Light Profit-Taking As Rains Begin to Fall in Argentina

January 10, 2012 12:43 AM

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

Corn: 1 to 2 cents lower. Futures saw light profit-taking overnight as rains began to fall on Argentina. This replaces the hot, dry weather that has been stressing the crop, but forecasters expect a return to stressful conditions after the cold front passes. Additionally, weather models show only half of the drought area receiving relief from this event.

Soybeans: 7 to 11 cents lower. Futures saw profit-taking overnight to erase about a third of yesterday's gains. Profit-taking on rains beginning in Argentina is being limited by weakness in the U.S. dollar index. Crude oil and gold futures are sharply higher this morning. As a result, traders could view early weakness as a buying opportunity if outside markets remain positive.

Wheat: 2 to 5 cents lower. Futures saw light profit-taking overnight after yesterday's sharp gains. Traders worked on narrowing the corn/wheat spread yesterday, but March Chicago wheat remains at around a 12-cent discount to March corn futures. Wheat is also seeing a boost from index fund rebalancing, although it will be complete by the end of the week.

Live cattle: Mixed. Futures are expected to see a mixed tone as traders wait on cash cattle trade to begin. Boxed beef prices were mixed yesterday on decent movement to start the week at 198 loads. This week's showist is smaller than a week-ago, giving feedlots more bargaining power -- which is likely to extend the cash debate into the end of the week.

Lean Hogs: Steady to weaker. Futures are excepted to be steady to weaker as they anticipate near-term cash softness. Packers have seen profit margins slip into the red -- which hasn't happened in quite some time. However, pork cutout values improved yesterday, which could rally some hope a near-term low is in the works for the pork cutout market. Cash sources look for demand for hogs to soften as the week progresses due to plentiful supplies of market-ready hogs.


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