Dollar Weakness Boosts Grain Markets

October 22, 2012 01:29 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: 1 to 3 cents higher. Nearby futures are 2 to 3 cents higher, with deferreds favoring a firmer tone in mixed trade. Weakness in the U.S. dollar index is supportive for commodity markets this morning. Corn is also seeing spillover from double-digit gains in the bean pit. Otherwise, a lack of fresh news is limiting buying in the corn pit.

Soybeans: 10 to 16 cents higher. Soybeans have been highly choppy overnight, but are currently trading near session highs. November beans are pivoting around $15.50, with support coming from positive outside markets, as well as dry weather in northern Brazil. Southern Brazil and Argentina have seen good rains, with too much of a good thing slowing corn planting in Argentina. But lingering dry weather in Mato Grosso raises concerns about crop prospects.

Wheat: 6 to 9 cents higher. Futures are seeing a lift from spillover from neighboring pits and weakness in the U.S. Dollar index. Weather concerns in Ukraine and Russia are also a concern for the establishing winter wheat crops, especially following back-to-back years of droughts. Recent rains in the U.S. Southern Plains has helped with establishment there, but timely rains will be needed given ongoing drought conditions.

Live cattle: Higher. Futures are expected to see a boost from Friday's Cattle on Feed Report, as it showed all categories below expectations. Placements at 81% of year-ago are especially bullish for deferred futures as it signals supplies will tighten drastically next year. Once the report is factored into prices, traders will be watching the boxed beef market closely for clues. Beef strength last week forced packers to raise bids, with cash trade seen at $127.

Lean hogs: Mixed. Futures are expected to be mixed as traders even positions ahead of this afternoon's Cold Storage Report. Traders look for the report to show record-large pork stocks at the end of September. Meanwhile, the pork cutout market rose $1.26 on Friday to lift packers' profit margins. But given the seasonal increase in supplies, the cash hog market is expected to be mostly steady this morning.


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