Market Snapshot, Noon CT (VIP) -- September 4, 2012

September 4, 2012 06:51 AM
 

 

Corn futures have softened slightly to trade around 4 cents higher in nearby contracts.

  • Corn futures continue to benefit from news Japan purchased 180,000 metric tons (MT) of corn for 2013-14.
  • This was countered by weekly export inspections of 6.37 million bu., which fell short of expectations and week-ago and reminded traders that demand destruction has occurred.
  • Despite recent rains associated with Hurricane Isaac, traders expect USDA's Crop Progress Report this afternoon to show harvest is advancing at a record-fast pace of 12% complete as of Sunday. This limits the market's upside potential.
  • Gulf basis levels were down 7 cents for immediate delivery, but steady to 4 cents higher for deferred delivery.

 

Nearby soybean contracts have pared gains to "just" 9 to 13 cents, while deferred months continue to enjoy gains in the 20s to 30s.

  • The soybean market's rally to all-time highs this morning on concerns about tight U.S. supplies and slower Brazilian exports in August has encouraged profit-taking at times this morning, though bulls maintain the upper hand.
  • Weekly soybean export inspections of 15.126 million bu. narrowly topped expectations and gained on last year's pace, reminding the market of the need for more price rationing.
  • Traders are ignoring news China's Ministry of Commerce lowered its estimate for August soybean imports to 4.53 million metric tons (MMT) from its earlier forecast of 5.3 MMT.
  • Gulf basis levels softened for near-term delivery this morning and at midday.

 

Wheat futures have softened to mixed trade at all three locations.

  • A pullback in the corn market and dollar strength have encouraged profit-taking in wheat.
  • Recent export activity signals buyers are concerned about tightening global supplies, but it also reminds the market U.S. wheat is not competitively priced.
  • Egypt purchased 365,000 MT of Russian, Ukrainian and Romanian wheat over the weekend for October shipment. On Sunday, Saudi Arabia announced purchases of 575,000 MT of hard wheat from Europe, Australia, the U.S. and South America. The Taiwan Flour Millers' Association purchased 55,200 MT of U.S. wheat today.
  • India's food ministry announced the government will release 1.3 million MT of wheat onto the domestic market to ease prices.
  • Weekly wheat export inspections of 25.446 million bu. topped expectations.

 

Live and feeder cattle futures are enjoying slight gains in most contracts.

  • Stronger-than-expected packer demand last week led to cash cattle trade at firmer prices. Hopes the cattle and beef market will be able to again buck the seasonal trend for slowed demand after Labor Day is helping futures to favor the upside.
  • This morning's 95-cent gain in Choice boxed beef values and a $1.54 increase in Select cuts with decent movement of 95 loads gives weight to such ideas.
  • But futures are already at a premium to last week's cash cattle prices, limiting gains.
  • Feeder cattle futures continue to enjoy light short-covering. But this is the extent of buying interest as corn prices are firmer again today.

 

Lean hog futures remain under slight to moderate pressure at midday.

  • Hog supplies are mounting seasonally and high feed costs are encouraging herd liquidation. Thus, hog slaughter and meat production last week were around 7% above year-ago. This trend is expected to continue this week.
  • This has also resulted in a 20% decline in the front-month futures contract for August -- the largest such decline in 10 years.
  • Cash hog bids are mostly lower today, despite strong packer profit margins.
  • But selling in futures is being limited by the discount nearby futures hold to the cash index and hopes high beef prices will lead to an increase in demand for cheaper pork.
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