Light Short-Covering Seen Overnight

November 22, 2011 12:34 AM

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

Corn: 1 to 3 cents higher. Futures were slightly higher overnight, although saw two-sided trade. Weakness in the U.S. dollar index spurred short-covering, but buying was limited after futures did more technical chart damage yesterday. Rising euro-zone bond rates raise concern about their financial mess spreading, which limited buying to short-covering. December corn pivoted around $6.00 overnight.

Soybeans: 4 to 5 cents higher. Futures saw short-covering overnight following yesterday's sharp losses. The U.S. dollar index is weaker after the Super Committee announced it was unable to come to a debt agreement. January beans have moved to their lowest level since last November. While they are at value buy levels, concerns about the global economy are limiting buying attitudes.

Wheat: 2 to 3 cents higher. Wheat remains in a follower's role and enjoyed very light short-covering overnight. Chicago wheat came off session lows yesterday to hover just beneath $6.00. News of additional purchases by Egypt that didn't include U.S. wheat reminded the market yesterday of lackluster demand. Given its Thanksgiving week, there is risk of higher price volatility due to low-volume trade.

Live cattle: Mixed. Futures posted a strong price recovery yesterday to end firmer after trading sharply lower. Some help came from continued strength in the beef market, with support also coming from the Cattle on Feed Report reflecting tightening supplies via a drop in Placements compared to year-ago. But with this week's showlist up from last week and packers' profit margins in the red, the prospects of higher cash cattle bids is unlikely. As a result, choppy price action is likely until more is known about cash.

Lean Hogs: Mixed. Futures are called to open mixed after yesterday's choppy day of trade. Futures ended slightly higher yesterday on expectations seasonals were improving and demand would pick up after Thanksgiving. Nearby futures are trading at a premium to the cash index and the cash hog market is expected to be mostly steady today. Some lower bids could develop, though, as packers say supplies remain plentiful.


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