Dollar Weakness Continues

December 17, 2008 06:00 PM

Julianne Johnston Pro Farmer Senior Markets Editor

From Pro Farmer

Updated as of 7:00 a.m. CT

Grains higher overnight on dollar weakness... Grain futures were higher overnight on help from dollar weakness and slight gains in crude oil futures. Sharp losses in the dollar have helped to lift export expectations, with more wheat tenders beginning to line up. Traders will be watching for any clues of stepped up business in this morning's weekly export sales report.

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Opening calls. These calls originate more than three hours before the open -- use caution, things change:

Corn: 3 to 5 cents higher. Futures were higher overnight on help from dollar weakness. Futures closed 4 1/2 to 6 1/4 cents lower after a higher start yesterday. Futures opened higher on weakness in the dollar, but gains were short-lived amid light profit-taking. March corn futures briefly penetrated resistance to post a new-for-the- move high on the open and turned weaker. Futures remained above support at this week's low, keeping the near-term technical situation positive.


Soybeans: 5 to 8 cents higher. Futures were higher on help from dollar weakness. Futures posted a mid-range close yesterday, finishing 5 to 11 cents higher. Gains were trimmed as crude oil weakened. March soybean futures were unable to find followthrough buying above Monday's high of $8.78. The 40-day Moving Average was just above that level at $8.87 1/2 today and stands as key near-term resistance.

Wheat: 6 to 8 cents higher. Futures were higher overnight on weakness in the dollar. Futures posted double-digit gains yesterday, supported by the plunge in the dollar. With a lot of wheat tenders hanging in the balance, including several large tenders, traders are hopeful the sharp drop in the dollar over the last two weeks will steer some of the business toward the United States. March Chicago wheat futures have now posted consecutive higher closes above the 40-day Moving Average, which improves the technical picture


Cash cattle expectations: $1 to $2 higher. Packers and feedlots failed to get together on a common price for cash cattle trade in the Plains as of late Wednesday. Cash sources expect cash cattle trade to be pushed back to late Friday, after USDA's Cattle on Feed Report, unless packers push cash bids into the $86 to $87 range today. Weather may become a factor as freezing rain/snow is moving out of Oklahoma into Kansas this morning and is expected to continue into the weekend.

Futures call: Mixed. Futures are called to open mixed as traders wait on cash trade to begin. December cattle are trading in line with cash expectations following early week gains. Traders are also watching the outside markets closely, which provided mixed signals yesterday.

Cash hog expectations: Steady to weaker. The average pork cutout value declined another 65 cents Wednesday. Combined with the fact packers are virtually filled up on slaughter needs for the week, that will keep cash hog bids under pressure across the Midwest today. Hog movement is expected to be light the rest of the week as inclement weather is moving into the western Corn Belt this morning and will shift off to the east.

Futures call: Firmer. Futures are called to open firmer based on yesterday's late-session strength. But upside potential will be limited by the cash market, which is expected steady to weaker again today. The sharp plunge in the U.S. dollar the past two weeks is triggering some hope U.S. pork exports could pick up. That helped fuel buyer interest in deferred hog futures. For the year ahead, USDA sees pork exports down 14% from this year's record levels.


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