Soybeans Surge Overnight, Cattle React to BSE

April 25, 2012 01:46 AM

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Overnight highlights. Following are highlights of overnight trade:

Corn: 3 to 6 cents higher. Futures saw support overnight from weakness in the U.S. dollar index as well as spillover from sharp gains in the soybean pit. May corn needs to return above $6.30 to signal a near-term low has been posted and to break the trend of lower lows and lower highs. While old-crop stocks appear to be tightening amid strong demand, traders remain focused on the prospects for a large 2012 crop to replenish supplies -- therefore limiting buying interest.

Soybeans: 13 to 27 cents higher. Futures rose sharply overnight, with nearbys leading gains and posting an upside breakout. May beans now appear headed for $15.00. Futures were supported yesterday by talk a freeze event has further trimmed Argentine crop prospects, while traders expect demand for U.S. beans to remain strong due to the disappointing South American bean crop. Bulls clearly have the technical advantage.

Wheat: 4 to 8 cents higher. Futures benefited from spillover from neighboring pits and dollar weakness, as well as short-covering. Without help from neighboring pits, gains in the wheat pit would be limited, as recent rains across Europe have helped the wheat crop to recover and the U.S. winter wheat crop is in much better shape than a year-ago at this time.

Live cattle: Mixed. Futures are called to open mixed following yesterday's sharp to limit down move on rumors of BSE in California. USDA later confirmed the BSE case, assuring the public the animal never made it into the human food supply. The market will remain on edge today, but a price recover should be seen -- at least on the open -- as the discovery isn't expected to result in any issues with our trading partners. Additionally, beef prices strengthened yesterday, with Choice values up $1.37 and Select up $2.22.

Lean Hogs: Mixed. Futures are also called mixed, with some short-covering possible after yesterday's sharp losses. But attitudes remain negative toward the market as traders remain disappointed about the pork cutout market. Pork values firmed 21 cents yesterday, but much more improvement is needed to pull packers' profit margins out of the red. As a result, the cash hog market is expected to be steady to weaker again today.


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