Risk-On Attitude In Commodity Markets

February 15, 2012 12:46 AM

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

Corn: 1 to 2 cents higher. Some positive euro-zone news overnight weakened the U.S. dollar index and lifted corn futures. GDP data out of the euro-zone is slightly better than expected. Declining by 0.3% in the latest quarter, GDP is not as bad as feared and France's GDP rose slightly. Also, China has promised to keep buying euro-zone debt. Still, corn remains in its long-lasting sideways trading range, losing ground to soybeans that are bidding for acres.

Soybeans: 3 to 7 cents higher. Soybeans futures saw a boost overnight from dollar weakness, as well as ongoing concerns about dryness in Rio Grande do Sul, Brazil, as beans there are filling pods. March beans rose above $12.60 overnight -- the highest level since October 19. Meanwhile, the state-backed China National Grain and Oils Information Center today said it expects China to import around 3.97 million metric tons of soybeans this month, which would be down 14% from January, but up from year-ago. Also today, the Chinese trade delegation is expected to sign purchase agreements with the U.S. at a ceremony in Des Moines, Iowa.

Wheat: 2 to 4 cents higher. Wheat remains in a follower's role to corn, seeing light spillover support overnight. Wheat has ignored positive demand news this week, as Egypt purchased U.S. SRW wheat for the first time in months. Instead, traders are focused on the plentiful global stocks situation. March Chicago wheat needs to return to the $6.80 area -- near the February high -- to reignite bullish attitudes.

Live cattle: Steady to higher. Following two strong days of price gains, live cattle are vulnerable to profit-taking, but bullish attitudes often feed on themselves and the beef market continues to strengthen. This week's showlist is much tighter than last week -- raising expectations for $1 to $2 higher cash cattle trade. April live cattle are back testing contract-high resistance of $129.70.

Lean Hogs: Steady to higher. Futures are expected to benefit from followthrough after yesterday's high-range close, as well as spillover from live cattle and widespread buying in the commodity markets this morning. Traders are also encouraged to see packers' profit margins improve. While still in the red, packers' losses have been trimmed this week. But until margins are back in the black, demand for cash hogs is expected to be light. Bids are expected to be steady to weaker again today.


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