Chinese Banking Decision Bolsters Soybeans

June 7, 2012 01:48 AM

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Overnight highlights. Following are highlights of overnight trade (as of 6:50 a.m. CT) and opening livestock calls:

Corn: 5 to 7 cents higher. Futures are enjoying followthrough from yesterday's gains, as well as support from dollar weakness. A high-range close today would have traders talking about a near-term low being posted, as July corn is currently trading more than 40 cents off last week's low.

Soybeans: 19 to 25 cents higher. Futures are seeing a lift from dollar weakness, as well as technical buying as today could be the start of the fourth day of price gains to help signal a near-term low has been posted. Also supportive this morning is news that the People's Bank of China announced it is cutting its key lending rate by a quarter point to bolster its economy. The China National Grain and Oils Information Center said it expects soybean imports in June around 6 million metric tons (MMT), which would be steady with the previous month.

Wheat: Mixed. Futures are favoring a firmer tone in mixed trade, with pressure limited by gains in neighboring pits and dollar weakness. Upside potential in the wheat pit is being limited by harvest progress in the Southern U.S. Plains. July Chicago wheat futures remain in a consolidation range, which signals the market is building momentum from the next trading move. Bears still hold the near-term technical advantage.

Live cattle: Steady to firmer. Futures are expected to see a lift from positive outside markets, with traders also working to narrow the discount nearbys hold to last week's $121 cash cattle trade. Beef movement has remained strong this week, but beef prices have moderated. Choice values rose 73 cents yesterday and Select declined 38 cents. This week's showlist is up from last week, but due to strong beef movement, general expectations are for at least steady cash trade with last week.

Lean Hogs: Steady to firmer. Futures are expected to see a lift from yesterday's $1.75 increase in pork cutout values, which has traders finally believing a seasonal low has been posted. Packers' profit margins, however, remain in the red as the rise in cash bids has outpaced gains in the pork market. This could trim demand for cash hogs to close out the week.


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