Market Snapshot, 10:00 a.m. CT -- (VIP) -- January 31, 2014

January 31, 2014 04:05 AM

Corn futures are 1 to 2 cents lower on light profit-taking ahead of month end.

  • Corn futures continue to trade slightly lower in light profit taking as traders even positions ahead of week's end and month's end.
  • Markets in general are in a risk-aversion mood on recurring fears of currency contagion triggered by emerging markets. The result is a stronger U.S. dollar index, which is negative to corn exports.
  • March futures have retreated slightly from resistance at $4.35, which is also the top of the recent consolidation range.
  • Traders are seeing signs corn is viewed as a value buy, but traders are reluctant to lift futures above resistance levels for fear the higher prices will crimp demand rebuilding.
  • News Spain purchased another 110,000 MT of U.S. corn for a total of 220,000 MT announced this week for 2013-14 is viewed as supportive as it adds to the "corn is a value-buy" theme, but the risk-aversion mood is carrying heavier weight this morning.
  • Gulf corn basis is steady to 3 cents higher for nearby delivery, with immediate delivery standing 80 cents over March futures. This suggests more demand news lies ahead.

Soybean futures are 1 to 2 cents lower in the front three contract months and 1 to 6 cents lower in the deferreds.

  • Nearby soybean futures have seen periods of price strength amid bull spreading, but have again softened.
  • The main market theme is end-of-week and end-of-month position squaring and the stronger U.S. dollar index and news of currency jitters.
  • Traders continue to fret over potential Chinese cancellations of previously booked U.S. soybeans. Recent news that ships are lined up and being loaded out in Brazil without major logistical problems increases that risk. However, no major cancellations have been reported yet, other than the cancellation of a small shipment to an unknown destination announced by USDA yesterday.
  • Some pressure on deferred futures is coming on news Cargill will idle a North Carolina soy crushing plant later this spring due to declining domestic demand. That also raises questions about possible imports from South America.
  • Gulf soybean basis is steady this morning.

Wheat futures are 1 to 3 cents higher, although price action has been choppy.

  • Wheat futures opened choppy but have firmed to trade a few pennies higher.
  • The dominant feature is end-of-week and end-of-month position squaring and short-covering as traders view wheat futures as heavily oversold.
  • The strong U.S. dollar index is also limiting buying interest as traders adopt a "risk-off" attitude in the commodity world.
  • Yesterday's stronger-than-expected weekly export sales data is providing some support as traders look for signs U.S. wheat prices have reached "value-buy" status, but gains in the U.S. dollar index can quickly change that situation..
  • Gulf SRW and HRW wheat basis is steady this morning to signal supplies and demand are in balance.

Live cattle futures are mixed ahead of today's Cattle Inventory Report.

  • Cattle futures opened slightly weaker, but have turned mixed as traders wait on cash trade to begin, react to lower wholesale beef prices and even positions ahead of this afternoon's Cattle Inventory Report as well as month-end.
  • Cash trade has been very light so far, but what has been reported has occurred at lower prices than a week earlier. But feedlots say cash trade so far this week has been too light to be a true market test and they are asking at least steady with last week's record prices.
  • Declining wholesale beef prices are weighing on the market. Thursday afternoon saw Choice beef fall $1.06 while Select slipped 64 cents. Movement improved but was still light at 117 loads.
  • Traders are looking ahead to this afternoon's Cattle Inventory Report which they expect will show all cattle and calves down 1.4%, the calf crop down 2.1% and the number of heifers kept for breeding up 3.1%. Click here for full pre-report expectations.
  • Feeder cattle futures are slightly higher on weakness in corn futures and end-of-month position squaring.

Lean hog futures are slightly to moderately firmer.

  • Lean hog futures are being supported by strength in the wholesale pork market.
  • Wholesale pork cutout rose $1.18 yesterday. Packers, which are already cutting in the black, have boosted their demand for cash hogs as a result.
  • However, pork movement was light at 253.12 loads, which raises concern that prices are being met with resistance by consumers.
  • February futures are still trading at a $4 premium to the cash index. That prompted February futures to trim early gains and fill the gap left on today's opening. However, the April and later contracts have left this morning's opening gap open, which is bullish as it comes at the end of the week and the end of the month.
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