Market Snapshot, Noon CT -- July 20, 2012

July 20, 2012 06:55 AM
 

 

Corn futures have softened at midday to trade slightly lower in the front-month September contract while deferred months are holding onto slight gains.

  • Strength in the U.S. dollar index has encouraged traders to take some risk off the table and book profits ahead of the weekend. Traders recognize weather rallies often run their course before full crop damage is realized, which is making them more cautious buyers.
  • But bulls maintain a slight upper hand thanks to spillover from soybeans and the forecast for hot, dry conditions which signals more yield damage likely lies ahead.
  • Also encouraging some profit-taking is slowed Japanese corn use in feed and softer basis levels at interior locations on increased farmer selling. Gulf basis levels are steady today.

 

Soybean futures have trimmed gains, but most contracts are still in the double digits.

  • Soybean producers had held out hope that timely rain and/or cooler temps would help the bean crop as it fills pods in August, but the forecast over both the near- and long-term has dashed such hopes, and thus boosted futures.
  • Supplies were expected to be tight without a weather scare, so the market is working to achieve the rationing needed to make supplies last.

 

Wheat futures have softened to choppy trade with a downside bias. Nearby wheat futures at all locations are now double-digit lower.

  • Wheat futures enjoyed spillover from corn and soybeans this morning, but as these markets pared gains, profit-taking ahead of the weekend picked up. Sharp gains in the U.S. dollar index on renewed concern about Spain's banking sector adds incentive to do so.
  • While lofty corn prices and crop concerns overseas have boosted U.S. wheat export prospects, global supplies are not worrisome.
  • Plus traders expect USDA on Monday to again rate the U.S. spring wheat crop in generally good shape.

 

Live cattle futures have softened to post moderate to sharp losses. Feeder cattle futures remain under heavy pressure.

  • Selling picked up in the cattle market as this morning's boxed beef market action again disappointed. Choice values fell 44 cents while Select cuts dropped $1.14. Movement was decent but not impressive at 99 loads. The market is viewing this as a sign recent heat has taken a bite out of grilling demand.
  • Traders are also removing risk ahead of the Cattle Inventory Report, which is expected to show All Cattle & Calves at 98.6% of year-ago levels.
  • This afternoon USDA will also release the Cattle on Feed Report, which is expected to show On Feed at 102.6%, Placements at 98.9% and Marketings at 93.8% of year-ago levels.
  • Lofty corn prices are weighing heavily on feeder cattle futures.

 

Lean hog futures remain slightly to moderately higher in most contracts.

  • August lean hogs are benefiting from the discount they hold to the cash hog index, while deferred months are seeing some short-covering ahead of the weekend and the Cold Storage Report.
  • The report is expected to show frozen pork stocks of 590.6 million lbs., which is below last month but still would represent record-high pork stocks for June.
  • Cash hog bids are mostly steady as packers have fewer supplies available due to the heat as they purchase hogs for next week.
  • Pork cutout values rose another 79 cents yesterday with decent movement of 71.75 loads, adding to ideas a low is near or in for the pork market.
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