Weekend Developments

September 28, 2008 07:00 PM
 

Julianne Johnston Pro Farmer Senior Markets Editor


From Pro Farmer

Updated as of 7:00 a.m. CT

Weekend developments... Grain futures were sharply lower overnight as crude oil futures were sharply lower and the dollar was sharply higher overnight.

Weekend negotiations between administration officials and congressional leaders resulted in a deal being reached on a $700 billion bailout plan. The plan includes strict accountability and oversight provisions, taxpayer protections, mortgage foreclosure relief, limits on executive compensation and incremental payments to buy up troubled assets. The House is expected to vote on the measure today and the Senate potentially today or Wednesday. The weekend action came about after an apparent deal broke apart late last week.

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

Corn: 12 to 16 cents lower. Futures finished with double-digit losses Friday to erase nearly all of Monday's strong gains. Outside markets played the major role in corn market price action this week and that will likely be the case again this week. Aside from a close watch on the economy, corn traders will also be watching weather, specifically whether or not Mother Nature delivers the first widespread killing frost, as some forecasts suggest.

Soybeans: 29 to 32 cents lower. Friday's decline brought futures closer to the week-ago levels, with January beans closed about 20 cents above the previous week's levels. This week's price action will continue to be heavily influenced by outside markets.

Wheat: 15 to 17 cents lower. Futures started the week strong, but fell through support levels today to end the week about even with week-ago levels. Price action next week will largely be determined by outside markets.


Cash cattle expectations: Watching beef trade. Sharp declines in boxed beef prices last week signal a fundamental top in the cattle market. As a result, traders come into the week expecting steady to lower cash cattle prices in the Plains. In addition to fundamental concerns, cattle traders are also fighting economic worries.

Futures call: Weaker. Last week's price action was highly choppy, but produced very little in terms of net movement. Economic concerns capped buyer interest in live cattle futures and also made feedlots skittish on cash cattle negotiations. There's a very real likelihood economic concerns will persist in trade next week. With talk of a short-term fundamental top also hanging over the market, bears are likely to have momentum this week.

Cash hog expectations: Steady to weaker. Last Friday's Hogs & Pigs data showed the market hog inventory is even bigger than the trade expected. As a result, nearby hog futures are expected to open the week under pressure. Seller interest may somewhat be limited by expected strength in the cash hog market. Cash hog bids are expected to open the week steady to firmer despite very heavy market-ready supplies.

Futures call: Mixed. Lean hog futures deteriorated last week to close near the previous week's levels and remained within the downtrending channel. Hog slaughter last week is estimated at 2.363 million head, heavier than last week's lofty number and today's Hogs & Pigs Report suggests slaughter numbers will continue to rise. Friday's Hogs & Pigs Report comes in near expectations (All H&P at 102%, Kept for Breeding at 97% and Kept for Marketing at 103% of year-ago levels) and should lead to bear spreading this morning.


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