Ahead of the Open (VIP) -- January 8, 2014

January 8, 2014 02:16 AM

Corn futures are called steady to marginally lower in lackluster trade.

  • Corn futures ended the overnight session narrowly mixed, but softened into the close, leading to expectations for a mostly softer open this morning.
  • There's little fresh news for the market to digest this morning, which has traders focused on position squaring.
  • News that Chinese quarantine authorities have sped up inspections of U.S. DDGs has led some buyers to resume shipments of U.S. DDGs. But according to the report, the issue with unapproved GMO material in some corn and DDG shipments is not expected to be cleared up soon.


Soybean futures are called 4 to 7 cents lower on reports of good yields in Brazil.

  • Soybean futures ended the overnight session mostly 4 to 7 cents lower, with new-crop futures doing more technical chart damage.
  • Nearby soybean futures were unable to benefit from followthrough from yesterday's gains as traders returned their focus to prospects for a record South American soybean crop.
  • Traders are reacting to report of very good yields in Brazil, as harvest of the early planted crop is picking up.
  • Meanwhile, Argentina is forecast to see some relief from a return to hot and dry conditions later this week. However, the forecast calls for a return to drought-like conditions next week.
  • Also this morning USDA announced China purchased 115,000 MT of U.S. soybeans for 2013-14.
  • November soybean futures hit sell stops on the move through $11.25 yesterday and are seeing followthrough selling this morning.


Wheat is called 1 to 2 cents higher on short-covering.

  • All wheat flavors enjoyed light short-covering in overnight trade following yesterday's mixed to lower close.
  • But sharp strength in the U.S. dollar index will limit buying and could lead to pressure.
  • Otherwise, there's little fresh news for the wheat market to digest this morning. Wheat needs constant demand news to signal a near-term low has been posted.
  • There is some concern about damage to the winter wheat crop due to the recent frigid spell across the Plains, although traders recall the crop went into dormancy in solid shape.
  • Traders are also turning their focus to evening positions ahead of Friday's Winter Wheat Seedings Report, which is expected to show acreage up from year-ago levels.


Live cattle futures are called mixed as traders wait on direction from the cash market.

  • Following yesterday's slight losses, live cattle futures are expected to see a mixed start as traders wait on direction from the cash market.
  • This week's showlist is down slightly in the Southern Plains, but up from last week in Colorado and Nebraska.
  • Strength in the boxed beef market has traders looking for at least steady cash cattle trade with last week's record prices.
  • Choice beef values surged $1.77 yesterday and Select rose $2.18, but movement slowed to just 130 loads.
  • Traders believe resistance to higher beef prices signals a near-term high has been struck or is near.
  • Light weakness in corn futures this morning is supportive for feeder futures, as is the discount nearby contracts hold to the cash index.


Lean hog futures are called mixed on position squaring.

  • Lean hog futures are expected to see a choppy start following yesterday's losses as traders reevaluate positions.
  • Traders are pointing to chart signals the market has posted a near-term high, although some short-covering is expected this morning.
  • But traders are also noting yesterday's strength in the pork market. Pork cutout values firmed $1.93 on strong movement of 445.15 loads.
  • But with extremely frigid temps across the Corn Belt beginning to let up, traders expect hog movement to increase, which is expected to weigh on the cash market.
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