Wheat Sees Price Recovery on Yield Concerns

May 17, 2012 01:21 AM

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Overnight highlights. Following are highlights of overnight trade:

Corn: Steady to 3 cents lower. Futures saw a slight setback overnight amid dollar strength, as it treks toward the January high amid ongoing euro-zone concerns. Meanwhile, traders still have yesterday's Chinese corn purchase on their minds, which signals the country will continue to buy U.S. corn when it's a value buy. Also this morning, a Japanese trade official says it has only covered 25% of its feed corn requirements for the July-September period, signaling demand from Japan could be on the rise.

Soybeans: 3 to 6 cents higher. Soybeans continue to recover from recent losses, seeing slight gains overnight in the face on negative outside markets. The tightening supply picture into the upcoming marketing year has helped traders view the recent slide in prices as a value buy, but buying is being capped by strength in the U.S. dollar, which raises some concern about the competitiveness of U.S. exports -- although a smaller South American soybean supply this year keeps U.S. as the main soybean supplier on the globe.

Wheat: 1 to 3 cents higher. Futures benefited from followthrough buying overnight in the wake of yesterday's sharp price recovery. Futures surged late yesterday amid ongoing concerns about poor harvest results from the Southern Plains and the return to hot and dry conditions across the region. July Chicago wheat is pivoting around $6.40 this morning.

Live cattle: Mixed. Futures are expected to be mixed as traders wait on cash cattle trade to begin. After firming Monday and Tuesday, beef values slipped 63 cents (Choice) to $1.98 (Select) yesterday. But the good news is beef movement surged to 302 loads. Expectations are still for $1 higher cash trade with last week's $120 trade, although asking prices and bids remain several dollars apart. Traders will also begin to more actively even positions ahead of Friday's Cattle on Feed Report, expected to show On Feed at 100.3%, Placements at 88.4% and Marketings at 98.6% of year-ago.

Lean Hogs: Mixed. Futures are called to open mixed, as packers' profit margins have slipped back into the red. Pork cutout values slipped 31 cents yesterday, but movement surged to 120.5 loads. The combination of slight weakness on pork cutout values and this week's steady to $1 higher cash cattle trade each day could threaten packers' demand for hogs the remainder of the week, making traders nervous futures could retest the recent low.


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