Market Snapshot, Noon CT -- July 24, 2012

July 24, 2012 07:04 AM
 

September corn futures have dropped to their 40-cent limit lower today, while deferred months are seeing losses in the 20s to 30s.

  • Selling pressure picked up as the dollar extended early gains and selling in the bean market intensified. This triggered sell stops, accelerating the decline.
  • Pressure stems from the market being technically overbought and rains in the eastern and northern Corn Belt today. Though benefits from such rains are limited, it is difficult for a technically overbought market to find buyers with rain in the forecast.
  • Plus there are increasing signs of demand destruction. Not surprisingly, Smithfield Foods Inc. today confirmed it will import corn from Brazil due to high U.S. feed costs, though it provided little by way of details.
  • Meanwhile, heat across much of the Corn Belt today with high temps expected to persist signal more declines in yield expectations and crop ratings are likely ahead.

 

Soybean futures have plummeted to their 70-cent limit lower through the January 2013 contract. Farther deferred months are seeing losses in the 30- to 60-cent range.

  • Unlike corn, much of the soybean crop can still benefit from rains falling in the the eastern and northern Corn Belt today and forecast rains later this week as 79% of the crop is blooming and 36% is setting pods. Given excessive heat, coverage area and amounts is key to how much benefit is gained.
  • Gulf basis levels were steady to lower at midday.
  • Dollar strength is an additional source of pressure.

 

Wheat futures have extended losses to trade mostly in the 30- to 50-cent lower range.

  • Wheat futures are facing heavy spillover pressure from limit-lower action in the corn and soybean markets today. Dollar strength is also encouraging additional selling.
  • USDA yesterday reported spring wheat harvest is 12% complete, pointing to increased hedge-related pressure.
  • Also, while USDA's spring wheat crop condition ratings showed a 5-point decline in the "good" and "excellent" categories yesterday, this is still a pretty decent crop..
  • This is outweighing production concerns in the Black Sea region for now.

 

Live cattle have moved off their lows but they remain slightly lower in all but the front-month contract, which is slightly higher. Feeder cattle are enjoying sharp gains.

  • August live cattle futures have seen some light short-covering today thanks to signs the boxed beef market may be working on a low and tightening supplies.
  • This morning, Choice boxed beef values softened 35 cents while Select cuts firmed 75 cents. Movement was again strong at 124 loads.
  • While heat has limited animal weight gain and tightened supplies, it could also deter consumers from firing up their grills.
  • Showlist estimates are expected to be 30,000 head lighter this week, and market-ready supplies will remain tight. This will remain an underlying source of support.
  • As corn prices plummeted, feeder cattle futures extended early gains.

 

Lean hog futures are under slight to moderate pressure.

  • Lean hog futures continue to post moderate losses in most contracts. Pressure stems from still-negative packer margins. Cash hog bids are mostly steady to lower today.
  • While heat has limited weight gain, it has also led to a backlog of supplies that must eventually come to market when the heat eases. Until then, packers will be more willing to reduce late-week kill hours than to bid aggressively for supplies.
  • The market also remains concerned high temps will trim pork demand as prices and movement have softened recently.

 

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