Light Profit-Taking As Traders Ready for USDA Reports

July 10, 2012 01:38 AM

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Overnight highlights. Following are highlights of overnight trade (as of 6:45 a.m. CT) and opening livestock calls:

Corn: 5 to 8 cents lower. Despite a steeper-than-expected cut to crop condition ratings yesterday, corn futures are slightly lower this morning amid profit-taking. December corn so far has remained within the boundaries of yesterday's trading range to keep the uptrend well intact. Dry weather is expected to continue through the week and into next week, with mostly seasonable temps keeping moisture needs high for a crop that is pollinating. Focus in the market will also be on pre-report position squaring ahead of tomorrow's USDA reports, in which traders expect USDA to trim old- and new-crop carryover.

Soybeans: 5 to 12 cents lower. Futures are weaker this morning amid profit-taking following yesterday's strong gains. November beans so far have remained within the boundaries of yesterday's trading range. Yesterday's crop condition ratings reflected more deterioration -- as expected. Given this week's drier forecast, traders look for stress on the crop to mount. According to Chinese customs data, soybean imports in June of 5.62 million metric tons (MMT) were up 31% from a year-ago and year-to-date imports of 29.05 MMT are up 22.5%. Prices have yet to rally to a level that significantly slows Chinese demand.

Wheat: 8 to 15 cents lower. Futures are seeing spillover from neighboring pits as well as profit-taking from yesterday's losses. Slight deterioration in the spring wheat crop was noted in yesterday's condition report, although the crop remains ahead of schedule. Traders' focus has turned to evening positions ahead of tomorrow morning's USDA reports, in which traders expect USDA to raise the size of the wheat crop from last month.

Live cattle: Lower. Futures are called lower in reaction to yesterday's $2.14 drop in Choice beef values to narrow the premium it holds to Choice, which was 36 cents higher. Movement of 203 loads is very strong to start the week, but lower demand for higher-quality cuts is a concern to the market. Feeder futures could see some short-covering on weakness in the corn pit.

Lean Hogs: Mixed. Futures are expected to be mixed following yesterday's gains, with some followthrough possible as nearbys hold a steep discount to the cash index. Futures were also supported yesterday by ideas high corn prices were trimming producers' farrowing intentions. Meanwhile, the cash hog market is called steady to lower amid lackluster demand due to negative profit margins.


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