Grain Futures Face Profit-Taking As Harvest Builds

September 17, 2012 01:33 AM

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Overnight highlights. Following are highlights of overnight trade (as of 6:34 a.m. CT) and opening livestock calls:

Corn: 5 to 13 cents lower. December through July futures are mostly 13 cents lower, with the rest of the market down 3 to 5 cents. Slight strength in the U.S. dollar index triggered profit-taking overnight, with nearbys extending losses amid a lack of fresh positive news and building harvest-related hedge pressure. Support for December corn lies at last week's low of $7.59 1/4. Violation of that and then the July 11 high of $7.48 would strongly suggest a high has been posted.

Soybeans: 16 to 30 cents lower. Futures are seeing stepped up profit-taking pressure this morning, with nearbys leading losses as November beans challenge the $17.00 level. While fundamentals remain bullish, increased harvest over the weekend is weighing on futures. But too-dry conditions in Mato Grosso, Brazil, mean the start of planting will be delayed there. Depending on how long planting is delayed, traders will be concerned about the tight world supply situation, as it leaves the world without new-crop Brazilian soybeans for an even longer period.

Wheat: 7 to 14 cents lower. Wheat is seeing spillover from neighboring pits as well as a firmer U.S. dollar index. Wheat posted strong gains last week and ended near the weekly highs, but with no fresh news for the market to digest over the weekend, futures are vulnerable to profit-taking. December Chicago wheat is holding above the $9.00 level, which has served as a pivot point since mid-July.

Live cattle: Mixed. Futures are expected to see a choppy start as traders wait to get a feel for beef demand. All eyes will be on the beef market to start the week as tight supplies last week forced packers' to raise bids, which pushed their margins into the red. October live cattle are trading in line with last week's cash trade, which should limit pressure to profit-taking.

Lean hogs: Mixed. Ideas the pork market is nearing a low is expected to limit pressure in the hog pit this morning from expected cash market weakness. Pork cutout values firmed late last week to suggest the market was bottoming. This gave traders some encouragement to cover short positions and nearby futures moved to a premium to the cash index. Therefore, if pressure on pork and the cash market continues, it would open fresh downside risk for futures.


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