Grain Futures Enjoy Short-Covering

January 7, 2013 12:39 AM

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Overnight highlights. Following are opening grain and livestock calls at 6:40 a.m. CT:

Corn: 1 to 4 cents higher. Futures are enjoying short-covering on ideas last week's losses were overdone. This comes despite strength in the U.S. dollar index, which is limiting buying in commodity markets this morning. Traders are turning their focus to evening positions ahead of Friday's key USDA reports, which includes updated S&D's, the annual crop production summary and grain stocks data.

Soybeans: 7 to 11 cents higher. Ideas last week's losses were overdone is triggering some short-covering this morning in the soybean market. Traders are also awaiting Friday's barrage of data, as it will set the near-term price tone. If data is bearish, it would open additional near-term downside risk, but if it reflects a tightening supply situation, it could help secure a low. Traders' focus is also on the Brazilian weather situation, which is mostly favorable.

Wheat: 3 to 4 cents higher. Futures is enjoying spillover from neighboring pits, with upside potential limited by strength in the dollar index and a lack of fresh news. Like corn and soybeans, wheat has a lot of work ahead in order to secure a near-term low, but choppy price action is likely this week ahead of Friday's key report data.

Live cattle: Steady to weaker. Cattle futures are expected to see a weaker start on disappointment over light cash cattle trade last week. Trade in Nebraska and Iowa occurred at $1 to $2 higher than the previous week, but very little movement was reported in Kansas and Texas -- increasing this week's showlist. Additionally, the boxed beef market softened on Friday.

Lean hogs: Mixed. Lean hog futures are expected to see a choppy start as traders gauge packers' demands. The cash market is expected to start the week steady to firmer as many packers are in need of hogs to start the week, but traders will be hesitant to extend long positions given packers' negative profit margins.


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