Market Snapshot, 8:30 am CT -- July 19, 2012

July 19, 2012 03:45 AM
 

All corn contracts through July 2013 futures are 10 to 16 cents higher, while far-deferred months are mixed.

  • September corn futures posted an all-time high for a front-month contract on the weekly continuation chart earlier today amid heightened concern of the Midwest drought.
  • The updated Drought Monitor shows 81% of the nation covered by drought, with 86% of the Midwest and 96.5% of the High Plains covered by drought. Extended weather outlooks show drought lingering through the remainder of the growing season.
  • Weekly corn export sales of 31,900 metric tons (MT) for 2011-12 are a new marketing-year low and sales of 148,800 MT for 2012-13 reflect rationing amid the historic prices.

 

Soybean futures are posting double-digit gains, with all contracts through January 2013 futures trading 30- to 40-plus cents higher amid weather concerns.

  • August soybean futures posted an all-time high for a front-month contract on the weekly continuation chart earlier today due to concerns hot and dry conditions will continue.
  • This morning's extended weather outlooks from the National Weather Service (NWS) reflect the likelihood of drought remaining its stronghold, as below-normal precip and above-normal temps are expected across the Midwest through October.
  • Some areas of the Corn Belt received precip overnight with the rains continuing this morning. This will help soybeans in areas lucky to get the precip.
  • Weekly soybean export sales of 135,300 MT for 2011-12 and 272,300 MT for 2012-13 were below expectations and reflect some rationing. USDA also announced a 112,000 MT sale to the United Kingdom for 2012-13.

 

Many wheat contracts at all three exchanges are posting double-digit gains.

  • While front-month corn and soybean contracts have posted fresh all-time highs, September Chicago wheat is about $4 below its all-time high posted in early 2008, making this contract appear as a value buy.
  • Weekly wheat export sales of 589,200 MT for 2012-13 were above expectations -- confirming traders' expectations of increased demand for U.S. wheat due to global crop concerns and rising corn prices.
  • The extended weather outlook from the NWS signals winter wheat in the US Central and Southern Plains will be planted in stressful conditions.

 

Live cattle are expected to be mixed following yesterday's sharp to limit gains, with feeder cattle likely to face pressure from strength in the corn market.

  • Live cattle need to see followthrough from yesterday's sharp to limit gains to signal a near-term low has been posted. But with the August contract at around a $5 premium to this week's cash trade, upside potential may be limited.
  • Some feedlots looking to clean up showlists are asking for $115, which compares to $113 sales earlier this week.
  • Weekly beef export sales of 15,600 MT were down from the previous week, raising concerns about global demand.

 

Lean hog futures are called mixed, with pressure limited by improvement in the pork cutout market.

  • The pork market is showing more evidence of a near-term low being posted, as the cutout value rose 38 cents yesterday to return above $90-per-cwt. But with packer margins still in the red, cash hog bids are called steady to lower again today.
  • Strength in the grain market has traders scaling back their farrowing expectations, which tightens supply expectations for late this year into 2013.
  • August lean hog futures are trading at around a $3 discount to the cash index, which opens additional upside potential for the contract.
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