Dollar Strengthens Ahead of Fed's Policy Statement

September 21, 2011 01:39 AM

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Overnight highlights.

Following are highlights of overnight trade and opening calls:

Corn: 2 to 4 cents higher. Futures were stronger overnight amid talk China is interested in buying U.S. corn, but gains were limited by strength in the U.S. dollar index. Today could prove to be another choppy day of price action as traders await the highly anticipated Federal Reserve policy statement, in which its expected to announce further measures to simulate the economy.

Soybeans: 1 to 4 cents higher. Futures saw light buying overnight, but gains were capped by strength in the U.S dollar index. Expected moves by the Fed to stimulate the economy lifted the dollar, as well as ongoing troubles in the euro-zone. A return above $13.50 in November beans would signal some stabilization in the market and a possible near-term low.

Wheat: Mixed. Futures were mixed overnight, favoring slight weakness amid dollar strength. Traders recognize demand for U.S. wheat has been lackluster recently and it's not bullish when feed demand is outpacing food demand. Traders are comfortable with front-month Chicago wheat at a discount to December corn as feed-wheat usage is expected to strengthen.

Live cattle: Mixed. Futures are called to open mixed amid spreading after yesterday's gains. Pressure should be limited to profit-taking as the U.S. stock market is expected to be higher this morning. Choice beef values were 9 cents weaker and Select values slipped 87 cents yesterday, but movement was strong at 233 loads. Traders are waiting on additional cash cattle trade after Monday's moderate movement at $1 lower than the previous week. Unless beef values improve, it's unlikely the cash market will improve for the remainder of this week's sales.

Lean Hogs: Mixed. Futures are called mixed amid spreading, but downside risk should be limited by expected gains in the U.S. Stock market ahead of the Fed's policy announcement. Pork cutout values slipped 5 cents yesterday and packers have seen profit margins tighten considerably. While still in the black, packers are working to improve margins. As a result, the cash hog market is expected to be mixed as some locations are still bidding for this week's needs and others have supplies secured.

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