Dollar Strengthens

12:00AM Sep 09, 2008
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Julianne Johnston Pro Farmer Senior Markets Editor

From Pro Farmer

Updated as of 7:00 a.m. CT

Dollar started week very strong... The week began with some major news events to shape trading, and so far it appears the government's takeover of mortgage guarantors Fannie Mae and Freddie Mac is winning out in terms of market impact. Traders were more interested in what the takeover means to the economy than watching Hurricane Ike -- at least for now. Hurricane Ike is expected to miss the bulk of Gulf oil production facilities, but of course traders will continue to watch the path of the storm.

Ike could still prove to be a damaging storm and extent of that impact will depend be whether it strengthens further once back over water and the exact path it takes to make landfall in the United States. But yesterday, traders were more interested in the trend of the dollar. The dollar was stronger again in overnight trade, while crude oil weakened. This is expected to result in pressure on the grain market on the open this morning.

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Opening calls. These calls originate more than three hours before the open -- use caution, things change::

Corn: 8 to 10 cents lower. Futures were sharply lower overnight amid dollar strength. Futures started the week narrowly mixed, keeping an eye on outside markets. Early gains were tied to strength in the crude oil market, but traders quickly turned their attention to the dollar, which was sharply higher Monday on friendly economic news.

Soybeans: 23 to 27 cents lower. Futures were lower overnight as oil prices dipped as the projected track of Hurricane Ike is south of the oil production facilities in the Gulf of Mexico. Futures favored a firmer tone to start the week, closing 14 1/2 to 16 1/4 cents higher. Soybeans posted a near-session-high close, but remained within the boundaries of Friday's trading range.

Wheat: 13 to 15 cents lower. Futures were lower overnight on spillover from neighboring pits. Futures started the week under pressure, pressured by strength in the dollar. Chicago wheat closed 7 to 9 1/4 cents lower, with Kansas City 9 1/4 to 10 3/4 cents lower and Minneapolis mostly 6 to 9 cents lower. Futures were called to open firmer amid short-covering, but opened mostly weaker due to strength in the dollar from friendly economic news.

Cash cattle expectations: Watching beef trade. Cash sources say early indications are this week's showlist is about steady with last week, which is still considered tight. Therefore, if the beef market shows sustained strength through the week, expectations will rise for $100 cash cattle trade.

Futures call: Mixed. Futures are called mixed as they wait on cash direction. To start the week, futures closed steady to firmer amid short-covering. Nearby live cattle posted a low-range close, but deferreds posted a high-range close amid short-covering.

Cash hog expectations: Steady to weaker. The cash hog market is expected to start the day mostly steady, but weaker undertones could develop amid plentiful supplies. Key for building a base of support this week will be for pork cutout values to stabilize.

Futures call: Mixed. Futures are called mixed on the combination of spillover pressure from yesterday's losses vs. short-covering. Hogs closed slightly to moderately lower yesterday, extending losses ahead of the closing bell to post a low-range close.