Soybeans Showing Signs of Topping

September 18, 2012 01:38 AM

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Overnight highlights. Following are highlights of overnight trade (as of 6:40 a.m. CT) and opening livestock calls:

Corn: 2 to 8 cents lower. Futures are slightly lower on followthrough from yesterday's low range close, on spillover from sharp losses in soybeans, strength in the U.S. dollar index and increased harvest-related hedge pressure. With focus off the tight supply situation for now, traders have plenty of reasons to take some profits out of the market. December corn has developed a rounded downtrend from the contract high.

Soybeans: 20 to 29 cents lower. Futures are seeing followthrough from yesterday's limit-lower close, as well as pressure from more active harvest progress and strength in the U.S. Dollar index. While fundamentals remain bullish given the tightening stocks situation, a bull market needs fresh news to digest. November beans have completed a 25% retracement of the rally from the June low. Violation of $15.80 would complete a 38% retracement and signal a major high has been posted.

Wheat: Mixed. Wheat futures are favoring a firmer tone in mixed trade, as the market is able to shrug off spillover from neighboring pits due to concerns about tightening global supplies. Also supportive is the dry situation in the Southern Plains, which has resulted in a slower-than-usual start to winter wheat planting. December Chicago wheat is hovering around support at yesterday's low of $8.76 1/4.

Live cattle: Mixed. Following yesterday's losses, live cattle are due for a corrective rebound. However, negative outside markets will limit traders' willingness to extend long positions. But also supportive is a strong start to the boxed beef market for the week. Choice values rose $1.51 and Select was up $1.78 on strong movement of 171 loads. This week's showlist is also smaller than last week, but with packers working with negative profit margins, demand for cash supplies is thought to be lower than last week.

Lean hogs: Mixed. Futures are expected to be mixed as traders reevaluate positions. General thoughts are the worst is now behind the market in terms of sow slaughter, although another large kill is expected this week. The pork cutout market is also showing signs of stabilizing, as values slipped "just" 16 cents yesterday.


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