Market Snapshot, 10:00 am CT (VIP) -- August 27, 2012

August 27, 2012 05:00 AM
 

Corn futures continue to favor the downside, with most contracts posting losses around 1 to 2 cents.

  • A quiet news day for the corn market has encouraged some light profit-taking this morning.
  • But the tight supply picture and a need for rationing remains as underlying support.
  • Gulf corn basis is 2 cents firmer for immediate shipment, which reflects tight supplies.
  • Outside markets are also providing little direction. The dollar is lower, but so is the stock market and crude oil futures.

 

Soybean futures have softened to trade steady to 10 cents higher.

  • Pro Farmer's disappointing production and yield estimates for the 2012-13 crop Friday returned focus to the need to find a price that rations supplies. Thus far, historically high prices have yet to do so.
  • Traders will watch this morning's weekly export inspections report and Thursday's Export Sales Report for demand clues as supplies must be rationed.
  • China's Ministry of Commerce says it expects August soybean imports to total 5.3 million metric tons (MMT), which is up from its initial estimate of 4.37 MMT.
  • A hot, dry forecast for the Midwest this week is also supportive, as it increases the chances beans will be unable to hold onto yield potential.

 

Wheat futures are trading narrowly mixed at all locations.

  • Pressure on corn and a relatively quiet news day has left wheat vulnerable to some profit-taking this morning.
  • Egypt purchased 120,000 metric tons (MT) of Russian wheat and 60,000 MT of Romanian wheat this weekend, reminding traders high U.S. wheat prices have turned importers to other locations for filling their needs.
  • But crop concerns in the Black Sea region and Australia continue to limit the market's downside.

 

Live cattle futures are posting slight losses in early trade. Feeder cattle futures are seeing mixed trade.

  • Retailers have completed their Labor Day buys, so traders believe the boxed beef market is working on a top. On Friday, Choice and Select cuts plunged $1.69 and $1.40, respectively and movement slowed to 165 loads.
  • Packers will be buying for a holiday-shortened kill schedule next week due to the holiday.
  • A pullback in corn prices has encouraged light short-covering in feeder cattle futures, but traders are not convinced corn has put in a high. This will continue to limit buying interest.

 

Lean hog futures are enjoying slight gains in 2012 contracts, while deferred months are posting slight losses.

  • Nearby lean hog futures are benefiting from the $14-plus discount they hold to the cash hog index. The index has fallen steadily for much of August.
  • But buying interest is generally limited as expanding supplies continue to weigh on the pork product and cash hog markets. On Friday, the pork cutout value slid 73 cents and movement was slow at 35.75 loads. Cash hog bids are steady to lower this morning.
  • Plus, due to the holiday next Monday, packers will be buying for shortened week.
     
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