Market Snapshot, 10:00 am CT (VIP) -- September 4, 2012

September 4, 2012 05:03 AM
 

Corn futures extended gains with the open of pit trading to post double-digit gains in most contracts.

  • Corn futures are benefiting from news Japan purchased 180,000 metric tons (MT) of corn for 2013-14.
  • The market is also enjoying spillover from the bean market and ongoing concerns about the drought-stricken crop.
  • But harvest is picking up, which could cap upside potential despite poor yields.
  • Negative outside markets amid disappointing U.S. and Chinese manufacturing data along with a steep fall in U.S. construction spending are being ignored.

 

Soybean futures have strengthened slightly to trade 17 to 28 cents higher.

  • Soybean traders are again working to find a price that slows use -- something that has so far proved elusive. Traders will watch this morning's weekly export inspections tally for signs of weakening demand.
  • Weekend rains were too late for most of the bean crop.
  • Traders are ignoring news China's Ministry of Commerce lowered its estimate for August soybean imports to 4.53 million metric tons (MMT) from its earlier forecast of 5.3 MMT, saying crushers have slowed purchases due to declining profit margins.

 

Wheat futures have strengthened to post gains mostly ranging from 8 to 11 cents in Chicago and Kansas City. Minneapolis wheat is posting lesser gains in all but the front-month September contract.

  • Futures are enjoying spillover from corn and soybean futures.
  • Also, a flurry of export activity signals buyers are concerned about tightening global supplies, although demand for U.S. wheat is limited at current prices.
  • Egypt purchased 365,000 MT of Russian, Ukrainian and Romanian wheat over the weekend for October shipment. On Sunday, Saudi Arabia announced purchases of 575,000 MT of hard wheat from Europe, Australia, the U.S. and South America. The Taiwan Flour Millers' Association purchased 55,200 MT of U.S. wheat today.
  • India's food ministry announced the government will release 1.3 million MT of wheat onto the domestic market to ease prices.

 

Live and feeder cattle futures are favoring the upside in choppy trade.

  • Cash cattle trade took place at the higher prices of $122 to $123 last week, but futures are already at a premium to these prices, which is limiting buying interest.
  • Traders will watch the boxed beef market for an indication of how strong weekend clearance was and if retailers intend to feature beef following the holiday. Boxed beef demand typically moderates slightly following Labor Day.
  • On Friday, Choice values fell $1.21 and Select cuts slid 57 cents. Movement was decent at 146 loads.
  • Feeder cattle futures are enjoying light short-covering, although strength in the corn market is a limiting factor.

 

Lean hog futures are posting slight losses.

  • Hog supplies are mounting seasonally and high feed costs are encouraging herd liquidation. Thus, hog slaughter and meat production last week were around 7% above year-ago. This trend is expected to continue this week.
  • In light of plentiful supplies, cash hog bids are mostly lower today, despite strong packer profit margins.
  • But pressure on nearby lean hog futures is being limited by the sharp discount they hold to the cash index, which stands at $80.29.
  • The pork cutout value slid 12 cents Friday and movement was lackluster at 48.25 loads.
     
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