Market Snapshot, 10:00 am CT (VIP) -- August 1, 2012

August 1, 2012 05:12 AM
 

Corn futures are mostly 4 to 9 cents lower.

  • Traders are taking profits again today amid a lack of fresh, supportive news.
  • While news is limited, crop concerns remain a key market concern. Private crop estimates continue to decline amid the persistent drought pressure.
  • Gulf corn basis is mostly steady amid slackened demand. River bids are mixed. The surge to historic highs has slowed domestic and export demand.

 

Soybeans are have extended losses to trade 15 to 33 cents lower in the August through January contracts. Far-deferred months are modestly weaker in most contracts.

  • Traders are taking profits out of the soybean market as they await the conclusion of the Federal Open Market Committee meeting this afternoon. If the Fed disappoints, it could take some steam out of the commodity sector.
  • But crop concerns should limit the downside. Given very tight supply projections, traders must find a price that slows use. There haven't been signs of that yet.
  • Forecasts continue to call for stressful weather conditions. While there are some rains in the outlook, they are expected to be too light and scattered to have a significant impact.
  • Soybean basis is mostly steady at the Gulf amid limited export inquiries.

 

Most of the wheat contracts at all three exchanges continue to post losses with many of those contracts trading double-digits lower. Some far-deferred months in Chicago and Kansas City have firmed.

  • Weakness in the corn market is weighing on wheat futures. With that support absent, wheat futures are vulnerable to profit-taking.
  • Crop concerns in Russia and Ukraine continue, but neither country is signaling any export curbs will be needed. Ukraine's ag ministry has pledged a two-month warning before they will act to limit exports.
  • Minneapolis wheat futures are facing seasonal pressure as harvest activity builds. HRS basis is softening as new-crop supplies hit the market. But demand for high-protein U.S. spring wheat should be strong once the harvest pressure eases.

 

Live cattle futures are slightly lower. Feeder cattle are slightly to moderately firmer.

  • Selling interest in August live cattle futures is limited by expectations for at least $1 higher cash cattle prices compared with last week's $114 trade in the Plains. But the contract already holds nearly $5 premium to the cash market.
  • Fall- and winter-month live cattle futures are being lightly pressured by expectations rising feed costs will force more herd liquidation and increase market supplies.
  • Feeder cattle futures are being supported by weakness in the corn market, although buying is limited to short-covering. Traders will wait on signs of a major top in corn before actively moving money into the long side of the market.

 

August lean hog futures are holding near unchanged, while deferred contracts are under pressure.

  • August lean hog futures are finding modest support from the discount they hold to the cash index. But with the cash market expected to soften near-term, buying interest is limited.
  • Cash hog bids are steady to $1 lower as packers are not anticipating problems securing near-term supplies as herd liquidation talk is building.
  • Deferred lean hog futures are being pressured by the herd liquidation concerns as that would increase supplies at a time when hog numbers build seasonally.
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