Market Snapshot, 10:00am CT (VIP) -- August 20, 2012

August 20, 2012 04:57 AM

Corn futures have firmed slightly to trade 5 to 8 cents higher.

With the Pro Farmer Midwest Crop Tour underway, the market has shifted some more attention to the crop and concerns even higher prices will be needed to ration tight supplies.

Adding to such ideas are disappointing early harvest results in the southern Corn Belt.

Also signaling some expect higher prices lie ahead is Mexico's purchases of 121,000 metric tons (MT) of corn, with 99,000 MT for 2012-13 and 22,000 MT for 2013-14.

On the other hand, news Japan's corn-for-feed use dropped to a 20-year low of 43.3% in June is limiting gains as it can take a long time to rebuild a demand base.

Soybean futures have extended early gains to trade 5 to 16 cents higher.

Soybean futures are benefiting from concerns about tight supplies and a drier forecast.

Recent daily and weekly export sales tallies signal high prices have yet to significantly slow demand. This morning, Gulf basis levels are steady to firmer.

Traders will watch the Crop Progress Report from USDA and Pro Farmer's Midwest Crop Tour results to gauge whether recent rains have improved crop prospects.

Wheat futures remain under light pressure at all three locations in all but some far deferred contracts.

Gains in the corn and soybean market are limiting profit-taking pressure in the wheat market after strong gains Friday.

Also limiting pressure is news SovEcon has cut its wheat forecast to 39 million metric tons (MMT) to 41 MMT from 40.5 MMT to 42.5 MMT previously, due to disappointing early harvest results.

But recent export sales activity has shown Asian importers buying supplies from countries, such as India, as a cheaper alternative to U.S. supplies. This is adding light pressure.

Live cattle futures have improved to post slight gains after some early light profit-taking. Feeder cattle futures are posting slight losses.

Cash cattle trade took place at firmer prices of $120 to $121 late last week. But as higher trade was expected, nearby futures are in line with these prices, providing limited direction.

The Cattle on Feed Report Friday also came in near expectations.

But a steady stream of deliveries against the August contract signals some are concerned a top is near for the cash market.

The same can be said for the boxed beef market. While prices have consistently trended higher, movement has slowed notably. On Friday just 90 loads changed hands.

Firmer corn prices are weighing on feeder cattle futures.

Lean hog futures are posting slight gains in early trade.

Lean hog futures are benefiting from short-covering as traders work to narrow the more than $14 discount the October contract holds to the cash hog index.

Plus, the pork cutout value rose 36 cents Friday, though movement was lackluster.

But the upside remains limited by mounting hog supplies. This, in turn, weighs on the cash hog market despite positive packer profit margins and expanded slaughter schedules.

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