Dollar Weakness Spurs Widespread Commodity Buying

January 26, 2012 12:43 AM

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

Corn: 3 to 8 cents higher. Futures were supported overnight by weakness in the U.S. dollar index after the Fed said interest rates would stay low until at least 2014. Futures have also seen a boost this week from firming basis at the Gulf and across the country, as well as dry weather in Argentina and Southern Brazil. March corn futures overnight moved to a fresh weekly high, but need to return above the January high of $6.64 1/4 to turn momentum clearly over to bulls.

Soybeans: 9 to 10 cents higher. Futures were lifted by weakness in the U.S. Dollar index following the Fed's statement on the economy. Unlike corn, however, soybeans didn't post a fresh weekly high overnight, although they are back challenging the January high of $12.44 3/4. A move above this level would would make bulls' next target the November high of $12.90. This morning's weekly export sales data will also influence early price action this morning.

Wheat: 7 to 11 cents higher. Futures followed corn higher overnight, lifted by dollar weakness. The U.S. Dollar index has fallen to its lowest level since mid-December to establish a downtrend from the January high. March Chicago wheat futures need to return above this month's high of $6.70 3/4 to signal a near-term low has been posted, but there are several layers of resistance to move through in order to clearly give bulls momentum.

Live cattle: Steady to higher. Futures are expected to see a lift from widespread commodity buying this morning. Additional support is expected to come from Choice beef values rising 65 cents yesterday amid solid movement of 255 loads. As a result, thoughts are packers will raise bids, although with margins in the red, cash will likely be delayed until tomorrow.

Lean Hogs: Mixed. Futures are expected to be mixed, with selling limited by widespread buying in the commodity world. Meanwhile, packers have seen profit margins slip deep into the red this week, which is lowering demand for hogs. Pork cutout values were 56 cents lower yesterday.


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