Dollar Strength Limiting Buying in Grains

November 5, 2012 12:42 AM

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Overnight highlights. Following are highlights of overnight trade (as of 6:43 a.m. CT) and opening livestock calls:

Corn: Mixed. Nearbys are marginally to 2 cents higher, with deferred futures mostly a penny lower. Strength in the U.S. dollar index is limiting buying to short-covering and has resulted in choppy trade so far this morning. December corn respected support at last week's low of $7.32 1/2 in overnight trade, which is a key level as it marks the bottom of the choppy consolidation range.

Soybeans: 6 to 8 cents lower. Futures are seeing pressure this morning from strength in the U.S. Dollar index as well as beneficial rains across drier areas of Brazil over the weekend. Forecasters have improved rainfall chances for Mato Grosso and Parana this week, which are needed to improve the soybean planting pace and help with establishment.

Wheat: 1 to 3 cents higher. Wheat is seeing a lift from short-covering and global crop concerns, but upside potential is being limited by strength in the U.S. Dollar index. Concerns about the Australia crop and establishment of the U.S. HRW wheat crop are helping to firm prices this morning.

Live cattle: Mixed. Futures are expected to be choppy today as traders keep a close eye on the boxed beef market, as well as outside markets. Strength in the U.S. Dollar index this morning favors the bears, but tight market-ready supplies should continue to limit downside risk. Traders are watching to see if the beef market finds value this week after declining sharply last week.

Lean hogs: Mixed. Futures are expected to be mixed, with nearbys supported by the discount December lean hog futures hold to the cash index. The cash hog market is expected to be steady to weaker as packers have plenty of supplies to draw from, but with profit margins in the black, they will want to keep kill lines running as full as possible.


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