Market Snapshot, 8:30 am CT -- July 23, 2012

July 23, 2012 03:49 AM
 

Corn futures are trading mostly 9 to 21 cents lower on profit-taking pressure.

  • The recent price surge left futures heavily overbought and in need of a downside correction. That's encouraging traders to take profits to start the week.
  • Forecasts signal better rain chances for areas of the Corn Belt over the next three to four days, especially north of I-80. Temps will be very hot today, with excessive heat watches and warnings throughout the Corn Belt. Temps aren't expected to be quite as hot the remainder of the week, but they will remain well above normal.
  • Traders are anticipating another sizable downtick in crop condition ratings as the corn crop continues to wilt under the very hot and dry summer conditions.

 

Soybean futures are 20 to 40-plus cents lower amid heavy profit-taking pressure.

  • Traders are putting some money in the bank following the recent surge to historic highs. Pressure is coming from a wetter weather forecast than traders were working with ahead of the weekend and outside markets as economic concerns in Spain are flaring up.
  • Forecasts signal better rain chances for areas north of I-80 this week. Any rains now would be beneficial for soybeans as they flower and set pods.
  • Temps will remain stressful across the Midwest, making the arrival of rains critical. If rains don't develop, futures could quickly reverse the losses to start the week.

 

Wheat futures are showing losses in the teens to 20-plus-cent range for many contracts at all three exchanges. Far-deferred futures are posting lesser declines.

  • With the corn and soybean markets under pressure, wheat doesn't have a source of support. As a result, traders are taking profits out of the market.
  • Outside markets are also price-negative amid heightened euro-zone concerns as it appears Spain may need a complete sovereign debt bailout. This is pressuring the euro and supporting the U.S. dollar index.
  • Crop forecasts in the Black Sea region continue to decline, but that's not enough to overshadow the sharp spillover pressure this morning.

 

Live cattle futures are expected to open steady to weaker on pressure from outside markets. Feeder cattle may get some help from the pressure on corn futures.

  • Outside markets are price-negative for cattle futures as the stock market is under pressure while the US dollar index is firmer amid heightened euro-zone concerns.
  • Last Friday's Cattle on Feed Report was about as expected, giving it a neutral read. The Cattle Inventory Report had a bullish tone, but not enough to overshadow the outside market pressure this morning.
  • Traders are watching the boxed beef market for signs of a short-term low. Without those signs, cash cattle will likely trade steady to lower again this week.


Lean hog futures are seen opening with a steady to weaker tone amid pressure from outside markets.

  • Heightened euro-zone economic concerns, primarily in Spain, are weighing on investor sentiment this morning. With the U.S. stock market under pressure and the dollar higher, it will be hard to attract buying interest in hog futures this morning.
  • Cash hog bids are mostly steady across the Midwest, although there are mixed undertones. Most plants are bought ahead on slaughter needs, but excessive heat is limiting weight gains and slowing hog movement, which could leave some plants in need of supplies.
  • The pork product market strengthened last week, but packers are still cutting in the red. If margins don't improve, plants are likely to slow late-week slaughter runs instead of actively pursuing cash hogs.
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