Market Snapshot, Noon CT -- July 18, 2012

July 18, 2012 07:05 AM
 

 

Nearby corn futures rallied just ahead of midday to post gains of 5 to 9 cents, while deferred months are mostly weaker.

  • Uncertainty about the forecast and how much is left in the weather rally is encouraging choppy trade in the corn market today.
  • Rain in the forecast is expected to be light and scattered and heat is not expected to ease. But traders will wait for the event to play out before adding long positions.
  • Talk high prices may have caused some demand destruction, possibly with China, is adding light pressure.
  • Basis levels have softened at interior locations today, signaling lofty prices have encouraged farmer selling.

 

August through March 2013 bean futures are 1 to 18 cents higher, with nearbys leading gains. Deferred months remain under pressure.

  • While rain in the forecast has tempered buying interest today, market action signals traders again expect these rains to be disappointing.
  • Firmer Gulf basis levels this morning and at midday this morning are another source of support. But interior basis levels have softened, signaling increased farmer sales.

 

Wheat futures have improved to favor the upside in choppy trade.

  • A midday rally in the corn market provided wheat a boost, as this points to increased wheat feed use.
  • Also supportive is news Russia's ag ministry lowered its grain production and export forecast.
  • Production concerns also exist in other areas of the Former Soviet Union, Australia, Europe and China, among other locations -- boosting U.S. export prospects.

 

Live cattle are enjoying sharp gains across the board. Feeder cattle futures remain sharply to limit higher.

  • Traders are covering short positions on signs the boxed beef market may be bottoming. This morning, Choice cuts fell a penny while Select cuts slipped 4 cents, but movement impressed at 166 loads.
  • Reports by Nikkei Business Daily that the Japanese government may ease beef import restrictions for the U.S. as early as November is also supporting deferred contracts.
  • Traders are disregarding the fact that nearby futures are well below this week's $113 cash cattle price, signaling they expect beef strength to lift the cash market.
  • Feeder futures are enjoying strong short covering thanks to a pullback in corn prices. The market has been technically oversold for an extended period.

 

Lean hog futures posting moderate gains in most contracts.

  • Lean hog futures are benefiting from spillover from the cattle market as well as ideas the pork market may be working on a near-term low. Yesterday, pork cutouts rose $1.22 and movement was strong at 111.3 loads.
  • Cash hog bids are steady to lower today as packers are still working to improve negative profit margins.
  • August lean hogs remain at a discount to the cash index, though the contract has narrowed that gap to around $3.
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