Corn and Soybean Futures Enjoy Short-Covering

September 25, 2012 01:33 AM

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Overnight highlights. Following are highlights of overnight trade (as of 6:34 a.m. CT) and opening livestock calls:

Corn: 1 to 2 cents higher. Futures are benefiting from short-covering this morning, as well as help from slight weakness in the U.S. dollar index. Traders expect corn harvest to cross the halfway point this week, which is significant in that it would signal the worst of harvest-related hedge pressure has likely passed. Open harvest weather this week is forecast across the Corn Belt. Country basis levels have stabilized, with Gulf basis firming.

Soybeans: 8 to 14 cents higher. Futures are enjoying short-covering this morning on ideas yesterday's losses were overdone and expectations basis will improve in the near-term given tightening supplies. Harvest is running ahead of the average pace, signaling the worst in terms of harvest-related hedge pressure should be easing soon. Given the tight supply situation, traders are willing to cover short positions.

Wheat: Mixed. Wheat futures are favoring a firmer tone in mixed trade, but the lack of fresh news is limiting traders' willingness to extend long positions. Winter wheat planting is nearly caught up to the average pace despite lingering drought, which is limiting buying this morning. But wheat remains confined within the long-lasting consolidation range, which signals choppy trade is likely to continue.

Live cattle: Steady to weaker. Futures are expected to see some pressure from concerns about the cash market this week, as the beef market started the week under pressure. Choice values slipped 65 cents and Select is down $1.43 to signal a near-term high may have been posted. This week's cattle showlist is about even with last week.

Lean hogs: Steady to firmer. Futures are expected to see a lift from yesterday's 50-cent gain in pork cutout values, which is expected to contribute to improved demand for cash hogs this morning. While nearby futures are still holding a lofty premium to the cash index, traders are comfortable with the premium structure given ideas the worst is behind in terms of sow liquidation.


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