Market Snapshot, 8:30 am CT (VIP) -- August 17, 2012

August 17, 2012 03:47 AM
 

Corn futures are mixed, with the September through March contracts mildly firmer.

  • After favoring the downside overnight, corn futures have firmed to a mixed tone. Much of the support is coming on spillover from wheat.
  • Traders are also concerned with supplies amid the negative impact from drought. While rains have picked up recently, they are too late to help a severely damaged crop, although it could still add test weight in some of the better areas.
  • Gulf corn basis is firmer this morning, with bids 2 to 6 cents higher.

 

Soybean futures are 7 to 12 cents higher, which is a slight extension from earlier gains.

  • While weather has improved, traders remain hesitant to sell as there has been no solid proof that current prices, although historically high, are slowing soybean use.
  • Rains were heavier and more widespread than expected in Illinois and Indiana yesterday and overnight. This should help filling soybeans. Forecasts don't call for much precip near-term, but temps are expected to run below normal into the middle of next week.
  • Gulf soybean basis is steady to firmer, signaling demand is solid and supplies are tight.

 

Wheat futures are trading mostly 8 to 15 cents higher at all three locations.

  • There's continued talk about potential export restrictions from Russia and Ukraine despite indications from both governments those talks are not currently taking place.
  • Traders are also concerned about building dryness in Western Australia and a sharp reduction in Argentine wheat acres due to dryness and government policy.
  • On the demand side, South Korea bought 49,000 metric tons (MT) of U.S. wheat and Taiwan purchased 94,250 MT of U.S. wheat.
  • So far, mild strength in the U.S. dollar is being overshadowed by fundamental support.

 

Live cattle futures are called steady to lower. Feeder cattle are also expected to favor a weaker tone.

  • Live cattle futures closed poorly Thursday, which is expected to lead to followthrough selling this morning.
  • Traders will continue to even positions ahead of this afternoon's Cattle on Feed Report, which is expected to show On Feed at 100.7%, Placements at 91.4% and Marketings at 101.6% of year-ago levels.
  • Traders are also waiting on cash cattle trade to develop in the Plains. Expectations are for cash trade to come in steady to firmer compared with last week's $119 to $120 trade, although active trade is not expected until this afternoon. If there's sharp pressure on cattle futures it could negatively impact cash trade.
  • Feeder cattle closed low-range Thursday, which is expected to lead to followthrough selling, especially with corn futures favoring a mildly firmer tone in most contracts.

 

Lean hog futures are seen opening with a mixed tone this morning.

  • Hog traders continue to fret about supplies amid expectations high feed prices will lead to more herd liquidation as hog numbers build seasonally. This will limit buying interest.
  • Mild support could come from the sharp discount futures hold to the cash index.
  • Cash hog bids are called steady to lower across the Midwest as market-ready supplies are abundant. Most plants are bought ahead on kill needs well into next week.
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