Market Snapshot, 10:00 am CT (VIP) -- August 29, 2012

August 29, 2012 05:06 AM
 

Corn futures have rallied to post gains of 9 to 13 cents in the September through July contracts, with farther deferred months seeing lighter gains.

  • Hurricane Isaac is expected to bring rain and wind to the central Corn Belt. A consistent Pro Farmer Crop Tour observation was the weakness of corn stalks. Thus, the potential yield loss implications of imminent storms are encouraging traders to build more weather premium into prices.
  • But gains are being limited by concerns about demand destruction. Tomorrow morning's Weekly Export Sales Report from USDA will give the market data with which to gauge how much price rationing has occurred.
  • Hopes that the U.S. and euro-zone officials will soon announce additional stimulus measures as well as an upward revision to U.S. second-quarter GDP growth are additional sources of light support.

 

Soybean futures continue to enjoy gains of 8 to 12 cents in most contracts.

  • While Hurricane Isaac is eventually supposed to bring precip to the southern and eastern Corn Belt, heat and dryness are expected to persist over the next several days, which is stressful for the filling bean crop.
  • Tight supplies have spurred increased interest for beans, especially among Asian importers, signaling they are worried higher prices lie ahead. The American Soybean Association's director for southeast Asia expects the region's imports to to increase by at least 12% to 2.9 million metric tons (MMT) in the marketing year beginning Sept. 1.
  • However, the China National Grain and Oils Information Center says China's soybean inventories are a record 22 MMT -- enough to offset a decline in imports if needed.

 

Wheat futures have strengthened at all three locations to post gains in the teens to 20s, making them the upside leader in the grain and soy markets.

  • Wheat is enjoying some corrective short-covering around speculation Russia may announce export curbs following a meeting on the grain situation on Friday.
  • There are also concerns dryness in western Australia will trim winter wheat production.
  • Meanwhile, signs of increased global wheat demand continue to arise. Tunisia bought 150,000 MT of optional origin wheat. Syria tendered for 100,000 MT of optional origin wheat. This adds to wheat export activity reported in "First Thing Today."

 

Live cattle futures are trading moderately to sharply higher. Feeder cattle futures are posting slight to moderate gains in most contracts.

  • Labor Day marks the last beef holiday of summer. Expectations beef demand will ease in September initially encouraged light profit-taking, though this gave way to bargain buying.
  • Slowing demand has been reflected in the boxed beef market, too. Beef prices have slid and movement has slowed notably.
  • Last week, cash cattle trade took place at mostly $120 to $121. Softer beef prices and the fact packers are buying for a holiday-shortened week will make it difficult for feedlots to get firmer prices compared to week-ago, despite tighter showlists.
  • Feeder cattle futures are enjoying spillover from live cattle.

 

Lean hog futures are choppy this morning.

  • Hog supplies continue to expand seasonally and producers are actively liquidating their breeding herds due to high feed costs. The near-term result is a 15% decline in hog prices in August from last month and a 25% decline from their June high.
  • However, futures remain at a discount to the cash hog index, limiting selling pressure. Cash hog bids are lower today as packers are buying for a shortened kill schedule next week.
  • Plentiful supplies have also weighed on the pork market. The pork cutout value slipped another $1.46 yesterday, though movement improved to 136.25 loads.
     
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