Bull Spreading Dominating Corn and Soybeans

March 5, 2013 12:36 AM
 

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Overnight highlights. Following are opening grain and livestock calls at 6:40 a.m. CT:

Corn: Marginally to 3 cents higher. Bull spreading continues to dominate price action in the corn market, with nearbys leading gains amid concerns about tight supplies. Weakness in the dollar is also supportive of commodity buying this morning. May corn futures have moved to a premium to May Chicago wheat due to tight available feed supplies. Meanwhile, improved moisture across the western Corn Belt is limiting buying in new-crop futures.

Soybeans: 4 to 7 cents higher. Nearby futures are leading gains amid bull spreading as traders recognize old-crop supplies could further tighten as the export window remains open a bit longer than usual due to Brazilian shipping delays. But improved soil moisture due to another winter storm moving across the Upper Midwest is limiting buying in new-crop futures. Traders are also beginning to more actively even positions ahead of Friday's Supply & Demand Report, in which they expect USDA to slightly trim carryover due to strong demand.

Wheat: Marginally higher. Wheat is seeing a light boost from short-covering and spillover from corn. As mentioned in corn, nearby Chicago wheat futures are trading at a discount to corn futures, which is an unusual situation. History suggests this won't be the case for long, but wheat is clearly in a follower's role. Upside potential is being limited to short-covering due to recent moisture improvements across the Plains and a lack of fresh demand news.

Live cattle: Steady to higher. The boxed beef market got off to a very strong start to strongly suggest a near-term low has been posted. Choice values rose $2.86 to approach $191-per-cwt. and Select rose $2.27 to rise above $188-per-cwt. Movement was decent at 112 loads, but traders will want to see movement improvement or fear beef prices have risen too far too fast. This week's showlist is smaller than last week and a slowdown in the rate of gain due to weather-related stress should force packers to the cash market sooner rather than later in the week.

Lean hogs: Steady to firmer. Futures are expected to see a firmer start due to the possibility of short-covering given the severely oversold condition and a firmer start to the week in the pork cutout market. Pork values firmed 62 cents yesterday, but movement was slow at just 31.08 loads changing hands. Upside potential will be limited by lackluster demand by packers. The cash market is expected to be steady to weaker, which will limit buying to short-covering.


 

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