Grains Setback Overnight on Dollar Strength

February 2, 2012 12:35 AM

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

Corn: 5 to 6 cents lower. Futures were weaker overnight amid profit-taking and on strength in the U.S. dollar index. Corn posted a mid-range finish yesterday as March was unable to sustain trade above $6.50. This morning's weekly export sales report is highly anticipated and will help to direct early price action. Weather is South America remains on traders' minds, especially after the U.S. ag attache in Mexico lowered its estimate of that country's crop and raised the import forecast. Bottom line -- demand prospects are better for U.S. corn.

Soybeans: 3 to 8 cents lower. Futures saw light profit-taking after yesterday's high-range close. Buying was limited overnight by strength in the U.S. dollar index, as well as some nervousness ahead of this morning's weekly export sales report, which will reflect sales during China's lunar news years celebration. However, recent improvement in Gulf basis signals an increased appetite for U.S. beans, which helped to support futures yesterday.

Wheat: 8 to 10 cents lower. Futures were weaker overnight amid profit-taking following yesterday's move off the session highs, and from dollar strength. Wheat, however, has seen a boost this week due to concerns about frigid temps in northern areas of Europe and the FSU, as well as expectations the Russian government will soon announce plans to lower exports. Dry conditions in the U.S. Southern Plains are also reason for concern.

Live cattle: Steady to firmer. Futures are expected to see a boost this morning from strength in the beef market. Choice values firmed $1.04 yesterday and Select rose 60 cents on improved movement of 258 loads. Futures were stronger overnight on bullish supply fundamentals, but price action could turn choppy today as traders wait on the cash market for direction. Bids and asking prices remain several dollars apart.

Lean Hogs: Mixed. Futures are expected to see a choppy start as traders weigh tightening supplies against lackluster demand for hogs. The cash hog market is expected to be steady to weaker today as packers work to improve profit margins. Pork cutout values improved 10 cents yesterday, but much more strength is needed to lift packers' margins out of the red.


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