Improved Moisture Prospects Weigh on Grain Futures

December 18, 2012 12:37 AM

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Overnight highlights. Following are highlights of overnight trade (as of 6:35 a.m. CT) and opening livestock calls:

Corn: 1 to 3 cents lower. Corn futures are under light pressure on followthrough from yesterday's low-range close and spillover from soybean futures. With no fresh demand news for the market to digest, traders are opting to shed more risk by lightening their long exposure to the market. Additional pressure is coming from improved moisture chances for the Corn Belt. March corn is hovering above support at last week's low of $7.15, which if violated, would do technical chart damage and open fresh downside risk for futures.

Soybeans: 15 to 18 cents higher. A near daily chance of rains in the forecast for Brazil has triggered a round of profit-taking after futures posted a low-range close yesterday. But soybean futures remain in the uptrending channel established from the November lows as traders recognize the strong pace of demand. For January beans, $15.00 is serving as a tough level of resistance.

Wheat: 2 to 4 cents lower. Chicago and Kansas City wheat futures are weaker, while Minneapolis is firmer this morning on short-covering. Additional pressure is coming from more precip chances for the Central Plains as a winter storm moves through today and Wednesday. Chicago wheat is seeing spillover from neighboring pits, with the March contract hovering above last week's low of $8.01 1/2. With little fresh demand news for the market to digest, there is more room to the downside as the market searches for a price that boosts demand.

Live cattle: Mixed. Futures are called mixed on a combination of followthrough buying from yesterday's gains and the risk of profit-taking due to cash uncertainty. This week's cattle showlist is tighter than last week, but to gain on last week's $1 improvement in the cash market, the boxed beef market needs to strengthen. Choice beef values improved 17 cents yesterday and Select declined 89 cents on strong movement to start the week at 173 loads.

Lean hogs: Mixed. Lean hog futures are expected to be mixed today, with the possibility of short-covering following yesterday's losses. But traders are also working to narrow the premium nearbys hold to the cash index. Pork cutout values firmed 31 cents yesterday to lift packers' profit margins, although most packers are still cutting in the red. Demand for hogs remains strong ahead of the holiday-shortened kill schedules, but traders remain concerned about packers' margins.


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