Ahead of the Open (VIP) -- January 29, 2014

January 29, 2014 02:19 AM

Corn futures are called 1 to 2 cents lower in lackluster trade.

  • Corn futures ended the overnight session mostly 1 to 2 cents lower, which was near session lows.
  • Following a string of consecutive price gains, corn saw light profit-taking overnight, although a lack of fresh news limited pressure.
  • Much of the pressure stems from strength in the U.S. dollar index as investors prepare for this afternoon's statement from the Federal Reserve as it concludes its FOMC meeting.
  • Gulf corn basis is mostly 2 to 3 cents higher through spring delivery this morning to reflect improved demand.


Soybean futures are called 2 to 5 cents lower on expectations for reduced demand for U.S. beans.

  • Soybean futures ended the overnight session 2 to 6 cents lower on strength in the U.S. dollar index and expectations that Brazilian supplies will soon flood the market.
  • Price action was limited overnight, however, as there's little "fresh" news to digest.
  • Traders, however, remain on watch for signs of China canceling some of its large U.S. soybean bookings due to the availability of new-crop soybeans in Brazil. But so far, only light cancellations have been noted in weekly sales reports.
  • Also, concerns about the spread of H7N9 bird flu in China remains on traders' minds, as this could reduce feed demand.
  • Gulf soybean basis is steady this morning. Immediate delivery stands $1.05 over March futures.


SRW and HRW futures are called 1 to 3 cents lower, with HRS called mixed.

  • SRW and HRW wheat futures were pressured by spillover from neighboring pits and strength in the dollar index, while HRS futures were mixed amid bear spreading.
  • Winter wheat markets have been supported at times this week by concerns about multiple winterkill threats this winter and ongoing drought in the Southern Plains.
  • But traders are reminded the winter wheat crop went into dormancy in better shape than a year ago, which raises hopes the crop will fare well this spring.
  • But strength in the dollar index this morning raises concerns about the competitiveness of U.S. wheat on the global market.
  • Gulf HRW basis is steady this morning, but Gulf SRW basis is 3 to 5 cents higher for near-term delivery, reflecting a pickup in demand.


Live cattle futures are called lower on a softening tone in the beef market.

  • Live cattle futures are expected to see followthrough from yesterday's losses, as well pressure from weaker beef prices.
  • Choice beef values slipped $2.24 and Select declined $3.39 yesterday amid improved, but still light movement of 103 loads.
  • Very light cash cattle trade began in Texas Monday at $1 below the previous week, which raises expectations for similar declines when active trade starts in the Southern Plains.
  • So far, packers have not actively bid for cattle and feedlots have reduced bargaining power due to a slight increase in showlists this week.
  • But traders are also beginning to more actively even positions ahead of Friday's Cattle Inventory Report, which will provide the market a long-term outlook for the industry.
  • A slightly weaker tone in the corn market this morning should limit price pressure on feeder futures.


Lean hog futures are called mixed, with pressure limited by improved demand for hogs.

  • Lean hog futures are expected to see a mixed start amid spreading, but pressure on nearbys should be limited by expected improvement in the cash market.
  • Traders have cash improvement priced in, as nearby futures hold a sizable premium to the cash index, but cash bids are expected to be steady to $1 higher today as packers work to secure this week's needs.
  • Pork cutout values improved 48 cents yesterday on solid movement of 378.57 loads.
  • As a result, packers' profit margins are well in the black and they are short bought on this week's needs due to the weekend storm and subsequent cold temps that slowed hog marketings to start the week.
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