Corrective Gains in Grain Markets Overnight

December 15, 2011 12:28 AM
 

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

Corn: Mixed. Futures were mixed overnight, with some buying coming on short-covering after yesterday's losses. The U.S. dollar index is weaker this morning after surging yesterday. Strength in the U.S. Dollar certainly is bearish for commodities, especially with the dollar testing the January highs. But just as corn overdid it to the upside, remember that it can overdo a downside correction. Futures have entered oversold territory according to the 9-day Relative Strength Index, which signals a time or price correction is due.

Soybeans: 6 to 8 cents higher. Beans were the downside leader yesterday, as the market reacted to strength in the U.S. Dollar index and sharp weakness in crude oil futures. January beans returned above $11.00 overnight after closing below this level yesterday. Like corn, soybean futures appear to be "overdoing" the downside, but there's simply no confidence the euro-zone's plan of fiscal responsibility will be upheld.

Wheat: 2 to 6 cents higher. Wheat saw light buying overnight following yesterday's sharp decline March Chicago wheat posted a fresh contract low yesterday to do more technical chart damage. Wheat is moving into oversold territory according to the 9-day Relative Strength Index, but needs help from neighboring pits to secure a near-term low.

Live cattle Mixed. Futures are expected to be choppy today as traders wait on cash cattle trade to begin. Beef prices were softer yesterday, but movement was very strong to suggest retailers will feature beef after the holidays. Nearby live cattle are trading at around a $2 discount to last week's cash trade, suggesting attitudes are more negative about this week's cash trade.

Lean Hogs: Mixed. Futures are expected to be mixed today, but pressure should be limited by strong demand for cash supplies. While packers have plentiful supplies to draw from, pork cutout values firmed yesterday to suggest demand remains strong. Packers are enjoying very profitable margins. Therefore, the cash market is expected to be mostly steady today.


 

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