focused on evening positions.
  • Rains across key corn areas of Argentina this week are limiting buying. Another day of hot temps is being seen today, but temps are expected to moderate the rest of the week and then warm up again on Sunday.
  • May corn futures need another dime rally to move above the January high and return to the upper portion of the extended consolidation range.
  • Signaling prices are a value, USDA announced a 105,664-MT corn sale to Japan for 2014-15.
  • Gulf corn basis is steady this morning to stand 72 cents over March futures to suggest supplies and demand are in balance.


Soybean futures are called 2 to 3 cents lower on light followthrough from yesterday's losses.

  • Soybean futures saw two-sided trade in overnight trade, but softened in late trade and ended the session 2 to 3 cents lower in the nearby contracts and mostly around a penny lower in deferreds.
  • Improved weather across Argentina remains on traders' minds, as this week's rains have helped stabilize the crops after an extended hot and dry period.
  • Even though China continues to actively buy U.S. old-crop soybeans, traders expect the country to soon begin canceling purchases in favor of Brazilian supplies.
  • Meanwhile, China's state-run information center says the country will likely import 5.35 MMT of soybeans this month, which is higher than the Ministry of Commerce's forecast.
  • Gulf soybean basis is steady this morning to signal there's no fresh demand news surfacing. Basis is a strong $1.20 over March futures for immediate delivery.


SRW wheat is called steady to 1 cent lower, with HRW and HRS expected to open 1 to 2 cents higher.

  • SRW wheat spent much of the overnight session in positive territory but drifted lower in late trade to end mostly around a penny lower. HRW and HRS futures trimmed gains to end the overnight session fractionally to 3 cents higher.
  • Wheat remains in a follower's role and needs a dose of fresh export news to encourage more than short-covering as funds continue to hold a sizeable net short position.
  • Wheat is due for a corrective bounce given the oversold condition of the market according to the Relative Strength Index.
  • Gulf HRW basis is steady this morning to stand $1.60 over March futures for immediate delivery, with SRW basis up a penny for immediate delivery to stand 90 cents over March futures.


Live cattle futures are called higher on surging beef prices.

  • Live cattle futures are expected to open higher based on strength in the beef market.
  • Choice beef values rose $3.16 yesterday to a record $239.72 per cwt. and Select rose $2.70 to $237.15 per hundredweight. The narrow spread is a reflection of tight supplies.
  • Meanwhile, live cattle are severely overbought according to the 9-day Relative Strength Index, which signals a time or price correction is due.
  • This week's showlist is up slightly from last week, but most expect the cash market to be higher again this week as packer profit margins are positive.
  • A firmer tone in the corn market could result in choppy price action in feeder futures this morning.


Lean hog futures are called mixed amid position squaring.

  • Lean hog futures are expected to see a choppy start as traders even positions.
  • Pork cutout values slipped 83 cents yesterday on moderate movement of 353.56 loads.
  • With nearby lean hog futures trading at a steep premium to the cash index, buying will be limited to spillover from live cattle.
  • The cash hog market is called mixed amid varied demand. Some packers are in need of additional supplies due to weather disruptions while others say they will have no difficulty securing this week's needs.
  • Traders look for this afternoon's Cold Storage Report to show frozen pork stocks at the end of December up slightly from the previous month, but down from year-ago levels.
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