Wheat Leads Overnight Gains

October 19, 2012 02:49 AM

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Overnight highlights. Following are highlights as of 7:50 a.m. CT and opening livestock calls:

Corn: Mixed. Nearby corn futures are 2 to 5 cents higher, but deferred futures are mostly weaker. Nearbys are enjoying followthrough buying from yesterday's gains, as traders return their focus to tight supplies. Gulf corn basis is firmer for immediate delivery this morning, which reflects a possible increase in demand but also tight supplies.

Soybeans: Marginally to 3 cents higher. Futures are enjoying followthrough from yesterday's strong gains, as traders recognize the current prices are encouraging too-strong of a demand pace. But expectations for a big South American crop are limiting buying, but these supplies would be available until early next year. Gulf soybean basis is weaker for immediate delivery, which suggests a slowdown in demand but also the availability of new-crop supplies.

Wheat: 3 to 9 cents higher. Wheat is leading gains this morning as new outlets are reporting that Ukraine will ban exports starting Nov. 15. This further tightens global exportable supplies, raising expectations demand for U.S. wheat will improve sooner rather than later. December Chicago wheat futures are working on solid weekly gains after violating supply early in the week.

Live cattle: Higher. Futures are expected to be higher in reaction to ongoing strength in the boxed beef market, as Choice values were up $1.10 and Select rose 13 cents yesterday on strong movement of 167 loads. Traders will also put finishing touches on positions ahead of this afternoon's Cattle on Feed Report, which is expected to show On Feed at 97.8%, Placements at 85% and Marketings at 89.8% of year-ago levels. Cash cattle trade will likely be delayed until this afternoon.

Lean Hogs: Lower. Futures are expected to be weaker in reaction to yesterday's 92-cent drop in pork cutout values, which has tightened packers' profit margins. The cash hog market is still expected to be mostly steady today, but followthrough pressure today in the pork market would suggest a seasonal decline in pork prices has begun. December lean hog futures have moved into overbought territory according to the 9-day Relative Strength Index after posting more than an $8 recovery from the September low.


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