Grains Pressured by Dollar Strength, Waiting on USDA

February 22, 2012 12:43 AM

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

Corn: 1 to 3 cents lower. Corn saw light followthrough from yesterday's losses, with strength in the U.S. dollar index contributing to the weaker tonight overnight. Typically, the February break has run its course by now, but March corn futures are hovering above the February low of $6.21 3/4. Much of yesterday's pressure came from expectations this week's baseline projections from USDA will show the market has done its job of bidding for 2012 corn acres.

Soybeans: 4 to 6 cents lower. Soybean futures saw pressure from dollar strength overnight, triggering some light profit-taking following yesterday's gains. Futures have rallied recently to widen the new-crop soybean/corn spread in an attempt to bid for more 2012 acres. Additional support is coming from renewed concerns about the crops in southern Brazil, as hot, dry weather is stressing the filling soybean crop. November beans need to move above $12.70 to extend the uptrend, but bulls have the reigns for the timebeing.

Wheat: 2 to 4 cents lower. Futures were weaker overnight on spillover from neighboring pits and dollar strength. Crude oil and gold are slightly weaker this morning after yesterday's big runup. Wheat needs a dose of fresh news as temps have moderated in northern Europe. Still, wheat's demand prospects have improved recently due to those crop concerns and Ukraine saying it will limit exports.

Live cattle: Steady to firmer. Futures are expected to see a boost from the beef market, as Choice values rose $2.34 yesterday and Select climbed $2.77. Movement slowed, which could signal some resistance to higher prices. But given this week's tighter showlist, traders anticipate at least steady cash trade with last week's $5 to $6 higher trade.

Lean Hogs: Steady to weaker. Futures are expected to be pressured by weakness in the pork cutout market. Pork cutout values slipped 39 cents yesterday to push packers' profit margins back into the red. Bulls are growing discouraged waiting for the pork cutout market to climb. The cash hog market is expected to be steady to weaker amid reduced demand for cash hogs.


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