Grains Weaker Overnight on Dollar Strength

February 6, 2013 12:24 AM

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Overnight highlights. Following are opening grain and livestock calls at 6:25 a.m. CT:

Corn: 4 to 5 cents lower. Futures are lower this morning on followthrough from yesterday's losses, spillover from soybeans and strength in the U.S. dollar index. There's no fresh news for the market to digest, although rain chances in southern Brazil and Argentina have improved slightly. Traders are also more aggressively preparing for Friday's USDA S&D Report, which is expected to reflect softening demand. March corn is pivoting around support at yesterday's low.

Soybeans: 9 to 12 cents lower. Futures are weaker this morning on profit-taking and strength in the dollar, but also on forecasts for rainfall chances in Argentina and southern Brazil this week, although weather models are not in agreement about the coverage of the event. March soybeans are trading within the boundaries of yesterday's range, but are near session lows as testing support at yesterday's low.

Wheat: 1 to 3 cents lower. Wheat is seeing spillover from neighboring pits, as well as pressure from strength in the dollar index. There was a flurry of export developments yesterday that traders are still digesting. The immediate consequences are not bullish for U.S. wheat, but raises the possibility that as European and Brazilian supplies dwindle, importers will be coming to the U.S. to meet needs.

Live cattle: Mixed. Futures are expected to be choppy as traders wait on cash cattle trade to begin. Packers have not yet begun to bid for cattle, which signals trade will be delayed until Friday. Meanwhile, the boxed beef market signals a near-term low may be in the works, as Choice values firmed $1.57 and Select rose 71 cents yesterday on strong movement. Strength in the beef market could help support futures.

Lean hogs: Steady to weaker. Futures are expected to be pressured by weakness in the pork cutout values, as values slipped $1.62 yesterday to push packers' profit margins deep into the red. As a result, demand for cash hogs has been reduced, with packers lowering daily slaughter requirements. Traders believe the drop in pork values represents weakening domestic demand for pork.


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