Volatile Week of Trade

March 12, 2009 07:00 PM

Julianne Johnston Pro Farmer Senior Markets Editor

From Pro Farmer

Updated as of 7:00 a.m. CT

No Bullpen on Monday. Bullpen will return on Tuesday, March 17.

Plenty of news to move markets this week... Today will cap off what has been a very choppy week of price action. There has been plenty of news for the market to digest, with outside markets also providing direction. USDA's S&D Report on Wednesday has put more focus on the fundamental side of the market, but without supportive outside markets, upside potential will be limited.

But it was a combination of strong corn and soybean sales yesterday and strong outside markets that provided support for futures yesterday. The dollar index opened higher, but drifted lower to hint of a near-term high being posted. This, as well as hints of increased Chinese consumption, provided strong support for the crude oil market. Thirdly, the Dow Jones Industrial Average posted its third consecutive day of gains. In fact, this week's strength in the Dow has investors talking about the potential for a near-term low being posted, although there is much more technical price improvement needed before it can be confirmed.

Corn futures did some slight technical chart improvement yesterday, but May corn needs to climb above the $4.00 level before there is more confidence of a near-term low being posted. Meanwhile, if soybeans add to yesterday's gains they will post gains for the week, but May beans need to climb above the $9.00 level to hint of a near-term low. Wheat remains within the boundaries of the recent consolidation range.

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Opening calls. These calls originate more than three hours before the open -- use caution, things change:

Corn: Steady to 1 cent higher. Futures were mostly around a penny higher overnight. Futures enjoyed price strength through the day, but extended gains into the close to finish around 20 cents higher.  A combination of outside markets, short-covering and strong export data provided support. May corn futures posted an upside day of trade on the charts, penetrating resistance to post a fresh weekly highs. Futures need to climb above the $4.00 level to strongly suggest a near-term low has been posted. Support lies at the March low of $3.44 1/2.

Soybeans: 1 to 6 cents higher. Futures saw spillover support overnight from yesterday's gains. Futures closed 20 to 24 cents higher yesterday, which was near session highs amid late-session buying. Much of the strength came from outside markets, which inspired traders to cover short positions. Additional support came from the strong weekly sales figure. today's gains, May soybean futures posted an inside day of trade on the daily chart. This week's high of $8.95 is near-term resistance.

Wheat: Narrowly mixed. Futures were narrowly mixed overnight amid spreading. Futures extended gains into the close yesterday, with Chicago wheat closing around 16 to 17 cents higher. Much of the support came from outside markets, as the dollar sank after a stronger start. May Chicago wheat posted an inside day of trade to erase a little more than half of the previous day's sharp losses.

Cash cattle expectations: $1 lower. Active cash cattle trade was seen in the Plains at $1 lower $81 prices Thursday. Cash sources signal all that's left is some cleanup sales and feedlots may opt to carry those cattle into next week if packers don't raise cash cattle bids, especially if cattle futures build on Thursday's price gains.

Futures call: Mixed. Futures favored gains through the day yesterday thanks to supportive outside markets. Outside markets were supportive for cattle futures, as the Dow Jones Industrial Average traded higher. The dollar also trimmed gains this afternoon, while crude oil traded sharply higher. June live cattle penetrated resistance at yesterday's high after testing support levels in early trade, but closed back below that level. Futures need to climb above the $83.00 level to violate downtrending resistance drawn off January and February highs.

Cash hog expectations: Steady to lower. Demand for cash hogs to close out the week will be light and cash hog bids are expected to be steady to $1 lower across the Midwest. Packers are buying hogs for early next week and cash sources indicate most plants are well bought ahead on needs after reducing late-week slaughter runs amid poor margins. If margins don't improve significantly, more slaughter reductions are likely next week.

Futures call: Mixed. Futures posted strong gains yesterday due to outside markets, but could face profit-taking today as traders even positions ahead of the weekend. With nearby hog futures trading in line with the cash index, there is room for additional gains. However, with the cash market expected to remain under pressure near-term, potential for spillover gains today should be limited.

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