Market Snapshot, 10:00 am CT (VIP) -- August 10, 2012

August 10, 2012 05:02 AM
 

Action in the corn market has been very choppy this morning. At present, nearby contracts are favoring the upside and far deferred months are weaker.

  • The market continues to digest USDA's reports this morning, which showed drought has slashed production and yield to 10.779 billion bu. and 123.4 bu. per acre, respectively.
  • But countering this is USDA's carryover estimates that show high prices have slowed demand. USDA now estimates 2011-12 carryover at 1.021 billion bu., well above expectations and month-ago. It projects 2012-13 carryover at 650 million bu., which matched expectations.
  • Gains are also being limited by news China will sell state-owned reserves of corn, though tonnage is expected to be minimal.
  • Gulf corn basis is steady to weaker this morning.

 

Soybeans have extended early gains to trade 20- to 30-plus cents higher.

  • As expected, USDA slashed its 2012 production estimate and lowered its 2011-12 carryover estimate even more than expected. Its projection for 2012-13 carryover was near expectations but still represents very tight supplies. Thus, the market believes more rationing is needed.
  • Emphasizing this was another daily sale to China today for 290,000 metric tons (MT) of beans for 2012-13. This brings the weekly daily sales tally to 701,000 MT, of which 561,000 MT were to China (the remainder to "unknown destinations").
  • Also, Gulf basis levels are steady to higher (sharply higher for August delivery) this morning.
  • China's Ministry of Commerce announced China imported 5.87 million metric tons (MMT) of soybeans in July -- a 25-month high and 9.7% higher than year-ago.

 

Wheat futures have softened slightly to post losses in the teens to 20s, with Chicago wheat leading to the downside.

  • The corn market has been very choppy today, leaving wheat vulnerable to profit-taking after neutral to bearish USDA report data.
  • USDA's all wheat crop peg topped expectations at 2.268 billion bushels. The same can be said for USDA's 2012-13 wheat carryover peg of 698 million bushels.
  • USDA now puts the national average all wheat yield at 46.5 bu. per acre, up 0.9 bu. from last month. The spring wheat yield is estimated at 42.8 bu. per acre, up 2.4 bu. from July.

 

Live cattle are off to a choppy start with most contracts favoring the downside. Feeder cattle futures are enjoying moderate gains.

  • Live cattle futures are chopping sideways to lower as they wait for cash cattle trade.
  • Tighter showlist estimates and impressive strength in the beef market this week have traders expecting trade above last week's $118, but this is already baked into prices.
  • Also limiting buying interest is the fact USDA raised its beef production estimate slightly from July for both 2012 and 2013 and lowered its export projections for both years. As a result, USDA lowered its 2012 price projection by $4 on both ends to $119 to $122.
  • Choppy action in corn despite bullish production news is supporting feeder cattle futures.

 

Lean hog futures are slightly firmer in most contracts.

  • Lean hog futures are benefiting from much-welcomed improvement in the pork market yesterday. The pork cutout value rose 32 cents and movement impressed at 89.5 loads.
  • This improved packer profit margins, but as they are still near breakeven. Thus, cash hog bids are steady to lower today.
  • USDA this morning raised its 2012 cash hog projection from $60 to $62, to $62 to $63. It also upped its 2013 projection by $4 on the bottom and $5 on the top end to a range of $62 to $67.
  • But hog futures buying interest being is being limited by seasonally expanding supplies.
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