Dollar Strength and Economic Uncertainty Weigh on Grain Futures Overnight

March 1, 2013 12:24 AM

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Overnight highlights. Following are opening grain and livestock calls at 6:20 a.m. CT:

Corn: 1 to 3 cents lower. Following yesterday's strong short-covering gains in the nearby contracts, futures are seeing profit-taking on sharply negative outside markets. The U.S. dollar index is sharply higher this morning as investors seek "safe havens" due to the economic uncertainty caused by sequestration.

Soybeans: 1 to 10 cents lower. Old-crop futures are leading losses this morning due to strength in the dollar index. Old-crop beans were supported yesterday by ongoing strong demand from China as that country grows impatient waiting on shipping delays in South America and turns to the globes most reliable supplier of soybeans. But that is not the focus of the market as the calendar flips to March -- the focus on the market is the uncertainty surrounding the economic impact of sequestration.

Wheat: 1 to 3 cents lower. Chicago and Kansas City futures are weaker while Minneapolis is mixed. Wheat is following neighboring pits lower this morning, with strength in the dollar index also providing pressure. March Chicago wheat futures are trading at around a 13-cent discount to March corn futures, which suggests the market is due for a corrective bounce.

Live cattle: Mixed. This week's bounce in the boxed beef market signals a near-term low has been posted, but buying in live cattle will be limited as traders try to digest the uncertainty sequester will have on the packing industry and beef demand. But the start of cash cattle trade at higher levels is also supportive for futures this morning.

Lean hogs: Mixed. Futures are due for a corrective bounce, but technicals continue to weaken due to bearish attitudes. Pork cutout values slipped another 48 cents yesterday to keep packer demand for cash hogs soft. While packers are enjoying profitable margins, they are expected to soften bids again today as they plan for a light Saturday kill.


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