Market Snapshot, 10:00 am CT (VIP) -- August 14, 2012

August 14, 2012 05:09 AM
 

Corn futures have turned choppy; most contracts are currently favoring the upside.

  • Corn futures have enjoyed bouts of short-covering this morning, but moves to the upside have in turn encouraged light rounds of profit-taking. The market is uncertain how much upside is left in the rally.
  • Encouraging short-covering is yesterday's crop condition report from USDA that showed slight deterioration in the corn crop and a rapid pace of development.
  • But cooler temps and chances of rain for the Corn Belt are limiting buying interest.
  • Gulf basis levels softened for August and September delivery but firmed for December this morning. This confirms some demand destruction has occurred.

 

August soybean futures have strengthened to trade 30-plus cents higher. The rest of the market has softened to a mixed tone.

  • Soybean futures are enjoying some corrective short-covering today as traders recognize supplies remain tight.
  • Plus it appears high prices have yet to significantly deter demand. This morning's NOPA soybean crush data topped expectations at 137.38 million bu. and was, 2.4% higher than June and 11.7% above year-ago. Soyoil stocks came in slightly higher than expected at 2.345 billion pounds.
  • Gulf basis levels were steady to higher this morning, also pointing to still-strong demand.
  • But yesterday's slight improvement in USDA's crop condition ratings is making traders more hesitant to add long positions.
  • Plus cooler temps and rain chances this week could still benefit some soybeans.

 

Wheat futures softened amid mixed action in the corn market to post losses of roughly 3 to 7 cents in Chicago and Kansas City. Minneapolis is seeing lighter losses.

  • Pressure on corn futures led to traders taking advantage of a firmer U.S. dollar index by booking profits in wheat futures this morning.
  • Egypt's state-owned wheat buyer bought 120,000 metric tons (MT) of wheat from Russia and Ukraine (evenly split between the countries) for September delivery. This reminds the market that high prices will make U.S. wheat less competitive on the global export market.
  • Global crop concerns remain, however. Most recently, the Australian government's statement that El Nino thresholds are near raise crop concerns for the country. This weather pattern typically leads to dry conditions in eastern growing regions of Australia.

 

Live cattle futures have reversed early gains to post slight losses . Feeder cattle are enjoying moderate gains.

  • Choice boxed beef values rose another $1.94 yesterday and Select climbed $1.77, but movement was very light to start the week at 122 loads.
  • With futures already at a premium to last week's $119 to $120 trade and considering yesterday's slow beef movement, futures are vulnerable to light profit-taking.
  • Expectations are for cash trade to take place late in the week as bids and asking prices have yet to be established.
  • Livestock futures are also benefiting from improved investor risk appetite as reflected by gains in the stock market and crude oil futures. This stems from better-than-expected gross domestic product data from France and Germany as well as a rise in U.S. retail sales.
  • Feeder cattle futures are benefiting from followthrough buying amid choppy to lower action in the corn market.

 

Lean hog futures are posting slight to moderate losses in most contracts.

  • The October lean hog contract is benefiting from the steep discount it holds to the cash hog index. The August contract is seeing light trade as it expires today.
  • The rest of the market is seeing light profit-taking after yesterday's strong gains on news the U.S. government will buy pork to aid producers.
  • While packer profit margins are solidly in the black, cash hog bids have recently been steady to lower as supplies are plentiful.
  • The pork cutout value fell 33 cents yesterday, but movement was decent at 51.5 loads.
     
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