Ahead of the Open (VIP) -- January 9, 2014

January 9, 2014 02:22 AM

Corn futures are called 2 to 3 cents lower on disappointing export sales.

  • Corn futures ended the overnight session mostly around 2 cents lower, which was near session lows.
  • Futures slipped into the close on disappointing weekly export sales. USDA announced corn sales of 155,300 MT for 2013-14, which came in below expectations.
  • Conab has raised its peg of the Brazilian corn crop to 78.97 MMT, up 190,000 MT from last month.
  • Traders' focus is also on evening positions ahead of tomorrow's USDA reports. Traders look for USDA to raise the size of the 2013 crop and for 2013-14 carryover to rise to around 1.84 billion bushels.
  • Tomorrow's Grain Stocks Report could be the market-mover for the day, however, as traders expect the report to reflect near-record quarterly corn usage.
  • Gulf corn basis is steady for immediate delivery but has softened 1 cent for March delivery.


Soybean futures are called 3 to 5 cents higher on strength in the cash market.

  • Soybean futures ended the overnight session mostly 3 to 4 cents higher.
  • Improvement in country and Gulf basis levels helped support futures overnight. Gulf soybean basis is up 6 cents this morning for immediate delivery to reflect a surge in demand. Basis for immediate delivery is now $1 over January futures.
  • But this morning's weekly export sales of only 155,500 MT was a marketing-year low and came in below expectations. Meanwhile, exports were strong at more than 1.675 MMT.
  • Also this morning, USDA announced an 110,000-MT soybean sale for 2014-15 to China.
  • Conab has raised its estimate of the Brazilian bean crop to a record 90.33 MMT -- up 300,000 MT from last month. Brazil's ag minister says the crop could exceed 95 MMT.
  • Traders are also putting their finishing touches on position squaring ahead of tomorrow's USDA reports. Traders look for USDA to raise the size of the 2013 crop slightly from last month and for carryover to be up nearly 1 million bu. from last month's 150-million-bu. peg.


SRW wheat is called mixed, with HRW and HRS called 1 to 3 cents higher.

  • SRW wheat ended the overnight session narrowly mixed, with HRW up mostly 1 to 2 cents and HRS up mostly 2 to 4 cents on short-covering.
  • Buying is being limited to short-covering, as the market needs a constant flow of demand to stabilize prices.
  • This morning's weekly export sales data met expectations but failed to impress. Sales of 110,800 MT for 2013-14 were a marketing year low. Sales of 184,100 MT for 2014-15 were reported.
  • Wheat traders have tomorrow's trend-setting reports on their minds, as USDA will release its peg for 2014 winter wheat acreage.
  • Traders look for all winter wheat acreage around 43.7 million, up from 43.1 million acres last year.
  • Meanwhile, traders look for USDA to raise its 2013-14 U.S. carryover peg by around 16 million bu. to 558.8 million bushels.
  • SRW wheat basis is steady for immediate delivery but has softened by 4 cents for March delivery.


Live cattle futures are called steady to firmer on followthrough buying.

  • Live and feeder cattle futures are expected to enjoy followthrough after yesterday's gains.
  • Traders are cautiously optimistic about steady to firmer cash cattle trade with last week's record $137 trade due to strength in the beef market.
  • February live cattle are trading at a slight discount to last week's cash market.
  • Choice beef values surged another $2.82 yesterday (to $210.13 per cwt.) and Select rose $3.51 (to $207.07 per cwt.) on strong movement of 192 loads.
  • The Choice-Select price spread has narrowed to $3.06 premium Choice, which reflects a tight supply situation.
  • January feeder futures ended yesterday at around a $2.50 discount to the cash index, which opens additional near-term upside potential for the contract.


Lean hog futures are called steady to weaker on weakness in the pork market.

  • Lean hog futures are called lower due to choppy action in the pork market this week, with values down $1.38 yesterday.
  • But pork movement has surged this week, with 573.70 loads changing hands yesterday, signaling the potential for a seasonal low.
  • Improved weather across the western and central Corn Belt is expected to result in increased hog marketings, although transportation disruptions remain in the eastern Belt.
  • Packers have seen profit margins tighten this week, which is reducing demand for cash supplies.
  • February lean hog futures ended yesterday at around a $5 premium to the cash index, which increases the risk of selling in nearby futures.
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