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

August 8, 2012 03:43 AM
 

Corn is 1 to 3 cents lower amid light selling.

  • Strength in the U.S. dollar index is spurring light selling in the corn market, with pressure limited by firmer prices in soybeans.
  • Traders are focused on evening positions ahead of Friday's first survey-based crop estimate from USDA. Traders look for USDA to slash the yield estimate by nearly 20 bu. per acre from its July projection to 126.2 bu. per acre for a crop of 10.971 billion bushels.
  • Gulf basis is weaker for nearby delivery to reflect price rationing.

 

Soybeans have firmed to trade 6 to 9 cents higher amid short-covering.

  • After trading weaker in overnight trade, soybean futures firmed around 7:30 a.m. CT; supported by short-covering due to crop concerns. Traders don't expect this week's rains to be widespread enough to broadly benefit the crop.
  • Traders also don't want to be caught short ahead of Friday's first survey-based crop estimate. Traders look for USDA to cut the yield estimate by around 3 bu. per acre from than last month's projection to 37.2 bu. per acre for a crop of 2.786 billion bushels.
  • Adding to support is news of a soybean sale of 140,000 metric tons (MT) to an unknown destination for 2012-13. There is also unconfirmed talk China bought new-crop beans.

 

Chicago and Kansas City wheat are moderately weaker, while Minneapolis is mixed.

  • Chicago and Kansas City wheat are seeing spillover from corn and strength in the U.S. Dollar index.
  • Pressure on Minneapolis wheat is being limited by tight supplies of high-quality wheat and expectations the bulk of harvest-related hedge pressure is now behind the market.
  • A Russian government commission on food security is meeting today to discuss the country's grain situation. The head of the Russian Grain Union says the country will have an exportable grain surplus of 12 million metric tons (MMT) to 13 MMT in 2012-13.

 

Live cattle futures are called to open steady to firmer on strengthening beef demand.

  • Futures are expected to see a boost from yesterday's stronger boxed beef trade. Choice values rose $1.41 and Select was up $1.55 on strong movement of 215 loads.
  • Ongoing strength in the product market and this week's tighter showlist has traders expecting $1 to $2 higher cash cattle trade compared with last week's $118 trade.
  • Feeder cattle futures should benefit from slight weakness in the corn market.

 

Lean hog futures are called to open steady to weaker on concerns about demand.

  • While pressure is expected to be limited by possible spillover from strength in the cattle market, yesterday's $1.45 drop in the pork cutout value renews concerns about packers' profit margins.
  • Some packers saw profit margins slip back into the red yesterday, which is expected to reduce demand for cash supplies. Cash bids are called steady to $1 lower.
  • But the good news is pork movement improved to 138.63 loads yesterday, signaling retailers are preparing for a round of features.
     
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