Market Snapshot, Noon CT (VIP) -- August 8, 2012

August 8, 2012 07:09 AM

Corn has reversed early losses to trade around 1 to 6 cents higher.

  • Corn futures have traded on both sides of unchanged today as traders ready positions for Friday's USDA reports, which are expected to show a drought-diminished crop but also an increase in old-crop carryover due to demand destruction.
  • Recent and forecasted rains are also limiting buying interest, though their benefit at this point is very limited.
  • Demand destruction is garnering more attention this week as basis levels at Gulf and interior locations continue to soften.


Nearby soybeans have improved to trade pennies to 10 cents higher while deferred months are narrowly mixed.

  • Soybeans remain choppy as traders oscillate between buying futures in anticipation of friendly USDA reports and reducing risk in the event of a sell-the-fact reaction to the survey-based estimates.
  • Also supporting nearby futures are signs high prices have yet to significantly slow use. USDA this morning announced a 140,000 metric-ton bean sale to unknown destinations for 2012-13 and rumors are circulating China bought new-crop beans. Also, Gulf basis levels firmed this morning and were steady at midday.
  • Forecasts calling for scattered rain in the eastern Corn Belt that could still help the filling bean crop are adding pressure to new-crop futures.


Wheat futures have improved to trade mixed in Chicago, mostly lower in Kansas City and mostly higher in Minneapolis.

  • Wheat remains a follower to corn, so as corn prices firmed, buyers returned to the wheat market. Also encouraging improved risk appetite was the dollar's move off its early highs.
  • Traders are expecting a slightly favorable USDA report Friday. Pre-report expectations are for USDA to trim its all wheat estimate by 4 million bu. from July to 2.22 billion bu.
  • Support also comes from ongoing concerns about crops in the Black Sea region. While officials continue to say the country will not ban exports, speculation the country will restrict exports in some way continue to circulate.
  • Fueling such ideas are reports that harvest results from the Stavropol region, Russia's second largest grain grower, are 33% below last year.
  • Minneapolis wheat is also benefiting from ideas the bulk of harvest-related hedge pressure is now behind the market as half the crop is now in the bin.


Live cattle futures have improved to sharply higher trade in nearby contracts while deferred months are slightly to moderately higher. Feeder cattle futures have extended early gains to trade sharply higher.

  • Futures rallied around continued improvement in the boxed beef market. This morning, Choice values surged $1.42 and Select cuts rose $1.02; movement was also impressive at 170 loads.
  • This along with tighter showlist estimates makes cash trade above last week's $118 likely.
  • Feeder cattle futures are benefiting from ideas the downside has been overdone and recent choppy action in the corn market, which has given some hope a reversal is near.


Lean hog futures are slightly to sharply higher in 2012 contracts, while deferred months are posting slight losses.

  • Nearby lean hogs are benefiting from the discount they hold to the cash hog index as well as spillover from live cattle.
  • But yesterday's $1.45 drop in the pork cutout value is limiting buying interest to corrective short-covering. Softer pork priced did, however, encourage strong movement.
  • For the cash market to strengthen, strong movement must be accompanied by rising prices as some packers are back to cutting in the red. Cash hog bids are mostly steady today.
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