Reaction Continues to USDA March 30 Data

April 2, 2012 01:17 AM

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Overnight highlights. Following are highlights of overnight trade:

Corn: 1 to 7 cents higher. Old-crop futures led gains overnight as traders continue to absorb the tighter-than-expected grain stocks figure from Friday's report that resulted in a limit-higher close in May corn. The contract is now pivoting around $6.50 to signal a near-term low has been posted. The market's job is now to ration remaining supplies given the threat that corn supplies will be razor thin this summer before the 2012 harvest.

Soybeans: 12 to 16 cents higher. Futures saw strong followthrough buying overnight after last week's strong gains. Traders reacted strongly to Friday's tighter-than-expected grain stocks peg and the Prospective Plantings Report showed soybean acreage below the lowest pre-report trade guess. The market's job is to now try to bid some acres away from corn -- which will be difficult if favorable weather continues to spur early corn plantings.

Wheat: 2 to 8 cents lower. Futures are weaker this morning on profit-taking following Friday's double-digit gains. Traders reacted to a smaller-than-expected all wheat acreage figure on Friday, as well as stronger-than-expected quarterly wheat use, with strong gains. But given the plentiful global stocks situation, upside potential was limited overnight. But pressure on wheat should at least be limited if corn and soybean futures continue to rally.

Live cattle: Mixed. Following last week's sharp decline, cattle futures are due for a corrective bounce to correct the oversold condition of the market. Nearby live cattle already have additional cash market weakness factored into prices to start the week, which should limit followthrough pressure. The main concern for the market right now is demand, as traders wonder when the impacts from the Lean, Finely Textured Beef fiasco will pass.

Lean Hogs: Steady to weaker. Futures are expected to see more pressure this morning from cash-market weakness than Friday's Hogs & Pigs Report, although the report showed most categories slightly above expectations. The number of total Hogs & Pigs is up 1.9% from year-ago, signaling hog supplies will build the last half of the year. Meanwhile, pressure on the pork cutout market will translate into a softer start to the week for the cash hog market, as packers work to improve ailing profit margins.


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