Wheat Extends Losses; Doing More Technical Chart Damage

December 27, 2012 12:54 AM

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Overnight highlights. Following are opening grain and livestock calls at 6:55 a.m. CT:

Corn: 2 to 3 cents lower. Futures are seeing light followthrough from yesterday's losses, with December 2013 corn below $6.00 for another day. Weakness in the U.S. dollar index provided limited support in early overnight trade, as that gave way to fiscal cliff and demand concerns. News Taiwan has canceled a tender for U.S. corn due to high prices is adding to the negative tone.

Soybeans: Mixed. January and March futures are marginally higher, while the rest of the market is down 1 to 3 cents. Weakness in the dollar index is limiting price pressure, although traders say upside potential is being limited to short-covering due favorable growing conditions in Brazil. Traders report Taiwan has canceled a tender to purchase U.S. soybeans due to high prices.

Wheat: 2 to 6 cents lower. Wheat futures are weaker this morning amid a lack of fresh news. The fact weakness in the dollar index hasn't spurred short-covering is also discouraging, as it signals bearish attitudes are building on themselves. March Chicago wheat is testing $7.64 1/2, which marks a 62% retracement of the rally from the May low. Violation of this support would make bears' next target the May low of $6.52.

Live cattle: Steady to firmer. Futures are expected to see a lift from followthrough from yesterday's gains and cautious optimism about higher cash cattle trade this week. Boxed beef values started the week on solid footing, with Choice up $1.15 and Select up $1.40 yesterday and movement of 292 loads. Traders, however, have higher cash trade priced into the market, which could taper gains this morning.

Lean hogs: Mixed. Futures are expected to be choppy this morning as traders work to even positions ahead of Friday's Quarterly Hogs & Pigs Report. The report is expected to show farrowing intentions below year-ago levels, but for gains in pigs per litter to reflect expectations for steady to higher pork production. Meanwhile, packers have seen profit margins return to the black, but packers say demand for hogs is limited as they are well supplied for this week's holiday shortened kill schedule.


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