Dollar Strength Spurs Profit-Taking Overnight

May 22, 2012 01:33 AM

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Overnight highlights. Following are highlights of overnight trade (as of 6:30 a.m. CT) and opening livestock calls:

Corn: 6 to 8 cents lower. Futures are seeing pressure this morning from strength in the U.S. dollar index and from a strong start to the growing season as revealed by the weekly crop condition report. Yesterday's USDA data showed 76% of the crop has emerged, with 77% rated in "good" to "excellent" condition. However, rains are needed after a nearly two-week-long dry spell across much of the Corn Belt, and there are just some scattered showers in the near-term forecast. Temps are expected to warm over the weekend.

Soybeans: 1 to 7 cents lower. Futures are weaker this morning on profit-taking following yesterday's gains and on price consolidation within the recent week-long trading range. Like mentioned in corn, weather is on traders' minds and the near-term forecast doesn't provide a lot of hope for a widespread rain. This will help producers wrap up their planting efforts, but warmer temps over the weekend will further rain moisture needs for the developing crop.

Wheat: 6 to 15 cents lower. Futures were pressured overnight by strength in the U.S. dollar index. After posting another round of strong gains yesterday, wheat futures were weaker overnight amid profit-taking. Traders, however, remain concerned about the poor finish to the HRW wheat crop in the Southern Plains, as harvest is already underway and picking up steam and crop conditions continue to decline. Early harvest results are disappointing, but better results should be reported as harvest moves northward.

Live cattle: Mixed. Futures are expected to be mixed today after futures trimmed early gains yesterday and ended lower amid demand concerns. But downside risk should be limited by continued strength in the beef market and the discount nearby futures hold to last week's $123 to $124 cash cattle trade. Choice beef values surged $2.08 yesterday and Select declined 9 cents on very strong movement of 195 loads to start the week.

Lean Hogs: Mixed. Futures are expected to be mixed this morning, with pressure limited by improvement in packers' profit margins. Pork cutout values firmed 21 cents yesterday, but still have some work to do in order to return packers' margins to the black. The cash hog market is expected to be mostly steady today, but some weaker undertones could develop as packers say they are having no difficulty securing needed supplies.


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