Price Action Increasingly Choppy Ahead of Friday's Reports

March 28, 2012 01:46 AM

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Overnight highlights. Following are highlights of overnight trade:

Corn: Mixed. Futures were mixed overnight, with nearbys currently firmer amid short-covering after yesterday's late-session decline. Old-crop corn futures are at levels that have spurred increased demand in the past, and given the tight old-crop supply situation, an increase in demand at these prices should spur a corrective bounce. But instead, traders are focused on expectations Friday's Prospective Plantings Report will show the potential for a large build in carryover for the upcoming year.

Soybeans: 4 to 6 cents higher. Futures were lifted overnight by ideas yesterday's losses were overdone, as traders obviously are comfortable building a long position ahead of Friday's key USDA reports. Given the disappointing outcome of the South American crop, U.S. carryover in 2012-13 is expected to tighten, hence the market's intense bid for more soybean acres.

Wheat: 5 to 6 cents higher. Futures benefited from light short-covering overnight following yesterday's double-digit decline. Futures were pressured yesterday by improvement in the winter wheat crop in the U.S. Southern Plains following recent rains. May Chicago wheat has returned to the lower half of the choppy consolidation range, which encouraged some short-covering overnight. Traders are waiting on results from an Egyptian wheat tender, which are expected to be announced this morning.

Live cattle: Mixed. Futures are called mixed on followthrough from yesterday's gains vs. concerns about the beef market. Given the fact Choice beef values yesterday fell below year-ago for the first time since February of 2010, there could be a pickup in selling as packers' negative profit margins come back into focus. Choice beef values slipped $1.31 yesterday, with Select down $1.18. Movement was decent at 197 loads, but prices need to firm in order to build expectations for steady to firmer cash trade.

Lean Hogs: Mixed. Futures are expected to be mixed, with some short-covering possible as April hogs are trading at a discount to the cash index and are oversold. Pork cutout values improved 58 cents yesterday and movement was strong at 116.5 loads of product on the day. However, with packers' profit margins still in the red, there is quite a bit of work to do in order to improve demand for cash supplies -- especially since packers say this week's needs have been largely secured.


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