Market Snapshot, 10:00 am CT (VIP) -- August 8, 2012

August 8, 2012 05:08 AM
 

Corn remains under light pressure, with most contracts seeing losses of 1 to 4 cents.

  • Corn futures are seeing light selling ahead of USDA's reports Friday, which are expected to show a production estimate trimmed by drought, but also an increase in old-crop supplies due to demand destruction. Dollar strength is also encouraging to this end.
  • Rain in the Corn Belt this morning with more in the forecast are adding light pressure, though they are too late to improve yields.
  • Gulf basis is weaker for nearby delivery, reflecting price rationing.

 

Soybeans have softened to post slight losses.

  • Soybean futures enjoyed light short-covering early this morning thanks to ongoing crop concerns, but a firmer dollar has encouraged a light wave of profit-taking. Action in the bean pit will likely remain choppy until USDA releases its Crop Production Report Friday.
  • Traders anticipate a friendly report; USDA is expected to put its national average yield at 37.2 bu. per acre for a crop of 2.784 billion bushels. But uncertainty exists about whether the decimated crop is already factored into prices.
  • Rain in the forecast, though not expected to be widespread, is adding light pressure.
  • Pressure is being limited by a 140,000 metric-ton (MT) soybean sale to an unknown destination for 2012-13. There is also unconfirmed talk China bought new-crop beans.
  • Also, Gulf basis levels firmed for this morning, signaling demand is still solid.

 

Chicago and Kansas City wheat are seeing double-digit losses in nearby contracts, while Minneapolis wheat is seeing lighter losses.

  • Pressure on corn and a firmer U.S. dollar index have left wheat futures vulnerable to selling as traders ready for Friday's USDA reports.
  • Pre-report expectations are for USDA to trim its all wheat estimate by 4 million bu. from July to 2.220 billion bu.
  • Pressure also comes from news Russia's deputy prime minister says there are no grounds for banning exports following a meeting on food security. Also, the head of the Russian Grain Union says the country will have an exportable grain surplus of 12 million metric tons (MMT) to 13 MMT in 2012-13.
  • Countering this, however, are reports that harvest results from the Stavropol region, Russia's second largest grain grower, are 33% below last year.
  • Pressure on Minneapolis wheat is being limited by tight supplies of high-quality wheat and expectations the bulk of harvest-related hedge pressure is now behind the market.

 

Live cattle futures gapped higher on the open and are enjoying slight to moderate gains. Feeder cattle futures are also enjoying moderate gains.

  • Futures are benefiting from a surge in boxed beef values yesterday. Choice cuts rose $1.41 and Select firmed $1.55 on strong movement of 215 loads.
  • Beef demand strength this week along with tighter showlist estimates has traders expecting cash cattle prices to take place at prices above last week's $118 trade.
  • Labor Day buying and tightening supplies will continue to limit cattle futures' downside.
  • Feeder cattle futures are benefiting from spillover from live cattle as well as slightly softer corn prices today.

 

Lean hog futures are steady to sharply higher in the August and October contracts, while deferred months are under light pressure amid spreading activity.

  • Nearby lean hogs are benefiting from the discount they hold to the cash hog index as well as spillover from live cattle.
  • But yesterday's $1.45 drop in the pork cutout value is weighing on deferred contracts, though the softer prices encouraged strong movement of 154.63 loads.
  • This decline pulled some packer profit margins back into the red yesterday, which will in turn reduce their demand for cash hog supplies. Cash bids are mostly steady today.
     
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