Market Snapshot, 8:30 am CT (VIP) -- September 24, 2012

September 24, 2012 03:50 AM
 

Corn futures are steady to 5 cents lower on dollar strength and a lack of fresh news.

  • It's a "risk-off" day of trade for the commodity markets, as the U.S. dollar index is stronger due to concerns about the global economy.
  • Additional pressure is coming from stepped-up, harvest-related hedge pressure. Until harvest reaches the halfway point, there is more downside risk for futures as the cash market absorbs new-crop supplies.
  • Gulf basis is steady to 1 cent firmer this morning, however, which reflects tight supplies and the possibility of improved demand amid the price break.

 

Soybean futures are 16 to 24 cents lower on harvest pressure and negative outside markets. Meal and soyoil are seeing spillover pressure.

  • Disappointing German economic data is lifting the U.S. dollar index this morning, which in turn is providing pressure on the commodity sector. That's spilling over to soybeans, which have extended the decline from the summer high.
  • Rapid harvest progress is keeping pressure on the soybean market. Mostly dry conditions are forecast across the Corn Belt this week.
  • However, Gulf soybean basis is steady to 2 cents higher, which reflects tight supplies and could signal end-user demand is rising following recent, sharp price pressure.

 

Chicago wheat is 5 to 8 cents lower, with Kansas City and Minneapolis wheat favoring a weaker tone in mixed trade.

  • Chicago futures are weaker, but there is some scattered buying in Minneapolis and Kansas City futures as traders remain concerned about tightening global supplies and dryness in the U.S. Plains that is slowing planting efforts.
  • Traders expect a near-term increase in demand for U.S. wheat given rapidly tightening supplies in the Black Sea region.
  • Because Russian exportable supplies are dwindling, traders will be watching to see if the U.S. can garner any of a newly announced Iraqi wheat tender.

 

Live cattle futures are called higher based on positive USDA reports.

  • Friday's Cattle on Feed Report showed slightly fewer-than-expected cattle On Feed, with Placements coming in well below traders' expectations. The report is especially supportive for deferred futures.
  • The Cold Storage Report also showed total frozen beef stocks in storage at the end of August below traders' expectations, showing that demand is doing its job.
  • But there will be some caution as traders wait for cash signals. Market-ready supplies are expected to remain tight, but boxed beef prices are at levels that have dramatically slowed demand in the past and packer margins are in the red.

 

Lean hog futures are called cautiously higher on support from the cash market.

  • The cash hog market is expected to be steady to firmer as packers work to secure early week supplies. But the pork cutout market must strengthen in order to keep cash pointed higher as supplies are adequate.
  • Upside potential in futures should be limited by a bearish Cold Storage Report, as it showed record frozen pork stocks for the end of August.
  • The CME lean hog index is projected at $68.93, which is around $7 below nearby lean hog futures. That should limit near-term upside potential, as traders have plenty of cash improvement priced into futures.
     
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