Dollar Weakness Lifts Grain Futures Overnight

January 31, 2012 12:28 AM

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

Corn: 5 to 7 cents higher. Futures were lifted overnight by a weaker U.S. dollar index. The dollar firmed yesterday on concerns about Greece defaulting on its debt, but today hopes are rising a deal between Greece and the private sector will keep the country afloat. Also of note is the sharp drop in Gulf corn basis yesterday -- which reflects last week's increased farm sales. It's also the last trading day of the month, so focus will also be on position squaring.

Soybeans: 3 to 4 cents higher. Futures were firmer overnight amid light short-covering following yesterday's sharp drop. The U.S. dollar index is supportive for the market this morning, but traders are hesitant to extend long positions given this week's better weather outlook for Argentina and southern Brazil. Rains across the regions this week will help to stabilize the bean crop and help with pod fill.

Wheat: 7 to 10 cents higher. Futures got a boost from weakness in the dollar index overnight, but traders also have weather concerns on their minds. Frigid temps in northern Europe have raised concern about winterkill given the lack of widespread snow, with dryness in the U.S. Southern Plains also a concern. Kansas state statisticians report the condition of the winter wheat crop declined in January, as more precip is needed.

Live cattle: Mixed. Futures are expected to see a mixed start as traders wait on more cash clues. Futures came off session lows yesterday to post a mid-range close, focusing on last week's $2 lower cash cattle trade instead of Friday's bullish Cattle Inventory Report. Choice beef values were $1.25 softer yesterday and Select declined 54 cents on moderate movement of 179 loads. Beef prices need to strengthen in order to encourage steady cash trade later this week.

Lean Hogs: Steady to weaker. Futures are expected to be weaker this morning as traders anticipate softer cash hog bids. Packers' profit margins are deep in the red, but pork cutout values firmed 65 cents yesterday. But it will take much more strength in the pork cutout market to turn the cash market around, as packers say they are trimming kill requirements to limit losses.


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