Market Snapshot, Noon CT -- August 16, 2012

August 16, 2012 07:06 AM
 

Corn remains mixed at midday with September through July futures enjoying slight gains and farther deferred months slightly lower.

  • The market is lacking significant fresh news, leaving it to chop sideways as traders continue to weigh tight supplies against slowed demand.
  • Weekly export corn sales fell short of expectations at 122,800 metric tons (MT) for 2011-12 and 130,600 MT for 2012-13. On the other hand, Gulf basis is steady at midday.
  • Light support also comes from news Strategie Grains slashed its European Union 2012-13 corn production forecast by 7.1 million metric tons (MMT) to 58.1 MMT due to high temps and drought in the region. In light of the depleted U.S. corn crop, production estimates elsewhere take on more significance.
  • A cooler and wetter near-term forecast for the Corn Belt will at best stabilize the crop, but this is removing any incentive to build additional weather premium into prices.

 

Soybean futures are roughly 5 to 9 cents lower in all but the lead-month September contract, which is choppy.

  • Recent rains and cooler temps with more in the forecast are encouraging traders to take some weather premium out of the bean market.
  • FSA certified acreage data for 2012 is an additional source of pressure as it indicates planted acreage is likely 1.8 million higher than NASS's current estimate.
  • But selling interest is also limited as demand remains strong. This morning's weekly soybean export sales of 1.022 million metric tons (MT), most of which were for 2012-13, topped expectations and included strong Chinese buys.
  • The Philippines also purchased 123,900 MT of soymeal for 2012-13 this morning.
  • Gulf basis was steady to firmer at midday and the national average bean basis improved 9 1/4 cents over last week to a better-than-average 56 2/4 cents over November futures as of Wednesday's close.

 

Wheat futures continue to enjoy gains in the teens at all three locations.

  • Global supply concerns are back in focus for wheat futures today. A weaker dollar and improved risk appetite are adding buying incentive.
  • Russian on-farm wheat stocks as of Aug. 1 are the lowest since 2003. While Russian officials have reiterated there are no plans for export restrictions, tight supplies could limit export sales from the country.
  • Plus concerns are heightening about dryness in western Australia, especially with El Nino building. This weather pattern is associated with dry weather for Australia.
  • This is outweighing news Strategie Grains raised its European Union soft wheat production estimate for 2012-13 by 1.7 million MT (MMT) to 125.3 MMT amid better than expected harvest results.
  • Weekly wheat export sales this morning disappointed at 396,700 MT and the market continues to hear reports Southeast Asian nations are shifting to cheaper alternatives to U.S. wheat to cut costs.

 

Live cattle futures have improved to narrowly mixed trade. Feeder cattle futures have softened to post moderate to sharp losses.

  • The live cattle market continues to chop sideways as traders wait for cash cattle trade to get underway. Traders are also readying for Friday's Cattle on Feed Report, which is expected to show Marketings and On Feed slightly above year-ago levels, with Placements down sharply.
  • This morning's boxed beef action adds to a string of daily gains. Choice cuts firmed 44 cents and Select cuts rose 42 cents; movement was light at 95 loads.
  • Boxed beef market strength and tighter showlist estimates equate to a general consensus packers will have to pay up for supplies compared to last week.
  • Strength in the corn market, although mild, is weighing on feeder cattle futures today.

 

Lean hog futures have improved to favor the upside in choppy trade.

  • Lean hog futures are seeing some light short-covering after heavy losses yesterday and as traders work to narrow the steep discount nearby futures hold to the cash hog index.
  • But interest in adding long positions is being limited by seasonally expanding supplies that have in turn weighed on cash hog and pork prices.
  • Cash hog bids are mostly steady to lower, though a few firmer bids have been noted.
  • Two bright spots for the lean hog market is packers are still cutting in the black (this was not the case for much of the year) and pork movement has improved recently.
     
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