Market Snapshot, 8:30 am CT -- August 10, 2012

August 10, 2012 03:38 AM
 

 

Corn futures have reversed early gains to trade slightly lower.

  • Futures initially spiked in reaction to USDA lowering its corn production estimate even more than excepted to 10.779 billion bu. with a national average yield of 123.4 bu. per acre.
  • But the small crop was already accounted for by lofty prices that have also caused demand destruction. USDA raised its 2011-12 carryover estimate more than expected to 1.021 billion bu., which compares to 903 million bu. last month. USDA's carryover projection for 2012-13 was in line with expectations at 650 million bushels.
  • Gains are also being limited by news China will sell state-owned reserves of corn; the speculation is the tonnage would be minimal. Gulf corn basis is steady to weaker this morning.

 

Soybeans are enjoying gains in the teens in nearby contracts, while deferred months are seeing slightly lighter gains.

  • Traders are building more weather premium into prices as USDA today slashed its 2012 production estimate even more than expected to just 2.692 billion bu. with a yield of 36.1 bu. per acre.
  • It also lowered its 2011-12 carryover more than expected to 145 million bu., but its 2012-13 carryover came in as expected at 115 million bu. -- but still points to tight supplies, especially if the small crop continues to get smaller.
  • Plus, today marked the fourth daily soybean announcement this week. China bought another 290,000 metric tons (MT) of soybeans for 2012-13.
  • China's Ministry of Commerce announced China imported 5.87 million metric tons (MMT) of soybeans in July -- a 25-month high and 4.4% higher than June and 9.7% higher than year-ago.

 

Wheat futures have traded in a wide range this morning, but the market is now posting double-digit losses in most contracts at all three exchanges.

  • A reversal in the corn market left wheat futures even more vulnerable to profit-taking after neutral to bearish reports for wheat this morning.
  • USDA pegs 2012 wheat production at 2.268 billion bu., which is above expectations of 2.22 billion bushels.
  • USDA also raised 2012-13 carryover more than expected to 698 million bu., which is drawing the most attention this morning.

 

Live cattle are expected to open mixed as traders wait on cash trade to begin.

  • Live cattle traders are still waiting for cash cattle trade to get underway and while expectations are for firmer prices, futures are already well above last week's $118 cash action.
  • Yesterday boxed beef prices again posted $1-plus gains on solid movement of 189 loads.
  • A pullback in corn futures could support feeder cattle futures today.

 

Lean hog futures are called steady to higher on improved technicals.

  • Lean hog futures enjoyed strong gains yesterday thanks to the discount nearby contracts hold to the cash hog market. The market is expected to enjoy followthrough buying after the pork market improved yesterday.
  • The pork cutout value rose 32 cents and movement impressed at 89.5 loads. The gains pulled packer profit margins back into the black.
  • If the pork market continues to improve, this could help the market to work through seasonally expanding supplies
  • Cash hog bids are expected to be flat with a few weaker bids today.
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