Market Snapshot, Noon CT -- July 13, 2012

July 13, 2012 07:01 AM
 

Corn futures have trimmed gains substantially to favor the downside in mixed trade.

 

  • Profit taking loosened market bulls' hold on the corn market, though fears persist regarding the U.S. crop with drought encompassing the Corn Belt and no major relief in sight.
  • The forecast calls for only scattered rain and building heat.
  • But traders are hesitant to add long positions as the market showed signs of topping after Wednesday's USDA reports and weather rallies are typically short-lived. This has encouraged some profit-taking ahead of the weekend.

 

Soybeans have pared gains to the mid-teens.

  • Soybeans are benefiting from concerns about additional crop condition declines in Monday's USDA report. Drought continues to expand and intensify in key growing areas and the forecast signals more of the same likely lies ahead.
  • USDA announced a 150,200-metric ton (MT) soybean sale to unknown destinations, with the bulk of sales being for 2012-13. This reminds the market that soybean prices have yet to achieve the rationing needed to make supplies last.
  • News Brazil's Agroconsult expects the country to produce a record 83.1 million MT (above U.S. supplies) of beans in 2012-13 has encouraged some light profit-taking.

 

Wheat futures have trimmed gains further along with corn to trade around 3 to 7 cents higher in Chicago and Kansas City. Minneapolis wheat is seeing slightly firmer gains.

  • Action in the wheat market largely mirrors that of the corn market. A weaker dollar and strong risk appetite among investors today is also making it easier for the market to rally.
  • The market also continues to benefit from a more favorable export outlook for U.S. wheat thanks to crop concerns in areas of the Black Sea region, Australia, Europe and China.
  • However, Chicago wheat has moved to a premium to Kansas City wheat. The heavy amount of speculative money that is in the market signals a corrective reversal may be in the near future.

 

Live cattle futures have moved off their early lows to trade slightly to moderately lower. Feeder cattle futures remain under heavy pressure.

  • Cash cattle trade took place yesterday at prices $2 to $3 below $117 the prior week. This is putting some pressure on futures, though heat and tightening supplies is making traders comfortable leaving some premium in futures prices.
  • Pressure also stems from continued softness in the boxed beef market. This morning, Choice values plummeted $2.47 and Select cuts fell 13 cents. Movement also slowed to 84 loads.
  • Recent strength in the corn market continues to weigh on feeder cattle, though futures have backed off their losses as corn futures trimmed gains.

 

Lean hog futures have softened to post moderate to sharp losses in all but the soon-to-expire July contract, which is slightly lower.

  • Packers have reduced kill hours and are keeping bids steady to lower today in an effort to boost profit margins.
  • Pork performance has also been disappointing of late as prices have steadily fallen for more than two weeks. Movement has recently improved, but this must be paired with price gains to signal a low is near. An expected heat wave next week is making traders question whether this will occur.
  • July lean hogs are benefiting from the slight discount they hold to the cash hog index ahead of their expiration Monday.
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