Good Morning! Paul Georgy with the early morning commentary for September 26, 2016
Grain markets are lower as weather forecasts project a better harvest week ahead. Follow through technical selling is also weighing on prices. The US Dollar is lower with crude oil higher. Stock indices are lower as traders prepare for several macro events this week.
Join us tomorrow, September 27th at 8:00 PM CT for a cash rents outlook with University of Illinois Professor Gary Schnitkey. Register here. We'll ask Professor Schnitkey for his take on where rents are headed and how futures markets could be impacted. We'll also have Rich Nelson on hand for estimates and expectations of the September 30th USDA Grain Stocks report.
Trade is expecting corn and soybean conditions to decline this week simply due to crop maturity and seasonal patterns.
Allendale’s Branch Manager in Bird Island, MN reported corn yields last year of 205-210. In his area, the first completed field this year made 262 BPA and they have been in two other fields that have been better than that but are not completely harvested. Heavy rains across IA and MN is causing flooding and likely will impact navigation on the Mississippi River. Trade will be watching for damage reports as this week progresses.
World Weather Inc.’s forecast for the coming week to ten days is mostly a good one for key U.S. crop areas. Some rain is expected, but none of it will be seriously disrupting or pose much of a threat to maturing crops. The same is true for southeastern Canada. Rains were seen in Brazil over the weekend and more is expected early this week which will likely benefit some early season planting. Follow up rain next week will be welcome and equally beneficial.
CFTC Commitments of Traders Report had managed money funds net sellers last week to make them net short 161,592 contracts of corn. Managed funds were net buyers of soybeans of 11,444 contracts. They were net sellers of 1,827 contracts of wheat. Funds were net buyers in cattle and net sellers in lean hogs.
Macro markets this week will focus on the first Clinton-Trump debate this evening, Fed Chair Yellen's testimony on bank regulation and supervision on Wednesday before a House committee, several Fed officials will be making appearances this week, and whether Washington can get a continuing resolution approved by Friday to prevent a partial U.S. government shut-down on Saturday.
Hog slaughter is estimated at 8% above last year and 18% above the 2 year ago low. Traders continue to battle the large supplies of protein from all competitive meats. Weather conditions continue to be beneficial for rate of gain. The technical trend is down in lean hogs with chartist going to the long range charts to project support.
Live cattle production last week was only 3% larger than same period a year ago while the previous week was up 4.5% from same period in 2015.
Cattle-on-Feed report can be called bullish for the front-month supply and bearish for the 2017's. Technical rebound near the close on Friday could also signify a near term low. Stay in touch with your Allendale broker today.
Dressed beef values were lower with choice down .56 and select down .81. The CME Feeder Index is 133.10. Pork cutout value is down 1.15.
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