Dollar Strength Weighs on Grains Overnight

August 8, 2012 01:27 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: 5 to 8 cents lower. Corn futures are seeing pressure this morning from negative outside markets, as the U.S. dollar index is firmer. Pressure, however, is being limited by position squaring as traders get ready for USDA's first survey-based corn estimate. Traders look for USDA to slash the yield estimate by nearly 20 bu. per acre from its July peg to 126.2 bu. per acre for a crop of 10.971 billion bushels.

Soybeans: Mixed. Nearby futures are steady to 4 cents lower, with deferreds firmer. Dollar strength is weighing on nearby futures, with funds also active sellers amid profit-taking. Scattered Midwest rains are also making it more difficult for soybeans to rally. Traders are also readying for USDA's first survey-based soybean estimate. Traders look for USDA to trim its yield projection by around 3 bu. per acre from last month to 37.2 bu. per acre for a crop of 2.786 billion bushels.

Wheat: 10 to 13 cents lower. Selling in the wheat pit is largely tied to strength in the U.S. dollar index. The recent consolidation level at "high" price levels is also a sign the market is growing tired, which has some suspecting a major high has been posted. Traders look for Friday's USDA report to show the wheat crop declined just marginally from last month, with all wheat expected at 2.22 billion bushels.

Live cattle: Steady to higher. Futures are expected to see a lift from strength in the beef market, with Choice values up $1.41 and Select up $1.55 on solid movement of 215 loads. Ongoing strength in the beef market is lifting cash expectations, giving traders more encouragement to keep the premium nearby contracts hold to last week's $118 trade.

Lean Hogs: Steady to weaker. Yesterday's $1.45 drop in pork cutout values has erased hopes a near-term low in the pork market was struck. The drop came on increased pork movement of 138.63 loads, but it also pushed packers' profit margins back into the red, which is expected to weigh on the cash market this morning.


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