Dollar Weakness Supports Corn & Wheat Overnight

May 25, 2012 01:28 AM

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Overnight highlights. Following are highlights of overnight trade (as of 6:30 a.m. CT) and opening livestock calls:

Corn: 5 to 8 cents higher. Futures are benefited from short-covering on ideas recent losses are overdone, as well as weakness in the U.S. dollar index. The dollar is falling this morning on a statement made by Italy's prime minister, saying he believes Germany can be persuaded to back eurobonds, which could be a solution to the debt crisis. Rains across the Upper Midwest yesterday were beneficial, but forecasters say rains weren't enough to alleviate drought and there's little more meaningful rain in the near-term forecast.

Soybeans: Mixed. Futures didn't stray too far from unchanged overnight, with weakness in the U.S. dollar index limiting pressure. Traders say signs of easing demand are limiting buying, as China said it will continue auctioning state reserves next week in an effort to empty some warehouses to create space for new-crop supplies this fall. But limiting pressure ahead of the extended holiday weekend will be weather concerns, as recent rains weren't enough to erase drought conditions in the Upper Midwest and dry conditions continue in the southern Corn Belt and Mid-South.

Wheat: 11 to 14 cents higher. Futures have seen a highly volatile week of trade, supported overnight by weakness in the U.S. dollar index and ongoing dryness in the Southern Plains. Harvest results continue to be disappointing, but are expected to improve as harvest moves northward. Rains in Ukraine and Russia over the next five days are also expected to help stabilize those crops, which could make it more difficult to rally prices.

Live cattle: Mixed. Futures are called to open mixed, with selling limited ahead of the extended holiday weekend as traders even positions. The beef market has seen general support this week to help limit pressure. Choice values firmed 19 cents yesterday and Select dropped 91 cents on solid movement of 195 loads. Some support could come from packers in Nebraska raising bids yesterday to steady with week-ago levels. So far this week, trade at $121 in the Southern Plains is down $2 from the previous week.

Lean Hogs: Mixed. Futures are called to open mixed, with some short-covring possible ahead of the extended holiday weekend. But upside potential will be limited by continued weakness in the pork cutout market. Pork values slipped 44 cents yesterday to keep packers' profit margins well in the red. Packers have supplies secured, so steady to weaker bids are expected today.


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