Traders Shedding Risk Ahead of Holiday-Shortened Week

November 18, 2011 12:51 AM

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

Corn: Steady to marginally lower. Futures saw lackluster price action following yesterday's sharp decline. The U.S. dollar index is weaker this morning, but traders are cautious about adding risk given the ongoing euro-zone debt worries. Overnight a Chinese grain official signaled no more purchases of U.S. corn would be needed this year as they have begun to restock state reserves, but the official said prices should remain stable and traders expect the country to need additional corn next year.

Soybeans: 6 to 8 cents higher. Futures benefited from short-covering overnight following yesterday's losses to avoid additional technical chart damage. There's little fresh news for the market to digest this morning, with focus expected to be on evening positions ahead of next week's holiday-shortened Thanksgiving schedule. Many traders will stay out of the market next week.

Wheat: Mixed. Torn between spillover from a negative bias in the corn pit and short-covering in beans, wheat saw choppy trade overnight. After yesterday's drop to a fresh yearly low, there's fresh downside risk for nearby Chicago wheat futures. Wheat remains in a follower's role, and for now, the "risk-off" attitude signals bears clearly have control of the market.

Live cattle: Mixed. Look for price action to be choppy as traders even positions ahead of this afternoon's Cattle on Feed Report. Traders look for the report to reflect tightening calf supplies, with the average pre- report guess for Placements at 99.2% of year-ago levels. On Feed is expected at 104% and Marketings at 101.4% of year-ago. Also, Cash cattle trade got underway in Kansas and Texas yesterday at $122 to $122.50, which is $2 to $3 below last week. No trade has been reported in Nebraska. While boxed beef prices have strengthened this week, packers are looking for ways to trim negative profit margins.

Lean Hogs: Mixed. Futures are expected to see a choppy tone after yesterday's short-covering turned into strong gains for nearby contracts. Futures surged yesterday on ideas a seasonal low is in the works or has been posted. But meanwhile, the cash hog market continues to soften as packers work through plentiful supplies. Pork cutout values slipped 32 cents yesterday and movement moderated. The cash hog market is expected to be steady to weaker and packers say early week supplies are being booked.


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