Traders Watch for Signs of Price Rationing

August 2, 2012 01:54 AM


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Overnight highlights. Following are highlights of overnight trade as of 6:55 a.m. CT and opening livestock calls:

Corn: 2 to 6 cents lower. Futures have been choppy overnight, but are currently trading near session lows to post slight losses. December corn has remained within the boundaries of yesterday's trading range. Traders will look to this morning's weekly export sales report for guidance as to price rationing. Meanwhile, FC Stone has lowered its national corn production estimate to 11.043 billion bu., with a yield of 124.3 bu. per acre.

Soybeans: 2 to 19 cents lower. Nearby futures are weaker, with August posting double-digit losses. However, deferred futures have firmed. November beans are around 5 cents lower on followthrough from yesterday's losses. November beans remain within the boundaries of yesterday's trading range, but are currently trading near session lows. FC Stone has lowered its national soybean crop estimate to 2.73 billion bu., with a yield of 36.2 bu. per acre. Traders are also anxiously awaiting the weekly export sales data to see if China continued to purchase U.S. soybeans last week.

Wheat: 3 to 8 cents lower. Wheat is mostly around 3 to 8 cents lower at all three exchanges this morning on spillover from corn futures. Futures posted a mid-range close yesterday. With little fresh news for the market to digest, wheat continues to closely track corn prices. Traders remain concerned about the size of the global crop, but this is mostly factored into prices. If this morning's weekly export sales data shows a strong tally, traders will be impressed that U.S. prices remain competitive on the global market.

Live cattle: Mixed. Futures are expected to be mixed as traders wait on cash cattle trade to begin. Expectations are for $1 to $2 higher cash trade with last week's $114 trade, but nearby futures are already trading at a premium to those expectations. Beef prices were slightly lower yesterday, but movement continues to pick up this week, with 255 loads changing hands yesterday.

Lean Hogs: Mixed. Futures were lower in all but the front-month August contract, which has some work to do in order to catch up with the cash index. October lean hogs will soon be the lead-month contract and are trading at a steep discount to the cash index. This should help to limit pressure on nearby contracts, although talk of stepped up sow liquidation remains a concern as supplies will soon begin to build seasonally.


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