Stocks to Open Lower

February 24, 2009 06:00 PM
 

Julianne Johnston 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.


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