Grains Softer on Rain Forecast for Argentina

December 21, 2011 12:46 AM

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

Corn: 1 to 4 cents lower. Futures were weaker overnight despite a softer U.S. dollar, as traders are responding to the forecast for rains tomorrow and Friday in Argentina. But meteorologist David Tolleris says the rains in the forecast aren't enough to stabilize the crop that is suffering from extreme high temperatures. As a result, two-sided price action could be seen today as traders monitor the forecast.

Soybeans: 4 to 5 cents lower. Futures were weaker overnight on profit-taking after four straight days of price gains that have contracts testing resistance levels. Like mentioned in corn above, soybean futures softened overnight on forecasts for rains in Argentina beginning tomorrow. However, if the U.S. dollar index is softer when beans open, it could help to limit selling.

Wheat: 3 to 5 cents lower. Futures were weaker on spillover from neighboring pits overnight, as well as from profit-taking after the recent string of price gains. The U.S. dollar index was softer overnight and the U.S. stock market is expected to be firmer his morning on news the European Central Bank allotted 489.19 billion euros ($643.8 billion) in an auction of three-year loans, much higher than estimated. Asian and European stock markets were also higher overnight.

Live cattle: Mixed. Futures are expected to be mixed as traders wait on cash trade to begin. Choice beef values rose 99 cents and Select was up 84 cents on solid movement of 201 loads. Feedlots in the Southern Plains are still cleaning up after the blizzard, so no cash cattle trade is expected today from that region. While showlists are down this week, packers' negative profit margins have limited their willingness to raise bids. But futures have slight cash improvement priced in.

Lean Hogs: Steady to lower. Futures are expected to be weaker this morning after pork cutout values softened yesterday. Pork cutout values slipped $2.90 yesterday, but movement improved. As a result, packers' profit margins have tightened, although remain well in the black. Pressure on pork cutout will translate into softer cash hog bids today that could weigh on nearby lean hog futures.


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