Negative Outside Markets Weigh on Grain Futures

October 8, 2012 01:36 AM

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Overnight highlights. Following are highlights of overnight trade (as of 6:36 a.m. CT) and opening livestock calls:

Corn: 3 to 6 cents lower. Futures are weaker to kick off the week, largely due to negative outside markets. The U.S. dollar index is stronger this morning after the World Bank lowered its outlook for economic growth in Asia, from the 7.6% estimate it made in May to 7.2%. It also warned that worsening conditions in Europe could knock off 2% from Asia's GDP growth next year. Traders are also working to even positions ahead of Thursday's Crop Production Report.

Soybeans: 8 to 12 cents lower. Futures are under pressure this morning due to strength in the U.S. Dollar index, as the World Bank made a bold forecast in lowering economic growth in Asia. But there are still no signs of slowed Chinese soybean buying, as the county was back buying soybeans during a national holiday last week. Traders believe that even if USDA raises its crop projection on Thursday, it will also raise exports as the current bookings pace is well ahead of the needed pace.

Wheat: Mixed. Wheat futures are choppy this morning, with nearby contracts at all three exchanging holding onto slight gains. There's little fresh news for the market to digest, with some short-covering helping to offset strength in the U.S. Dollar index. Pressure is also being limited by global crop concerns, which is helping to keep futures within the boundaries of the long lasting consolidation ranges.

Live cattle: Mixed. Futures are expected to see a choppy start as traders watch the boxed beef market for cash signals. Choice beef values slipped $1.36 and Select was down $1.45 on Friday, with movement a moderate 151 loads. October live cattle are trading at around a dollar discount to the cash index, which should help to limit pressure from negative outside markets this morning.

Lean hogs: Steady to firmer. Futures are expected to build on last week's strong performance, although upside potential could be limited by negative outside markets and the premium nearby futures already hold to the cash index. Pork cutout values slipped 68 cents on Friday, but packers' profit margins remain in the black and the cash market is expected to start the week steady to higher.


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