Market Snapshot, 8:30 am CT -- July 26, 2012

July 26, 2012 03:43 AM
 

Corn futures have firmed to mostly firmer trade despite disappointing weekly export sales.

  • USDA reported net sales reductions of 9,100 metric tons (MT) for 2011-12 and sales reductions of 131,300 MT for 2012-13. That's a great disappointment and shows high prices are curbing export demand. But traders aren't focused on demand.
  • Traders' focus remains largely with the crop as conditions are deteriorating and private crop estimates continue to decline. Overnight rains and forecasts for cooler, wetter conditions in the five-day outlook are not pressuring corn futures as traders realize the rains came too late to help the crop.
  • Outside markets are price-supportive today, which is also helping corn traders look past the paltry weekly export sales performance.

 

Soybean futures are trading well off the overnight lows, but remain 1 to 8 cents lower.

  • Rains pushed across the Corn Belt overnight, giving crops in some areas a much-needed drink. Forecasts are generally favorable for the next five days as more scattered rains are expected along with a break from recent extreme heat.
  • Weekly export soybean sales were stronger than anticipated at 193,200 MT for 2011-12 and 517,300 MT for 2012-13. China was the lead buyer of old-crop soybeans for the week ended July 19 and also was a buyer of new-crop beans.
  • In addition to the stronger-than-expected weekly export sales, selling interest in soybeans is being limited by supportive outside markets.

 

Wheat futures are mixed with a downside bias.

  • Corn's move off its overnight lows has helped wheat futures turn mixed. A sharp drop in the U.S. dollar is also supportive.
  • Weekly wheat export sales were disappointing at 367,000 MT for 2012-13. That's mildly weighing on the market.
  • Minneapolis wheat futures are struggling to find buying interest as the Wheat Quality Council HRS tour is finding yield potential above year-ago in North Dakota so far this week. The tour will move through central and northeastern parts of the state today.

 

Live cattle futures are called higher. Feeder cattle futures are also expected to open with a slightly firmer tone.

  • Cattle traders are still waiting on cash cattle trade to get underway in the Plains. Most traders are anticipating steady to firmer cash prices compared with last week's $113 trade. Some cash trade is possible today if packers raise cash bids, but most are not expecting active trade until Friday.
  • Futures already hold a premium to the cash market. That may limit buying interest.
  • Feeder cattle traders will keep a close watch on the corn market. Unless corn is appreciably lower, feeders will struggle to find sustained buying interest.
  • Outside markets are supportive as the U.S. dollar index is sharply lower, while commodities are showing general strength and the stock market is also firmer.

 

Lean hog futures are seen opening with a firmer tone.

  • Fundamentally, support for lean hog futures will come from the pork product market. While the cutout value was up only 16 cents yesterday, that was enough to push cutting margins into the black for some plants.
  • Improved margins could increase demand for cash hogs, although cash hog bids are expected to be steady at most Midwest locations again today. The break in the heat is expected to bring a rush of hogs to market and may limit packers' willingness to raise cash hog bids despite the improved margins.
  • Outside markets are supportive as investors are taking a more risk-on approach. The U.S. dollar is sharply lower, while commodities and the stock market are firmer.
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