Traders Shedding Risk Ahead of USDA Report

February 7, 2013 12:36 AM

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Overnight highlights. Following are opening grain and livestock calls at 6:35 a.m. CT:

Corn: 4 to 5 cents lower. Traders continue to shed risk ahead of tomorrow's USDA Supply & Demand Report. Traders look for USDA to raise carryover from last month to reflect demand destruction, but carryover will remain at razor-tight levels. March corn is now hovering above support at the Jan. 24 low of $7.14 1/2.

Soybeans: 1 to 5 cents lower. Nearby soybean futures have recovered from earlier losses, but deferred futures remain near session lows this morning as traders work to even positions ahead of tomorrow USDA's reports. Hot and dry conditions across southern Brazil and Argentina are maintaining stress on the crops, although traders look for USDA to raise the size of the Brazil crop in tomorrow's USDA report.

Wheat: 1 to 4 cents lower. Wheat is seeing spillover from corn futures, as well as traders moving to the sidelines ahead of tomorrow's USDA reports. Traders look for USDA to raise carryover from last month, but traders are noting indications that demand for U.S. wheat could be on the rise given global developments regarding tariffs. Weakness in the U.S. dollar index is helping to limit pressure this morning.

Live cattle: Mixed. Futures are expected to be mixed as traders wait on cash trade to develop. With packers reluctant to bid for cattle, trade isn't expected to get underway until tomorrow. Boxed beef prices were mixed yesterday, with Choice values down 37 cents and Select up 93 cents. This raises into question whether or not the beef market is working on a low.

Lean hogs: Steady to weaker. Futures are expected to be pressured by weakness in the pork market, as values slipped $1.75 yesterday to push packers' profit margins deeper into the red. As a result, the cash hog market is called steady to lower again today and packers have reduced kill requirements as they work to improve margins.


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