Today's Focus on USDA Reports and Euro-Zone Deal

June 29, 2012 12:44 AM

EU leaders strike a deal. The U.S. dollar index is sharply lower this morning on a surprising deal struck by leaders at the euro-zone summit. They have pledged to allow direct recapitalization of the region's banks, which investors hope will draw the euro-zone back from the brink of its debt crisis.

Also, I will not have an update on Monday and Tuesday and the markets are closed on Wednesday. Happy Independence Day!

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Overnight highlights. Following are highlights of overnight trade (as of 5:45 a.m. CT) and opening livestock calls:

Corn: 6 to 12 cents higher. Futures are seeing a lift this morning from weakness in the U.S. dollar index, as well as from weather concerns. Traders are being somewhat cautious ahead of this morning's key USDA reports. Traders look for USDA to raise acreage slightly from USDA's March intentions report, with corn stocks seen below year-ago levels.

Soybeans: 7 to 10 cents higher. Futures are firmer this morning on improved risk appetite and ongoing weather concerns. Some showers are possible across areas of the Corn Belt this weekend, but dry eastern and southern areas are once again expected to miss out on the much-needed precip. Traders look for USDA to raise planted acres by around 1.7 million acres this morning. If accurate, traders will discount the figure as second-crop soybean area is in jeopardy due to dryness. Soybean stocks are seen above year-ago levels.

Wheat: 4 to 7 cents higher. Futures are enjoying spillover from the corn pit, as well as from dollar weakness. Traders expect this morning's key USDA reports to show farmers took advantage of favorable conditions this spring and planted more spring wheat acres than the March intentions report suggested. Wheat stocks are seen below year-ago levels.

Live cattle: Steady to firmer. Futures are expected to benefit from the improved risk appetite, as well as expectations for $1 to $2 higher cash cattle trade. Rising temps that are raising concerns about death losses in the Plains, as this threatens to further tighten supplies near-term. Price action in the corn pit will also influence cattle futures.

Lean Hogs: Steady to lower. Packers saw profit margins decline sharply as pork cutout values slipped $3.41 on pressure from all cuts. As a result, the cash hog market is expected to be steady to weaker today amid lighter demand, pressuring futures. Traders look for this afternoon's Quarterly Hogs & Pigs Report to show All Hogs & Pigs at 101.3%, Kept for Breeding at 100.7% and Kept for Marketing at 101.4% of year-ago levels.


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