Ahead of the Open (VIP) -- January 27, 2014

January 27, 2014 02:21 AM

Corn futures are called mixed in lackluster trade.

  • Corn futures didn't stray too far from unchanged in the overnight session and ended it narrowly mixed.
  • There's little fresh news for the market to digest this morning, which is expected to limit price action this morning.
  • Rains last week eased stress on developing and pollinating corn in Argentina, but temps are forecast to climb again this week. But with some scattered showers in the forecast, traders' concern about the crop is limited -- for now.
  • Also supportive for nearby futures this morning is USDA's announcement of a 119,888 MT corn sale to an unknown destination for 2013-14.
  • Gulf corn basis is steady this morning to reflect supplies and demand are in balance.


Soybean futures are called mixed amid bull spreading.

  • Nearby soybean futures ended the overnight session marginally to 2 cents higher, with deferred futures marginally to around 3 cents lower amid bull spreading.
  • Nearby futures are being supported by continued strong demand for U.S. soybeans, as weekly export sales data have shown China is still in the market for old-crop soybeans.
  • In fact, China's Ministry of Commerce has raised its January soybean import forecast (again) to 5.27 MMT from 4.61 MMT previously. The ministry expects imports to slip to 3.42 MMT in February.
  • Meanwhile, Brazil's shipping agent SA Commodities says the country is slated to ship a record 2.5 MMT of soybeans in February, which raises concerns about U.S. sales cancellations.
  • Also this morning, USDA announced an 183,000 MT soybean sale to an unknown destination for 2014-15.
  • Gulf soybean basis is steady this morning, which signals no major weekend export business took place.


Wheat futures are called 1 to 3 cents higher on short-covering.

  • SRW and HRW wheat ended the overnight session mostly 2 to 3 cents higher, with HRS 1 to 3 cents higher.
  • Futures were lifted by short-covering on a continuation of some basing action that took place last week.
  • Frigid temps cross the Plains and Midwest are also raising concern about winterkill. But price action from this is limited as more won't be known until the crop breaks dormancy this spring.
  • Outside markets are mixed this morning amid some risk aversion ahead of this week's FOMC meeting.
  • Gulf SRW and HRW wheat basis is steady this morning and little weekend business was reported.


Live cattle futures are called weaker in reaction to the Cattle on Feed (COF) Report.

  • Live cattle futures are expected to be pressured by Friday's COF Report.
  • The report wasn't as friendly as expected, as On Feed and Placements came in above expectations and Marketings last month were lighter than expected.
  • The Placements category -- at 101% of year-ago -- signals an increasing number of calves are crossing the border into the U.S. from our northern and southern neighbors, which takes some of the burden off the small U.S. calf crop.
  • Adding to thoughts of a high being in the works is pressure on the beef market. Choice beef values slipped $1.29 on Friday and Select declined 68 cents. But a narrow spread of just $1.01 premium Choice reflects the overall tightness of supplies.
  • Winter weather across the Plains and Midwest is maintaining stress on feedlots, which could also help limit pressure to profit-taking.
  • January feeder futures are trading in line with the cash index ahead of Thursday's expiration.


Lean hog futures are called mixed, with pressure limited by winter weather.

  • Lean hog futures are expected to see a choppy tone this morning as traders weigh expected pressure from live cattle against winter weather that will slow marketings to start the week.
  • Winter weather conditions across the Corn Belt to start the week has some packers to reduce hours or close today.
  • Therefore, demand for cash hogs will be limited today, which is expected to result in mixed cash trade. But as weather improves, traders look for packer demand to rise, which could support cash trade the remainder of the week.
  • Traders will be keeping a close eye on the product market for cash clues, as well. On Friday, pork values improved 17 cents, but movement slowed to just 276.7 loads.
  • February lean hog futures hold around a $5 premium to the cash index, which is also a limiting factor for nearby futures to start the week.
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