Grains Benefit From Short-Covering

January 19, 2012 12:27 AM

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Overnight highlights. Following are highlights of overnight trade and opening calls:

Corn: 1 to 4 cents higher. Grain futures were lifted by short-covering overnight and positive outside markets. The U.S. dollar index is weaker this morning, bolstering crude oil and gold futures. Corn softened yesterday on better rain chances in Argentina this weekend, doing more technical chart damage as last week's lows were violated. But with futures nearing oversold territory according to the 9-day Relative Strength Index, some value buying showed up overnight.

Soybeans: 6 to 11 cents higher. Futures recovered yesterday to post just modest losses and built on that late-session short-covering in overnight trade due to dollar weakness. Beans were supported late yesterday by talk China is in the market for more soybeans. And, with rains delaying the early harvest in Mato Grosso, the window for U.S. exports is still open.

Wheat: 2 to 4 cents higher. Wheat remains in a follower's role and is keeping close tabs on the corn market as it works to remain competitive as a feed ingredient. The U.S. dollar index extended yesterday's decline yesterday to test uptrending support. Further softening would signal a near-term high has been posted, which would be supportive for commodity markets.

Live cattle: Mixed. Futures are expected to be mixed as traders don't want to extend long positions too heavily ahead of the start of cash cattle trade. But with asking prices and bids several dollars apart, trade will likely be delayed until late Friday. Beef prices were mixed yesterday on solid movement, but price improvement is needed to lift packers' ailing profit margins. The U.S. stock market is expected to be softer this morning, which if realized, would limit buying interest in live cattle futures.

Lean Hogs: Steady to firmer. Futures firmed late yesterday on news of some packers raising bids for Saturday's kill. Pork cutout values firmed 40 cents yesterday, but packers' profit margins slipped deeper into the red yesterday. After several months of cutting deep in the black, packers can "afford" to let margins slip into the red for a period, but it's not likely to last.


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