Market Snapshot, 8:30 am CT -- July 25, 2012

July 25, 2012 03:53 AM
 

Corn futures are trading mostly 7 to 13 cents higher as focus has returned to falling crop prospects after two days of sharp, corrective losses.

  • With the corrective selling complete for now, traders are refocused on supply concerns. Private crop forecast continue to drop as the crop withers under persistent drought.
  • Scattered rains are in the outlook through next Tuesday for areas of the Corn Belt. However, traders realize rains that fell yesterday and any additional precip in the five-day period may stabilize the crop, but they won't add bushels.
  • Outside markets are supportive today with traders showing a stronger risk appetite given expectations the Fed is moving closer to QE3.

 

Soybean futures are trading mostly 30-plus cents higher as traders have shifted their attention back to crop concerns.

  • After two days of heavy price pressure, buyers have returned to the soybean market amid ideas the downside was overdone on the sharp pullback.
  • Rains fell on parts of the Corn Belt overnight and more precip is expected in the five-day outlook. But no one is expecting this rain event to be a drought breaker. And hot, dry conditions are forecast to return for the second half of the 15-day outlook.
  • Any precip now is timely for the soybean crop as it flowers, sets pods and fills pods. But coverage and rainfall amounts are expected to be limited, especially through southern and southeastern areas of the Corn Belt and in the Mid-South.
  • Outside markets should also aid buying interest today. Investors' attitudes are improved after a story in the Wall Street Journal said the Fed is getting more concerned with the economy, upping the odds of additional stimulus.

 

Wheat futures are posting gains of 20-plus cents at all three exchanges.

  • With the corn and soybean markets firmer this morning, wheat traders have a reason to be buyers again. Wheat remains a follower market.
  • Traders are also concerned about falling crop prospects in the Black Sea region. While there's no fresh news on this front today, the renewed buying interest in corn and soybeans is allowing wheat traders to refocus on global crop concerns.
  • The U.S. dollar is under moderate pressure, which is supportive for wheat futures.

 

Live and feeder cattle futures are expected to open steady to lower.

  • August live cattle futures ended Tuesday at nearly a $6 premium to last week's cash cattle trade. That will limit buying interest and could put pressure on the market.
  • Cash cattle trade is still up in the air. While showlist numbers are down sharply from week-ago and the boxed beef market is hinting at a short-term low, packers may try to get animals bought at steady to weaker prices again this week as there are concerns the persistent excessive heat will curb consumer red meat demand.
  • Feeder cattle futures are expected to pull back from yesterday's strong, corrective gains amid renewed strength in the corn market.
  • Outside markets should help cattle futures as the U.S. dollar index is under moderate pressure and the stock market is expected to trade higher.

 

Lean hog futures are seen opening with a steady to firmer tone.

  • August lean hog futures should get a boost from the discount the contract holds to the cash index. But this support is likely to be limited as traders fear the cash market will soften near-term, as hog movement is likely to rise once temps break.
  • Cash hog bids are called mostly steady, although mixed undertones are likely amid varied packer demand.
  • The pork cutout value was $1.57 higher Tuesday. While that improves packer margins, they continue to cut in the red, which will continue to limit demand for slaughter supplies.
  • Outside markets are price-supportive, which is expected to trigger mild short-covering in lean hog futures.
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