Negative Outside Markets Weigh on Grain Futures

September 20, 2012 01:29 AM

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Overnight highlights. Following are highlights of overnight trade (as of 6:30 a.m. CT) and opening livestock calls:

Corn: 4 to 6 cents lower. Corn futures are lower this morning on strength in the U.S. dollar index. The dollar is stronger on disappointing economic data out of Asia and Europe that shows signs that business continues to stall. With a smaller crop factored into prices, traders are paying closer attention to outside markets, but will also have weekly export sales data this morning to factor into prices.

Soybeans: 7 to 13 cents lower. Futures are lower this morning on dollar strength after Chinese manufacturing data showed the world's second largest economy ticked up slightly in September -- coming in below expectations. With a smaller crop factored into prices and early harvest results in some instances coming in better than traders expected, soybean futures are vulnerable to profit-taking on negative outside markets this morning.

Wheat: 2 to 4 cents lower. Wheat is seeing spillover pressure from neighboring pits and on spillover from a stronger U.S. dollar index. Global stock markets were weaker overnight on disappointing Asia and European economic data, but pressure on wheat was limited as traders remain concerned about global crop prospects.

Live cattle: Mixed. Futures are expected to be mixed this morning as traders wait on cash cattle trade to begin. The beef market has generally strengthened this week, with Choice values up 65 cents yesterday to rise near the $195-per-cwt. level. While this week's showlist is smaller than last week, packers are hesitant to raise bids due to negative profit margins. As a result, cash trade isn't expected until later on Friday.

Lean hogs: Mixed. Futures are expected to see a mixed start, with upside potential limited by tightening packer profit margins, weakness in the pork cutout market and negative outside markets. The cash hog market has stabilized this week to support futures, but ongoing weakness in the pork cutout market has trimmed packers' profit margins, which could soften the cash market as packers still have plentiful supplies to draw from.


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