Dollar Weakness Spurs Short-Covering in Grain Markets

June 6, 2012 01:45 AM

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Overnight highlights. Following are highlights of overnight trade (as of 6:45 a.m. CT) and opening livestock calls:

Corn: 4 to 7 cents higher. Futures were stronger overnight thanks to positive outside markets. The U.S. dollar index is weaker this morning as investors wait for comments from the European Central Bank (ECB) regarding actions -- if any -- it will take to contain the bloc's debt crisis. Meanwhile, there's little other fresh news for corn traders to digest this morning, as weather is a mixed bad. This week's warmer/drier conditions are stressing the crop, while just-in-time rains are in the forecast for next week.

Soybeans: 11 to 16 cents higher. Futures saw a lift overnight from positive outside markets. Traders await comments from the head of the ECB, which they hope signal stimulus measures are ahead. Also supportive are crop concerns, especially in southern areas that haven't received a rain in several weeks and none in the near-term forecast. Meanwhile, the central Corn Belt is warmer and drier this week, but a return to above-normal precip was indicated by yesterday afternoon's National Weather Service 6-10 day forecast.

Wheat: 2 to 5 cents higher. Futures at all three exchanges are trading nearly in unison, finding support form positive outside markets and spillover from neighboring pits. The U.S. dollar index is weaker this morning and the U.S. stock market is poised for gains this morning as traders anticipate the ECB to announce easing of monetary policy to stimulate the economy.

Live cattle: Mixed. Futures are called to open mixed as traders wait on cash cattle trade. While beef movement has improved this week, prices softened yesterday, with Choice down $1.22 and Select down 34 cents. This week's larger showlist gives packers the upper hand, so key will be whether or not they are short bought. A positive outside market tone will encourage some fresh buying in livestock futures this morning.

Lean Hogs: Mixed. Futures are expected to be mixed today as traders reevaluate positions. Demand for cash hogs has improved this week despite negative profit margins, as pork cutout values slipped 21 cents yesterday. However, movement has been strong this week, with 104.25 loads changing hands yesterday. Expected strength in the U.S. stock market this morning should improve trader's risk-taking appetite.


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