Price Action Turns Choppy Ahead of Reports

December 7, 2011 12:39 AM

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

Corn: Mixed. Futures were choppy overnight, as traders' attitudes continue to shift ahead of the all-important late-week euro-zone debt meetings. Standard & Poors warned the euro-zone if they don't come up with a viable plan, the credit ratings for several countries will be downgraded. We'll find out soon if they took this warning seriously. Traders are also preparing for Friday morning's USDA reports, in which they expect USDA to trim 2011-12 carryover by around 5 million bushels from last month.

Soybeans: 3 to 5 cents higher. Futures were firmer overnight on help from weather concerns in South America, although there are some rains in the near-term forecast. But it doesn't take a lot of time for South American soils to become dry and some areas have been without a meaningful rain for two to three weeks, or more. Meanwhile, traders look for USDA to raise carryover by around 18 million bu. from last month due to a lagging export pace. This is limiting buying as traders even positions ahead of the report.

Wheat: 2 to 4 cents lower. Futures were weaker overnight after Russia said it will export "no less than" 25 million metric tons of grain in 2011-12. This is a change from the country's deputy ag minister previous statement, that signaled the country's exports could not exceed this threshold. Additional pressure is coming from slight dollar firmness as investors remain cautiously optimistic euro-zone leaders will come up with a plan that would solve its debt crisis. Traders look for Friday morning's USDA report to show a slight increase in carryover from last month by around 2 million bushels.

Live cattle: Steady to firmer. Futures are due for a round of short-covering following another day of price weakness in most contracts. Traders have lower cash cattle trade priced into the market and the boxed beef market has held up well so far this week. Usually at this time of year, traders keep some weather premium in the nearby contracts due to the risk of stress on feedlots, but instead, traders look for sharp cash weakness this week due to packers' sharply negative profit margins.

Lean Hogs: Mixed. Futures are expected to be mixed, with price moves for the December contract limited as it's trading in line with the cash index. The cash market is expected to be steady to weaker today, but pork cutout values firmed yesterday to lift packers' profit margins. Nearby lean hog futures need to at least stabilize to signal near-term lows have been posted, although bears have momentum on their side.


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