Market Snapshot, Noon CT (VIP) -- August 9, 2012

August 9, 2012 07:07 AM
 

 

Corn futures have maintained gains of roughly 3 to 11 cents in the September through July 2013 contract. Deferred months are mixed.

  • Traders are favoring the upside as they ready positions for USDA's reports tomorrow morning, which are expected to reflect a decimated 2012 crop but also some demand destruction.
  • Support also comes from this morning's weekly corn export sales of more than 1.1 million metric tons (MT) for combined marketing years (mostly for 2012-13). While this matched expectations, the high tally signals there is still demand at high prices.
  • Brazil's Conab now anticipates 2011-12 production for the country at 72.7 million metric tons (MMT), which compares to its July estimate of 69.48 MMT.

 

Soybeans have extended gains to trade 30- to 50-plus cents higher through the January contract. Deferred months are seeing gains in the teens.

  • Ideas more price rationing is needed to stretch supplies is supporting soybeans ahead of reports tomorrow that are expected to confirm tight old- and new-crop supplies.
  • USDA announced a daily soybean sale of 165,000 MT to China for 2012-13 this morning. This marks the third daily sale this week.
  • This morning's weekly export sales report showed soybean sales of 105,200 MT for 2011-12 and 195,200 MT for 2012-13. Though these felt short of expectations, the figures represented improvement over last week.
  • Plus, basis levels remain well above the three-year average.
  • Conab expects 2011-12 Brazilian soybean production of 66.4 MMT, which is up marginally from its July estimate.

 

Wheat futures continue to enjoy double-digit gains in most contracts at all locations.

  • Strength in the corn market has encouraged buying in the wheat market.
  • Support also comes from weekly wheat export sales of 665,300 MT for 2012-13, which topped expectations.
  • Harvest-related hedge pressure is easing as spring wheat harvest is past halfway complete.
  • Crop concerns in the Black Sea region remain an underlying source of support.
  • Trade is also readying for tomorrow's 7:30 a.m. CT reports. USDA is expected to lower its all wheat crop estimate slightly and raise its 2012-13 carryover projection.

 

Live cattle have improved to post slight to moderate gains in all but the August contract, which is slightly lower. Feeder cattle remain slightly to moderately lower.

  • Cattle futures received a boost from reports of dressed sales at $190 in Nebraska, which is well above last week's $185 trade there. The market is hopeful this is a precursor to similar gains in the live cattle cash market.
  • Boxed beef action this week certainly justifies firmer cash trade. This morning Choice values surged $1.19 and Select cuts rose $1.39; movement was also solid at 118 loads.
  • The fact that August live cattle are already at a $3-plus premium to last week's cash prices is leaving the contract vulnerable to some light profit-taking.
  • Strength in the corn market is again weighing on feeder cattle futures.

 

Lean hog futures continue to trade slightly to moderately higher with nearby contracts leading gains.

  • Lean hog futures are benefiting from a flat to firmer cash hog market today, which along with recent strong pork movement has traders optimistic demand is improving.
  • However, for the market to engage in more than corrective short-covering, pork prices will must improve -- some packers are again cutting in the red, which could soften demand while supplies are building seasonally.
  • Dollar strength is also making livestock traders more cautious today.
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