Market Snapshot, Noon CT (VIP) -- August 15, 2012

August 15, 2012 06:52 AM
 

 

Nearby corn futures have improved to trade around a dime higher with deferred months seeing slightly lighter gains.

  • Corn futures are benefiting from spillover from soybeans.
  • Considering the reduced U.S. corn crop, crop concerns elsewhere take on more significance. China's ag ministry says 10% of its corn crop is infested by army worms. The China National Grain and Oil Information Center trimmed its 2012 crop estimate to 197 million metric tons (MMT) from 197.5 MMT.
  • Gulf corn basis is steady to weaker at midday, signaling increased supply movement in the Southern U.S.

 

Soybean futures have maintained gains in the teens to low 30s.

  • Soybean futures are enjoying short-covering on ideas the downside has been overdone and recognition supplies are tight.
  • Demand for soybeans has remained strong despite record-high prices. This signals more price rationing is needed.
  • Sources say sales of South American soybeans are winding down as supplies tighten, but export sources also say purchases by China will slow in the coming months.
  • Today's action signals the market views recent improved weather prospects as already factored into prices.

 

Wheat futures have improved to post gains ranging from roughly 4 to 9 cents in all but far deferred contracts.

  • Spillover support from corn has encouraged short-covering in wheat.
  • But this is the extent of buying interest today as the U.S. dollar index is firmer and fresh fundamental news is lacking.
  • Algeria favored Canada in its purchase of 500,000 metric tons (MT) of durum. This reminds the market that high wheat prices will make U.S. wheat less competitive.
  • SovEcon lowered its 2012 Russian grain crop forecast to a range of 70 MMT to 74 MMT from 72 MMT to 75 MMT previously but it made no changes to its wheat estimate.

 

Live cattle futures have softened slightly amid profit-taking to narrowly mixed trade. Feeder cattle futures have improved to choppy trade.

  • The boxed beef market continued its impressive run this morning with Choice boxed beef values rising $1.89 and Select cuts up $1.75. Also, movement improved to 111 loads, signaling retailers are still buying for Labor Day features.
  • Expectations are high for cash trade to take place above last week's prices as beef prices have surged and showlist estimates are 35,000 head tighter than last week.
  • But the market has seen bouts of profit-taking as futures are already at a premium to last week's $119 to $120 trade.
  • Choppy action in the feeder cattle market signals traders believe a top is near in the corn market despite firmer prices today.

 

Lean hog futures have softened to post sharp losses in nearby contracts while deferred months are moderately lower.

  • Lean hog futures softened along with the cash hog market today. With supplies building, cash hog bids are steady to as much as $3 lower today.
  • Traders appear unconcerned about the steep discount nearby contracts hold to the cash hog index.
  • Yesterday pork prices and movement improved, and it appears the pork market is off to a strong start this morning as 22 loads have already changed hands.
  • Traders are ignoring news a Chinese trading firm says the country's pork imports from the U.S. could rise around 29% this year to 620,000 metric tons.
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