Short-Covering Lifts Grains Overnight

May 24, 2012 01:19 AM

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Overnight highlights. Following are highlights of overnight trade (as of 6:30 a.m. CT) and opening livestock calls:

Corn: Mixed. July through March futures are trading 1 to 5 cents higher, with the rest of the market narrowly mixed. Price action has been extremely choppy so far this week, so how the market closes will be anybody's guess. This morning's weekly export sales data will help to direct price action. The U.S. dollar index is slightly weaker this morning, which is supportive of short-covering. Rains are moving across the central Corn Belt this morning, although precip is expected to be light and scattered.

Soybeans: 12 to 14 cents higher. Futures benefited from short-covering overnight and weakness in the U.S. dollar index. Additional support comes from ideas recent losses are overdone, although traders remain weary as the financial situation in the euro-zone remains unsettled. Traders look for a strong showing in this morning's weekly export sales report, so anything less than that could diminish buying. Rains are expected to be a disappointment today across the Corn Belt and temps are seen rising this weekend -- further raising moisture needs.

Wheat: 5 to 8 cents higher. Futures were slightly higher overnight amid short-covering and help from dollar weakness. But the U.S. dollar index remains in a bullish pattern, which raises concerns about the competitiveness of U.S. exports. There's little fresh news for the wheat market to absorb this morning, but supportive for wheat are ongoing hot and dry conditions in the U.S. Southern Plains.

Live cattle: Steady to firmer. Futures are expected to see light short-covering this morning following yesterday's losses, with support coming from strength in the beef market. Choice values rose $1.09 and Select was up 61 cents yesterday on strong movement of 220 loads. Cash cattle trade got underway yesterday at $121 in the Southern Plains, which is down $2 from last week. June live cattle are trading at around a $3 discount to the cash market.

Lean Hogs: Lower. Futures are expected to be pressured this morning by weakness in the pork cutout market, which slipped 96 cents yesterday. Despite lower cash bids yesterday, packers' profit margins remain well in the red thanks to renewed pressure on the pork market. The cash market is expected to be steady to weaker again this morning amid lighter demand as packers work to improve margins. June lean hog futures are trading in line with the cash index, which should help to limit pressure on the contract.


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