Pro Farmer Senior Markets Editor
From Pro Farmer
Updated as of 7:00 a.m. CT
Stocks to open weaker... Early
calls are for the stock market to open weaker after President Obama's speech
to Congress last night. This comes after a rally in anticipation of the speech,
which investors say will not get the needed followthrough momentum to spur gains
this morning. The dollar was stronger overnight and crude oil slightly favored
the upside. But if the stock market returns lower today, it would be difficult
for grain futures to build on overnight gains.
Additionally, the financial markets will be focused on the January report
for existing home sales, as well as the Labor Department's report job losses
and the weekly report on oil inventories by the Energy Department.
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Opening calls. These calls originate more than three hours before the open -- use caution, things change:
Corn: 1 cent higher. Futures were mostly around 1 cent higher overnight.
Futures rebounded in late trade to finish slightly higher and on session highs.
A late rally in crude oil and the stock market triggered some relief buying
in the corn market. March corn futures have staked out a short-term trading
range from last Friday's low at $3.42 to Monday's high at $3.59 3/4, while
holding in the downtrend from the January high.
Soybeans: 2 to 4 cents higher. Futures were firmer overnight on short-covering.
Nearby futures closed 5 to 8 cents higher yesterday, supported by outside
markets. March soybeans posted an inside day of trade on the daily chart to
finish just below the $8.80 level. Support lies at last week's low of $8.81
1/2, with resistance at the Feb. 3 low of $9.34 1/2.
Wheat: Steady to 1 cent higher. Futures were fractionally higher in
overnight trade. Futures opened lower but ended firmer yesterday, closing
mostly 5 to 6 cents higher. Weakness in the dollar was supportive for the
wheat pit, as well as gains in the U.S. stock market. March Chicago wheat
is hovering just above support at last week's low of $5.04 1/2.
Cash cattle expectations: Trend uncertain.
Choice boxed beef prices were 7 cents higher while Select cuts dropped $1.15
Tuesday. That moved Choice values to a slight premium to Select cuts. The price
relationship had been inverted as feedlots have been marketing heavy cattle,
which has driven the price of Choice cuts lower. As cattle numbers continue
to tighten, Choice beef supplies will eventually decline and allow Choice prices
to trade at a premium to Select cuts.
Futures call: Steady to firmer. Futures posted strong gains yesterday
and finished in the upper end of the range. Live cattle futures were supported
by corrective short-covering, which was augmented by afternoon strength in
the stock market. With a high-range close yesterday, the cattle market is
set up for followthrough buying this morning-- if the stock market can produce
additional relief buying.
Cash hog expectations: Steady to
weaker. Cash hog bids are seen remaining steady to lower across the Midwest.
Although packer margins have improved some, they remain below breakeven. As
a result, packers are still looking to improve their bottom lines while limiting
their demand for cash hogs. If margins turn positive, Saturday kill plans could
be ramped up and it could create a short-term increase in cash hog bids to close
out the week.
Futures call: Weaker. Futures are called to open weaker based on spillover from yesterday's losses. Additional technical chart damage was done, as May lean hogs gapped to a fresh contract low and came within a nickel of
filling the gap. How outside markets perform will also help to direct hog futures, although hogs saw limited short-covering support from stock market gains yesterday.