Grains Pressured by Negative Outside Markets

March 22, 2012 01:31 AM

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Overnight highlights. Following are highlights of overnight trade:

Corn: 2 to 5 cents lower. Futures were weaker overnight due to lack of fresh positive news and on dollar strength. Crude oil and gold are lower this morning, signaling traders aren't willing to add risk. The U.S. stock market is headed for a lower start following news of disappointing manufacturing data from China and Germany. A slowdown in economic growth in those countries has traders concerned economic turmoil will spread. May corn saw followthrough pressure overnight from yesterday's losses, with next support the March low of $6.31 3/4.

Soybeans: 6 to 8 cents lower. Futures faced profit-taking overnight following yesterday's strong close on spillover from negative outside markets. Traders reacted to disappointing manufacturing data from China and Germany, as traders worry it signals demand -- especially soybean demand to China -- will soften. But key today will be if traders view a weaker start as a buying opportunity, as was the situation yesterday.

Wheat: 2 to 4 cents lower. Futures saw spillover from neighboring pits overnight, as well as pressure from dollar strength. The U.S. dollar index is testing the $80.00 level on news of disappointing manufacturing data from China and Germany. Adding to recent weakness in the wheat pit are rains across the Plains this week -- boosting winter wheat crop prospects. May Chicago wheat violated support by posting a fresh monthly low overnight.

Live cattle: Mixed. Following yesterday's gains, futures could see some additional short-covering, but that will be hard fought in light of negative outside markets. Late yesterday, traders reacted to news of $126 cash cattle trade beginning in the Southern Plains, which is steady with last week's trade. This was a surprise given weakness in the beef market and packers' negative profit margins, but reminds traders of the tightening supply situation.

Lean Hogs: Steady to lower. Futures are expected to be weaker this morning as traders react to negative outside markets and pork cutout pressure. Pork cutout values slipped another 72 cents yesterday, but movement has picked up. Still, with packers' profit margins well in the red, cash bids are expected to be mostly $1 lower amid lighter demand. April lean hogs are trading at a discount to the cash market as they expect additional near-term cash weakness.


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