Risk Environment Improves

October 6, 2011 01:34 AM
 

 

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

Corn: 5 to 7 cents higher. Despite firmness in the U.S. dollar index overnight, grain futures saw widespread buying amid optimism the euro-zone situation has stabilized -- at least for now. Investors' nervous have been calmed as European leaders are working to strengthen banks. Corn posted a strong upside day of trade yesterday as Informa surprised the market by lowering its corn production estimate. December corn needs to return above $6.25 to signal the start of a near-term low being posted, as that level would mark a 25% retracement of the recent decline.

Soybeans: 11 to 16 cents higher. Futures saw two-sided trade overnight, but are trading near session highs in late overnight trade. The soybean market has a lot of work ahead to signal a near-term low is in the works. November beans need to return above $12.30 to complete a minimal 25% retracement of the recent decline. Traders will be watching this morning's weekly export sales data for signs of a pickup in demand after yesterday's sales report showed China back in the market for U.S. beans.

Wheat: 8 to 10 cents higher. Wheat is following the corn market higher and today faces a possible test of downtrending resistance. December Chicago wheat needs a close above $6.40 to break the downtrend to signal the start of a near-term low being in the works. The atmosphere for traders taking on risk has improved with stabilization of the euro-zone debt situation. However, widespread rains across the Plains this weekend should limit buying to short-covering.

Live cattle: Mixed. Futures are expected to be mixed following yesterday's strong gains amid some profit-taking. Nearby live cattle are trading at a premium to the cash index, which is expected to limit followthrough buying. Still, the atmosphere for adding risk has improved and the Dow Jones Industrial Average is expected to be firmer this morning on stabilization of the euro-zone debt situation.

Lean Hogs: Steady to higher. Futures are expected to build in yesterday's gains amid strength in the cash hog market. But with October hogs trading at a premium to the cash index, upside potential should be limited for that contract. Strong demand is also behind positive attitudes in the hog pit.


 

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