Strength in the Dollar and Harvest Weigh on Grains Overnight

September 24, 2012 01:29 AM

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Overnight highlights. Following are highlights of overnight trade (as of 6:30 a.m. CT) and opening livestock calls:

Corn: 1 to 2 cents lower. Futures are mostly weaker, but deferred futures have turned mixed amid spreading. Weakness in the U.S. dollar index is weighing on the commodity sector this morning and there's little fresh news for market bulls to digest this morning. Strong harvest progress made over the weekend across the Corn Belt is weighing on the cash market, giving traders little reason to do more than cover short positions.

Soybeans: 9 to 15 cents lower. Futures are weaker this morning due to strength in the U.S. dollar index. Outside markets have a "risk-off" stance this morning due to lingering concerns about global economic growth. A German index on business sentiment fell for the fifth straight month, heightening concerns about the euro-zone. Traders also anticipate an increase in harvest-related hedge pressure will be seen this week.

Wheat: 3 to 5 cents lower. Chicago wheat futures are weaker, but there is some scattered buying in Minneapolis and Kansas City futures as traders remain concerned about tightening global supplies and dryness in the U.S. Plains. Support is also coming from tightening supplies in the Black Sea region, as traders sense an increase in demand for U.S. wheat is on the horizon.

Live cattle: Steady to firmer. Futures are expected to see a lift from Friday's USDA reports, which showed fewer cattle On Feed than expected as well as smaller stocks in cold storage at the end of August. But buying from this data could be limited as traders watch the beef market closely for signs of a near-term high. Choice beef values have reached a level that has slowed demand dramatically in the past and the cash market was steady to weaker last week.

Lean hogs: Steady to lower. Futures are expected to factor in a record pork stocks in cold storage figure for the end of August, although traders still believe the worst is behind in terms of sow liquidation. The cash market is expected to be steady to firmer as some locations are in need of supplies to start the week, although upside potential in the cash market will be limited as traders gauge the pork market given tightening profit margins.


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