Traders Await Key Cattle Inventory Report

January 27, 2012 12:39 AM

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Overnight highlights. Following are highlights of overnight trade and opening calls:

Corn: 1 to 3 cents higher. Futures were firmer overnight on help from positive outside markets. The U.S. dollar index is weaker on rising expectations the euro-zone is coming to an agreement on becoming more aggressive with its debt issues -- particularly Greece. Meanwhile, cash sources report a pickup in cash sales after basis levels improved sharply over the past two weeks. Also supporting futures overnight was a drier forecast for Argentina and southern Brazil for next week, which will maintain stress on the filling crop.

Soybeans: Mixed. Futures were mixed overnight, with nearbys slightly lower and deferreds firmer. A drier near-term forecast for Argentina and southern Brazil, as well as ongoing rains in Mato Grosso, Brazil, helped to limit pressure on the nearby contracts. Dollar weakness also helped to keep losses in check. Traders will be focused on evening positions ahead of the weekend, and the drier near-term forecast for Argentina could be encouraging for extending long positions.

Wheat: 1 to 2 cents lower. Futures favored a weaker tone in choppy trade overnight, with buying limited by a lack of fresh news. Weakness in the U.S. dollar index should help to limit losses, but key will be the direction of the corn market as wheat remains in a follower's role.

Live cattle: Mixed. Following yesterday's round of profit-taking, futures are expected to be mixed today as traders wait on cash cattle trade to begin, as well as evening positions ahead of the key Cattle Inventory Report. The report is expected to show All Cattle & Calves at 98.5% of year-ago levels -- pointing to tightening supplies through the year and higher prices ahead. Meanwhile, beef prices softened yesterday, which makes this week's cash trade more uncertain.

Lean Hogs: Steady to lower. Futures are expected to be pressured by softening pork cutout values, which have pushed packers' profit margins deeper into the red this week. Pork cutout values slipped 88 cents yesterday. Packers' margins have slipped into the double digits, which will lower demand for supplies early next week.


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