Larger Aussie Wheat Crop Pressures Market Overnight

December 6, 2011 01:02 AM

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

Corn: 6 to 7 cents lower. After starting last week with a risk-on attitude, traders have begun this week with a risk-off attitude thanks to reports that Standard and Poor's may put euro-zone nations on "creditwatch negative" -- meaning that the countries have a 50% chance of being downgraded within 90 days. Additional pressure came from ABARES saying there will be a larger quantity of low-quality wheat from Australia this year. March corn dropped to its lowest level since March in overnight trade. The March low of $5.55 is bears' next target.

Soybeans: 1 to 2 cents lower. Futures saw limited price action overnight, with futures chopping around unchanged thanks to a choppy U.S. dollar index. Pressure on beans was limited by concerns about building dryness in key production areas of South America. There are rains in the near-term forecast, but forecasters say rains could be too scattered to provide relief and stabilize crop prospects.

Wheat: 5 to 6 cents lower. Futures saw spillover from weakness in the corn pit, as traders reacted to the larger winter wheat crop estimate from ABARES. The larger crop estimate reminds the market of plentiful global supplies and a larger quality of low-quality wheat is not a price-positive development. March Chicago wheat drifted lower throughout the overnight session, testing $6.00.

Live cattle: Steady to lower. Futures are expected to see followthrough from yesterday's losses. Futures hit sell stops and extended losses sharply yesterday amid concerns about demand. While exports remain strong, retailers have largely completed buying for holiday features and packers' profit margins remain in the red. A slightly larger showlist has traders expecting weaker cash trade this week.

Lean Hogs: Steady to lower. Futures are called lower amid demand concerns and plentiful supplies. Weekly pork production was record large last week and another large kill is expected this week. With retailers thought to be largely done buying pork for holiday features, there is concern about the pork pipeline backing up. The cash market is expected to be steady to weaker again today as packers say this week's needs have largely been booked.


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