Ahead of the Open (VIP) -- January 3, 2014

January 3, 2014 02:16 AM

Corn futures are called marginally to 1 cent higher amid short-covering.

  • Grain markets ended the overnight session marginally higher in most contracts amid light short-covering.
  • Slight weakness in the dollar index was supportive, as were ideas yesterday's losses were overdone.
  • But the weekly export sales data is not supportive for the market this morning, as it showed sales of just 154,500 MT for 2013-14 and sales of 20,300 MT for 2014-15.
  • However, the sales data is for the week ended Dec. 26, which is historically a slower time for the global markets.
  • Gulf corn basis is steady this morning, with immediate delivery standing 75 cents over March futures.


Soybean futures are called 2 to 5 cents higher on ideas yesterday's losses were overdone.

  • Soybean futures ended the overnight session mostly 4 to 5 cents higher following yesterday's sharp losses.
  • Futures did near-term technical chart damage yesterday, which is spurring some light short-covering this morning.
  • This morning's weekly export sales data is supportive for the market, as it showed a pick up in business the week ended Dec. 26.
  • Weekly sales of 943,400 MT for 2013-14 and 237,500 MT for 2014-15 topped expectations, with China the lead buyer. Exports topped 1.5 MMT.
  • Gulf soybean basis is 1 cent weaker for immediate delivery to stand 99 cents over January futures, which signals a slight softening in demand.


Wheat futures are expected to favor a weaker tone in mixed trade.

  • All wheat flavors favored a firmer tone overnight, but the market softened at the conclusion of the overnight session, ending mostly marginally to 1 cent lower.
  • Mixed action overnight could result in a choppy start to daytime trade.
  • This morning's weekly export sales report isn't supportive for the market this morning, as it reflects lackluster demand for U.S. supplies. Exports of 248,500 MT for 2013-14 and 8,000 MT for 2014-15 were below expectations.
  • Exports of just 281,700 MT were down 40% from last week.
  • Traders are also waiting on results from Egypt's wheat tender issued for an unspecified amount. But Egypt has only purchased EU or Black Sea-region wheat since July.
  • Gulf SRW wheat basis is steady this morning for immediate delivery to stand $1 over March futures.


Live cattle futures are called higher in reaction to record cash trade.

  • Live cattle futures are expected to build on yesterday's strong performance by opening slightly to moderately higher.
  • Some selling, however, is possible in deferred contracts amid spreading.
  • Traders are still digesting news of record cash cattle trade occurring between $135 and $137 in Texas and Kansas, which is up $3 to $4 from last week.
  • Buying could be limited, however, as traders fear a near-term high is being struck after Choice beef values slipped 10 cents yesterday and Select declined 36 cents on slowed movement of 98 loads.
  • Slight strength in the corn market will limit buying in feeder futures, as nearby contracts are trading in line with the cash index.


Lean hog futures are called mixed amid spreading and position squaring.

  • Lean hog futures are vulnerable to some profit-taking following yesterday's moderate to sharp gains.
  • February lean hog futures are trading at more than a $7 premium to the cash index, which further increases the risk of profit-taking heading into the weekend.
  • But ideas supplies won't be as bulging as previously feared raises ideas a near-term low is in place in futures.
  • Meanwhile, pork cutout values slipped 16 cents yesterday on moderate movement of 351.39 loads.
  • The cash hog market is expected to be mixed amid varied demand. Packers have had no difficulty securing this week's needs despite frigid temps.
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