Ahead of the Open (VIP) -- January 7, 2014

January 7, 2014 02:16 AM
 

Corn futures are called narrowly mixed this morning.

  • Corn futures rebounded from slight losses to finish the overnight session steady to fractionally higher through the December 2014 contract.
  • Aside from light short-covering as traders square positions ahead of Friday's USDA reports, the upside is limited as bullish news is lacking.
  • Concerns about extreme heat in areas of Argentina's grain belt are muted as relief rains are forecast over the coming days.
  • Gulf corn basis is steady to a penny lower for all delivery periods this morning.

 

Soybean futures are called 3 to 5 cents lower this morning.

  • Soybean futures ended the overnight session 4 to 6 cents lower. Old-crop futures pulled back from yesterday's gains while new-crop futures continued the recent slide.
  • Very hot temps are expected to continue across La Pampa and southern Buenos Aires today, with slightly milder temps across the key corn and soybean production areas in Argentina. But relief from the recent heat and dryness is expected over the coming days as rains are forecast. This weighed on soybeans overnight.
  • Additionally, growing conditions remain generally favorable across Brazil. That limits traders' willingness to buy and is a reason to sell futures.
  • But an announcement from USDA that China purchased 350,000 MT of U.S. soybeans for 2013-14 should help limit selling interest this morning.
  • Gulf soybean basis is steady to a penny higher for nearby delivery this morning.

 

Wheat futures are expected to open 1 to 3 cents lower this morning, though price action could be choppy.

  • Wheat futures are choppy with a downside bias overnight following a poor close Monday.
  • While temps are still bitterly cold across winter wheat areas today, more seasonal conditions are on the way. Therefore, winterkill concerns have eased.
  • Traders are also expecting USDA to report winter wheat seedings up slightly from year-ago on Friday, though the figure could well come in higher than the average pre-report guess.
  • Plentiful global supplies and concerns about demand for U.S. wheat remain background issues that are price-negative for wheat futures.
  • The U.S. dollar index is mildly firmer this morning, which could add to the mildly negative tone in wheat.

 

Live cattle futures are called steady to slightly higher.

  • Nearby live cattle futures closed high-range Monday, which is expected to lead to light followthrough buying this morning.
  • Tight market-ready supplies and inclement weather across the Plains and Midwest are fundamentally supportive for cattle futures.
  • The lead-month contract is also trading slightly below the top end of last week's cash cattle price range in the Southern Plains, which is mildly supportive.
  • But traders aren't likely to get too aggressive with long positions as futures are mildly overbought and cash cattle trade isn't expected until late-week.
  • Boxed beef prices were sharply higher Monday, with Choice up $1.21 and Select $2.28 higher. Movement was light at 148 loads, however, and there are questions about beef demand with both Choice and Select boxes above $200.
  • Feeder cattle futures are also expected to favor a mildly firmer tone this morning, though price action should be light amid expected limited price movement in live cattle and corn.

 

Lean hog futures are expected to open slightly lower this morning.

  • February lean hog futures are expected to see light pressure this morning as the lead-month contract is trading at a stiff premium to the cash market. While the market should put in a seasonal low soon, if it hasn't already, traders already have a seasonal rebound built into the market.
  • Cash hog bids are expected to be steady to firmer across the Midwest, though packer demand is varied. Some plants are still running reduced hours due to inclement weather, while others are struggling to secure slaughter supplies.
  • Packers are working with profitable margins, but they have tightened amid declining pork product prices.
  • The pork cutout value was 28 cents lower Monday and packers moved only 265.07 loads of product on the day.
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