Grains Firmer Overnight in Lackluster Trade

May 8, 2012 01:42 AM

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Overnight highlights. Following are highlights of overnight trade:

Corn: 2 to 8 cents higher. Futures enjoyed short-covering overnight despite negative outside markets. Corn planting continues at a strong pace, which is impressive given few suitable fieldwork days last week. Upside potential overnight was limited by negative outside markets, as the U.S. dollar index is stronger again this morning amid uncertainty surrounding the euro-zone.

Soybeans: 2 to 3 cents higher. Nearby futures were firmer overnight, with deferred futures favoring a weaker tone in mixed trade. Price action for nearbys was limited overnight, with July pivoting around $14.70. Soybeans continue to get positive news, with USDA announcing a daily export sale yesterday and concerns about the South American crop lingering. But traders need another source of positive news, as these factors are baked into prices. Traders will also begin to more aggressively even positions today ahead of Thursday's S&D Report, expected to tighten corn, soybean and wheat carryover from last month.

Wheat: 2 to 6 cents higher. Futures were firmer overnight, supported in part by spillover from neighboring pits as well as from slight deterioration in the condition of the winter wheat crop. July Chicago wheat is testing the $6.20 level this morning but has a lot of work ahead to signal a near-term low has been posted.

Live cattle: Mixed. Futures are expected to be mixed, with support for nearbys coming from the steep discount those contracts hold to last week's cash market. Beef prices started the week mixed, with Choice values up 19 cents and Select down $1.43 to widen the premium Choice holds to Select. Movement of 168 loads is strong, but beef prices aren't strong enough to support thoughts of higher cash cattle trade -- especially given larger showlists this week.

Lean Hogs: Steady to weaker. Futures are called to open weaker on disappointment in the pork cutout market. Pork cutout values slipped 41 cents yesterday to keep packers' profit margins in the red. After nearing breakeven, packers' margins slipped deeper into the red yesterday. As a result, the cash market is expected to be steady to weaker again today, weighing on futures.


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