Agriculture • Livestock futures suffer from lower cash prices

Livestock futures suffer from lower cash prices
Doane Agricultural Services | Updated: July 13, 2012

Corn futures are trading mixed but mostly higher at midsession. Corn prices are slipping from early morning highs on end of the week profit taking. Weather forecasts calling for prolonged periods of hot dry conditions and minimal rainfall across the Corn Belt will continue to prop up the market. Due to recent weeks of excessive heat, new crop corn (along with soybeans) condition ratings have quickly deteriorated leading to USDA yield reduction. USDA slashed its yield projections more than expected to 146 bushels/acre, 20 bushels lower than the previous month’s estimate, increasing traders fears that new crop corn will be in short supply.
Soybean futures are trading 5 to 23 cents higher at midsession. Reported export sales of 150,200 metrics tonnes of soybeans to undisclosed locations for 2011/12 and 2012/13 marketing years are lifting old and new crop prices. Mounting concerns over tightening global supply due to USDA yield reductions are currently supporting the market as well. Weather remains a bullish factor as drought conditions across the Midwest worsen with forecasts predicting minimal rain over the region for the next 7 to 10 days.
Wheat futures are trading 4 to 12 cents higher at midsession. Wheat futures are feeling slight pressure as corn prices are turning lower. Weather worries in the corn market coupled with a dim outlook for the Black Sea Region wheat crop should undergird prices. The Midwest is currently experiencing the worst drought in over 20 years traders say and has the potential push prices to record levels if yields continue to fall. As corn prices rise, the demand for wheat as an alternative feed input will increase, thus pushing wheat futures higher.
Cattle futures are trading mixed but mostly lower at midsession. Declining demand for beef and lower beef prices continue to hurt cattle futures despite strength in the corn market. Thursday’s boxed beef prices closed down $1.78 for choice while select cuts were 24 cents lower. Cash trade was reported as light to moderate on Thursday with dressed prices in the South $2.00 lower and almost $5.00 lower in the North.
Lean hog futures are trading sharply lower at midsession. The front month July contract was trading slightly higher at the opening of pit trade due to its discount to cash prices but has now turned lower following the direction of deferred contracts. Market prices are trending lower due to lower cash prices and eroding pork cutout values. USDA reported average cash prices on Thursday down approximately $2.50 per cwt. Cash trade is expected to be steady to lower on Friday.

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Statistics: Posted by yoda — Fri Jul 13, 2012 10:47 am