Traders will return with a "risk-on" attitude towards the commodity markets thanks to Congress passing a fiscal cliff deal that will be signed by President Obama today. The U.S. stock market is geared up to start the new year on positive footing. Grain markets open at 9:30 a.m. CT.
Corn futures are called 6 to 10 cents higher but could see an even more robust open thanks to positive outside markets.
- The U.S. dollar index is sharply lower this morning, which is bolstering crude oil and gold futures and is expected to provide spillover to corn futures this morning.
- Corn is also expected to find followthrough support from Monday's high-range close, although futures still have a lot of work ahead in order to return momentum to bulls.
- Drier weather the remainder of the week across Argentina will help with remaining planting efforts, although the late-planted crop faces yield challenges.
Soybean futures are called 10 to 15 cents higher as traders are expected to return to add risk.
- In addition to relief the fiscal cliff has been avoided, funds are expected to pump fresh money into the long side of markets after liquidating long positions to close out last year.
- Also supportive for soybean futures this morning are more positive signs China's economy is strengthening. Its official purchasing managers' index matched the November reading to show three straight months of expansion.
- But soybean futures have some work ahead in order to secure near-term lows, especially given most favorable weather in Brazil and in light of recent sales cancellations.
Wheat futures are called 8 to 15 cents higher on spillover from neighboring pits.
- Wheat remains in a follower's role and is expected to benefit from spillover from neighboring pits and positive outside markets.
- Sharp weakness in the U.S. dollar index due to the fiscal cliff being averted is expected to lift grain futures this morning as traders return from the holidays to add risk.
- Wheat futures, however, have a lot of work ahead in order to improve the technical situation, as the decline from the November high was extended last week.
- Trade official from India say the additional 2.5 MMT of wheat its government recently freed for export will likely be sold within the next five to six months.
Live cattle futures are called higher on spillover from the stock market and firmer cash hopes.
- Live cattle futures are expected to benefit from strength in the U.S. stock market, as investors are relieved the U.S. economy has averted the fiscal cliff.
- A solid start to the beef market for the week is also supportive for cattle futures, although late-week cash trade is expected as packers work to catch up after the holidays.
- This week's showlist is smaller in Nebraska and Kansas, but up in Texas.
- Feeder cattle futures are expected to see spillover from positive outside markets, but could struggle to rally due to expected strength in the grain markets.
Lean hog futures are called to open higher as traders return from the holidays in a good mood after the fiscal cliff was averted.
- Lean hog futures are called higher on help from positive outside markets, as the U.S. stock market is set to open higher to signal improved consumer confidence in the economy.
- The cash hog market is expected to be mostly steady, but some firmer tones could develop as some packers are thought to be short bought on hogs coming out of the holidays.
- February lean hog futures are trading at more than a $3 premium to the cash index, which could sever or limit gains.
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