Johnston Pro Farmer Senior Markets Editor
as of 7:00 a.m. CT
Outside markets will
remain key... Broad-based selling in the commodity world was seen
Friday as the dollar rose through another layer of resistance and even broke downtrending
resistance drawn off multi-year reaction highs. But the dollar index still has
work to do before it gets back to "par" -- 100.00 -- but Friday's strong
gains are another piece in the puzzle that signal a major, multi-year low is in
Commodity traders have been closely watching the
direction of the dollar for quite some time. The dollar has been one of the, if
not the, most influential "outside" markets on agriculture in recent
years. The biggest impact a firming dollar would have on commodities -- including
agriculture -- would be on the export side.
We've been watching
the dollar closely, as all the warning signals are there more air could easily
come out of the commodity markets as the dollar has very likely posted a multi-year
low. Grain futures were higher in overnight trade thanks to corrective weakness
in the dollar.
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Opening calls. These calls originate
more than three hours before the open -- use caution, things change::
Corn: 11 to 13 cents higher. Futures saw corrective gains in overnight
trade. Futures ended sharply lower to finish last week, but for the week, were
around 25 to 30 cents higher compared to the previous week's close. Traders will
continue to watch outside markets next week, but Crop Tour data will also be critical.
Traders are anxious to see what the field samples uncover after USDA came with
a trendline yield on its first estimate.
Soybeans: 27 to 35 cents higher.
Futures were firmer in overnight trade on weakness in the dollar. Futures
trimmed weekly gains Friday as continued strength in the dollar strongly suggests
a multi-year low is in place. Broad-based commodity selling resulted in sharp
losses in the bean pit, but November beans still finished the week 36 cents above
the previous week's close. Early support in the week came from USDA's tighter-than-expected
new-crop carryover estimate. But the market couldn't gain enough upside momentum
to breakout of the downtrend channel.
Wheat: 11 to 13 cents higher.
Futures were firmer in overnight trade thanks to spillover from neighboring
pits. Futures posted heavy losses on strong spillover pressure from outside markets
to close last week. But for the week, wheat futures still posted very solid gains.
Wheat will be watching neighboring pits and outside markets for direction this
week. If corn and crude oil face more selling pressure and the dollar is higher,
wheat will have little defense against the spillover pressure.
cattle expectations: Watching beef market. Cash cattle trade was largely
completed around $100 in the Southern Plains on Friday afternoon. All eyes will
now be on the beef market for keys to this week's trade. Retailers are expected
to continue buying ahead of Labor Day, which should keep the cash market supported
Futures call: Mixed. Futures are called mixed
amid spreading and the possibility of short-covering following Friday's sharp
losses. Futures were sharply pressured to finish last week by broad-based commodity
selling, brought on by the strong push higher in the dollar index. While fundamentals
remain positive near-term for the beef market, outside markets were too much for
market bulls to ward off. October live cattle closed "just" 60 cents below the
previous week's finish, but broke uptrending support to do some near-term technical
expectations: Mixed. Cash sources say they expect a mixed cash tone
to start the week, as there are some locations still seeking early week supplies,
while others want to improve profit margins. Key this week will be how the pork
cutout market performs. After the rally to new highs, pork prices are at risk
of softening, especially as retailers complete Labor Day buys.
Hog futures: Mixed. Futures are called mixed amid spreading and the
possibility of short-covering following Friday's sharp losses. The meat markets
have been somewhat "immune" to outside markets recently, but Friday's sharp pressure
in high-profile markets like crude oil, metals and grains, was too much for hog
market bulls to withstand. October lean hog futures closed $1.42 below the previous
week's finish, which was a contract-high close. No technical chart damage was
done to the October contract, which is now the lead-month contract and is trading
at a sharp discount to the cash index.