Market Snapshot, 10:00 am CT -- July 24, 2012

July 24, 2012 05:09 AM
 

Corn futures have softened further to post losses in the teens to 30s with the September contract leading to the move lower.

  • Traders are taking advantage of a firmer dollar and recent price strength in corn futures by booking profits. The market had been technically oversold.
  • Adding incentive to do so is rains in the northern and eastern Corn Belt this morning with more chances throughout the week. These rains will do little more than stabilize the crop, but more attention is shifting to the demand side of the equation.
  • USDA yesterday lowered its corn crop condition rating slightly more than expected. Twenty-six percent of the crop is now rated "good" to "excellent," whereas 45% of the crop is rated "poor" to "very poor."

 

Soybean futures have extended early losses to to trade 30 to 50-plus cents lower in all but some of the far-deferred contracts.

  • Soybeans will benefit from rains falling in the the eastern and northern Corn Belt today and forecast rains later this week as 79% of the crop is blooming and 36% is setting pods.
  • But given excessive heat, the occurrence of these rains will be key, as crop conditions ratings and yield estimates continue to plunge. USDA yesterday rated 31% of the crop "good" to "excellent" and 35% of the crop "poor" to "very poor."
  • Gulf basis levels softened for August and November delivery but firmed for October delivery this morning.

 

Wheat futures are mostly 20- to 30-plus cents lower at all locations.

  • With corn and soybean futures under pressure, wheat is without support again this morning. That's opening the door to additional corrective selling.
  • Dollar strength as a result of disappointing manufacturing data in the U.S. and ongoing fiscal woes in Europe is adding pressure.
  • Also, USDA yesterday showed that 12% of the spring wheat crop is harvested, pointing to increased hedge-related pressure.
  • USDA data also showed the spring wheat crop is limping into the finish, as its rating slipped by 5 percentage points to 60% "good" to "excellent" yesterday. But relative to the corn and bean crop ratings, this still points to a decent crop.

 

Live cattle futures are slightly lower in all but the front-month contract, while feeder cattle futures are enjoying moderate to sharp gains.

  • Boxed beef movement surged to 290 loads, but prices slipped 54 (Choice) and 16 cents (Select) yesterday. While this points to improving demand, traders need prices to rise, too, to give them confidence in the long side of the market.
  • Showlist estimates are much tighter than week ago (down 30,000 head), giving feedlots some leverage in cash negotiations. In addition, high temps could make them unwilling to move cattle in addition to it limiting weight gain. Initial asking prices are $117 to $118.
  • But the heat could also trim consumer demand, though approaching Labor Day should keep a floor under beef demand.
  • Feeder cattle futures are benefiting from from a second day of pressure on corn futures.

 

Lean hog futures are mixed with a downside bias.

  • Lean hog futures are enjoying some light, corrective short-covering this morning.
  • But as packers continue to cut in the red, their demand is limited and talk has arisen that they may reduce kill hours. But heat is also limiting weight gain and making producers reluctant to move hogs to market. Early cash hog bids are mostly steady.
  • The market is also concerned heat will trim pork demand. Yesterday, pork cutout values slid 26 cents and movement failed to impress at 39 loads.
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