Dollar Strength Pressures Grains Overnight

January 5, 2012 12:31 AM

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

Corn: 1 to 5 cents lower. Futures were weaker overnight on strength in the U.S. dollar index. Euro-zone debt fears have resurfaced, reducing traders' willingness to add risk. Key this morning will be if traders view a weaker start as a buying opportunity, or if selling picks up and Tuesday's gap areas are filled. Today could be an important day technically on the charts.

Soybeans: 7 to 12 cents lower. Futures slipped below support at yesterday's low in overnight trade amid dollar strength. The threat of a downgrade to France's pristine AAA credit rating is on investors' minds after Fitch put the country on negative watch and Standard & Poor's said it will review 15 members of the euro-zone for a downgrade last month. Also, overnight weather models call for better chances of rains in central and eastern Argentina this weekend.

Wheat: 6 to 7 cents lower. Futures were pressured by dollar strength and spillover from neighboring pits. The U.S. dollar index soared overnight on renewed concerns about the euro-zone. Without any other fresh demand news to digest, wheat will remain in a follower's role. Chicago March wheat futures are trading at around a 9-cent discount to March corn futures. But wheat isn't considered a value buy currently due to the ample supply of feed wheat on the globe.

Live cattle: Mixed. Futures are expected to see a choppy start as traders wait on cash cattle trade to begin. February live cattle are trading in line with last week's $121 to $122 cash trade, signaling expectations for steady trade with last week. Beef prices were softer yesterday, but movement was strong at 259 loads, signaling a pickup in demand.

Lean Hogs: Steady to weaker. Lean hog futures are expected to see a weaker start in reaction to yesterday's 90-cent drop in pork cutout values. Packers' profit margins have been tightened considerably this week, which is expected to result in a pullback in cash bids. Cash bids are expected to be mostly steady today, with some firmer tones still possible as some packers are still in need of additional hogs for late-week delivery.


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