Soybean Futures Stronger Overnight, Brazilian Shipping Delays Linger

March 21, 2013 02:01 AM

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Overnight highlights. Following are opening grain and livestock calls at 7:00 a.m. CT:

Corn: Mixed. Old-crop futures are 1 to 2 cents lower, with new crop mixed this morning. Spread unwinding with soybeans is contributing to profit-taking in the corn market. Corn is still working on strong weekly gains, with May pivoting around $7.30 this morning. This morning's weekly export sales report will help direct prices, as will outside markets. The U.S. dollar index is weaker this morning, but has been choppy so far today. Traders are concerned the combination of the recent rally in corn futures and the overall strengthening of the dollar will slow (which is already slow) export demand for corn.

Soybeans: 3 to 10 cents higher. Futures are benefiting from spreading with corn, as well as shipping delays at South American ports. News that China plans to sell between 1 MMT and 1.5 MMT of state soybean reserves to crushers due to shipping delays in Brazil is also providing support, as traders believe it opens the window for the U.S. shipping season even a bit longer as we remain the most reliable source of beans on the globe. Traders will also take their cue from this morning's weekly export sales report to see if China remained the key buyer. Soybean futures still have work ahead in order to signal a near-term low has been posted although May beans are pivoting around $14.30 this morning.

Wheat: 4 to 7 cents lower. Wheat futures are seeing profit-taking following yesterday's gains, as traders wait for this morning's weekly export sales data for direction. The fear is strength in the U.S. Dollar index -- which posted a sharp late-winter rally -- will slow demand for U.S. wheat, especially given the plentiful global stocks situation. Meanwhile, the greening crop in the Central and Southern Plains needs moisture to sustain it, and there's little in the near-term forecast.

Live cattle: Steady to firmer. Live cattle futures are expected to build on yesterday's gains, but strength will be hard fought as traders remain concerned about demand. Choice boxed beef values slipped 77 cents and Select declined by 62 cents yesterday, but the good news is movement improved to 195 loads. Light cash cattle trade in the Southern Plains was reported yesterday at $125, which is down $1 to $2 from the previous week and is expected to set the tone for remaining sales. April live cattle are trading at around a dollar premium to the cash market, which is a fairly tight spread given the tight supply situation. Traders will also begin to more actively even positions ahead of tomorrow afternoon's Cattle on Feed Report.

Lean hogs: Mixed. The technical situation weakened further yesterday as nearby futures posted fresh contract lows, although trimmed losses into the close. The high-range close gives a clue to followthrough buying this morning, although gains will be hard to come by given continued weakness in the pork cutout market. Thanks to sharp price declines in loins and hams, pork cutout values slipped $2.03 yesterday to trim packers' profit margins. The softer tone in the pork market heightens concerns about demand and is expected to result in $1 lower cash hog bids this morning.


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