Buying Overnight Limited to Short-Covering

December 16, 2011 12:24 AM

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Overnight highlights. Following are highlights of overnight trade and opening calls:

Corn: Mixed. Futures are favoring a weaker tone in overnight trade despite weakness in the U.S. dollar index. Talk is circulating that China's grain reserves have been replenished and they won't need to buy corn on the global market until mid-2012. Price action was lackluster overnight as the holiday doldrums are setting in -- volume is lightening as many traders have evened positions and headed for the exits the remainder of the year.

Soybeans: 3 to 4 cents higher. Futures were supported overnight by positive outside markets, as the U.S. dollar index is weaker. Traders are awaiting this morning's inflation data, expected to show a slight uptick from last month. The data is expected to support the U.S. stock market, which would improve trader sentiment. January beans remained above the key $11.00 level overnight and needs to at least build a base of support around this level to signal it as strong support.

Wheat: 1 to 2 cents lower. Wheat saw lackluster trade overnight, but was weaker as plentiful global supplies are weighing on prices. March Chicago wheat has posted a series of fresh contract lows this week to further weaken the technical outlook of the market. Bears clearly have the near-term technical advantage. Downside risk to wrap up the week should be limited as long as the dollar remains weaker.

Live cattle Mixed. Futures are expected to be mixed as traders wait on cash cattle trade. Talk of $117 trade in Texas yesterday circulated the market, although no active trade has been reported. December live cattle was supported by strong beef movement yesterday, as retailers are preparing for a round of post-holiday features. Focus in the market however, will be on evening positions ahead of this afternoon's Cattle on Feed Report, expected to show On Feed at 103.7%, Placements at 99.6% and Marketings at 98.5% of year-ago levels.

Lean Hogs: Mixed. Futures are expected to be choppy today, with a downside bias given plentiful supplies. While packers have seen profit margins widen this week, they have little other reason to raise bids as they are having no trouble securing needed supplies. The cash market is expected to be steady to weaker today as packers say hogs are secured well into next week.


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