Grain Prices Turn Increasingly Volatile

July 12, 2012 01:17 AM

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Overnight highlights. Following are highlights of overnight trade (as of 6:20 a.m. CT) and opening livestock calls:

Corn: 8 to 12 cents higher. Following yesterday's key bearish reversal in most contracts, corn is seeing some short-covering this morning. Futures reacted to yesterday's 20-bu.-per-acre yield cut with sharp gains, but softened amid profit-taking and an announcement by USDA Secretary Vilsack of drought relief to producers. With rain in the forecast for next week in the eastern Corn Belt, look for price action to remain highly volatile.

Soybeans: 4 to 6 cents lower. Futures have seen two-sided trade so far this session, but remain above support at yesterday's low. A drop through that low could set off some sell stops after yesterday's key bearish reversals in some new-crop contracts. Futures are currently weaker on negative outside markets and forecasts for rains next week.

Wheat: 7 to 9 cents higher. Wheat futures continue to follow the corn market, which is the current source of support. Wheat ended firmer yesterday while corn was lower, however, which was due to spread unwinding. September Chicago wheat avoided a bearish reversal yesterday and are now trading in the upper half of yesterday's trading range.

Live cattle: Steady to lower. Futures are called steady to lower on followthrough from yesterday's losses, but downside risk should be limited by short-covering. Still, cash expectations are softening due to weakness in the beef market. Choice beef values slipped another 54 cents yesterday and Select declined 68 cents. Expectations are for $1 to $2 lower cash cattle trade, although trade will likely be delayed until tomorrow.

Lean Hogs: Steady to lower. Futures are expected to be weaker due to concerns about packers' negative profit margins. Pork cutout values slipped just 2 cents yesterday, but demand for cash supplies is lackluster. Pressure on nearbys should be limited by the discount those contracts hold to the cash index.


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