Market Snapshot, 10:00 am CT -- July 23, 2012

July 23, 2012 05:15 AM
 

Corn futures have trimmed losses slightly to trade mostly 6 to 13 cents lower.

  • Traders returned from the weekend with corrective profit-taking in mind. A sharply higher dollar and rains in the forecast are adding incentive to do so.
  • Forecasts signal better rain chances for areas of the Corn Belt over the next three to four days, especially north of I-80. However, temps are expected to remain above normal for the region.
  • Private crop watcher yield estimates continue to come down. Traders expect USDA to again slash its corn rating due to recent heat and dryness.

 

Soybean futures remain 20 to 40-plus cents lower.

  • Sharp gains in the U.S. dollar index and forecast rains are encouraging profit-taking in soybean futures today.
  • Forecasts signal better rain chances for areas north of I-80 this week. Any rains now would be beneficial for soybeans as they flower and set pods.
  • In light of ongoing heat, the occurrence of these rains is crucial. If they disappoint, bulls' may again gain the upper hand.

 

Wheat futures are posting losses ranging from pennies to around 20 cents at all locations. Nearby contracts are bearing the brunt of the pressure.

  • As global wheat supplies are ample and the US spring wheat crop is in generally favorable condition, wheat needs strength from corn to rally. That is lacking today, leaving the market vulnerable to profit-taking.
  • Heightened euro-zone concerns on news Spain may need a full debt bailout has pushed the dollar higher and choked investor risk appetite this morning.
  • Crop forecasts in the Black Sea region continue to decline. The International Grains Council says Russia's 2012-13 exports may decline by 44%. But this is countered by forecasts for sunny weather in Europe, which ease quality concerns there.

 

Live cattle futures are posting slight to moderate gains this morning, while feeder cattle futures are moderately higher.

  • Live cattle futures are enjoying some short-covering thanks to a bullish Cattle Inventory Report Friday that pointed to tight supplies over the long-term.
  • Last week, cash trade took place at mostly $113 on the Plains, which is around $5 below current front-month futures prices. Traders will watch showlist estimates and boxed beef action before assuming cash expectations this week.
  • The boxed beef market gave signs early last week a low may be near, but softened into week end. If beef action does not improve this week, cash trade will again soften.
  • Softer corn prices have given feeder cattle futures a boost.
  • Sharp gains in the US dollar index is keeping buying interest in check.

 

Lean hog futures are under slight to moderate pressure this morning.

  • Highly negative outside markets due to concerns about Spain's fiscal troubles is weighing on hog futures this morning.
  • Pork prices generally improved last week along with movement, but on Friday, the pork cutout value rose a penny and movement slowed to 34.5 loads. Traders need proof this was just a minor setback before throwing money at the long side of the market.
  • Also limiting buying interest was a Cold Storage Report showing record-large frozen pork stocks for June.
  • Cash hog bids are mostly steady across the Midwest, although there are mixed undertones. Most plants are bought ahead on slaughter needs, but excessive heat is limiting weight gains and slowing hog movement, which could leave some plants in need of supplies.

 

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