Market Snapshot, 10:00 am CT -- July 25, 2012

July 25, 2012 05:02 AM
 

Corn futures have pared gains slightly to trade roughly 4 to 10 cents higher.

  • After two days of corrective profit-taking, buying interest has returned to corn futures as outside markets are less burdensome and crop concerns are high.
  • Excessive heat in the Corn Belt with just scattered rain chances for the eastern and northern Corn Belt are withering the crop. Thus, private crop forecasts continue to drop.
  • Plus, any rains now would only stabilize the crop.
  • Outside markets are supportive today with traders showing a stronger risk appetite given expectations the Fed is moving closer to QE3.

 

Soybean futures are trading 20- to 30-plus cents higher as traders have shifted their attention back to crop concerns.

  • Traders are engaging in some "value" buying on ideas the downside was overdone the past two days as heat continues to wither crops and rains are not expected to be widespread or heavy enough to "make" the crop. Heat is expected to return next week.
  • Soybeans are now entering the stage when they are most in need of precip as bean plants are flowering and setting and filling pods. This is encouraging traders to add premium back into prices after the sharp, two-day pullback.
  • Hopes of another round of stimulus measures have made investors more willing to buy "risky" assets today.
  • News Indonesia will temporarily suspend its 5% soybean import duty Aug. 1 is adding light support.

 

Wheat futures are trading 20-plus cents higher at all three exchanges.

  • Wheat is enjoying spillover support from corn and soybeans this morning. A weaker dollar is adding buying incentive. Relative to near contract-high prices in corn and beans, wheat appears more of a "value" buy.
  • This has allowed traders to shift attention back to tightening global wheat prospects, with attention largely centered on producers in the Black Sea region. Most recently, talk has circulated Russia may ban grain exports.
  • Gains are being kept in check by recognition spring wheat harvest is underway.
  • On the demand front, Morocco tendered for 300,000 MT of U.S. wheat, while Jordan rejected all offers for a tender for 100,000 MT of optional origin wheat.

 

Live cattle futures are mixed with nearby contracts favoring the downside. Feeder cattle futures are sharply lower.

  • Cash cattle trade is not expected to get underway until late-week and initial expectations are for trade above last week's $113 as showlist estimates are much tighter for the week and boxed beef movement has picked up. Plus, recent heat has slowed weight gain and made packers unwilling to transport animals.
  • But the heat could also discourage consumers from firing up the grill and boxed beef prices have been mixed this week.
  • Feeder cattle futures are being pressured by firmer corn prices after a two-day setback.
  • Renewed hopes of a third round of quantitative easing have boosted investor risk appetite and caused the US dollar index to soften.

 

Lean hog futures gapped higher on the open and are enjoying strong gains.

  • Lean hogs are rallying around continued signs a low may be in for the pork market. The pork cutout value rose $1.57 yesterday and movement picked up to 85.3 loads, easing concerns heat is trimming consumer demand.
  • Such gains have improved packer profit margins, though they are still negative. Early cash hog bids are mostly steady due to tight supplies.
  • Nearby futures remain at a discount to the cash hog index, which is supportive.
  • News Russia will cut its import duty for pork from 15% to 0% on Aug. 23 as part of its accession to the World Trade Organization provides light support.
  • Additional support comes from a weaker dollar and improved investor risk appetite today.
     
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