Grain Markets are Quiet Waiting for Next Headline
Nov 19, 2013
Good Morning! Paul Georgy with early morning comments for November 19, 2013 at 4:45 am. Grain futures are mixed with corn and wheat higher and soybeans lower.
Corn harvest is 91% complete versus 86% average and soybeans 95% complete versus 96% average, as of Sunday. Winter wheat conditions dropped 2% to 63% Good/Excellent. Average G/E conditions for this time of year are 52%. Soils moisture in wheat country has been recharged which makes for better prospects come spring.
Local analysts in Brazil are suggesting that corn production will drop 8.4% this year due to the switch from corn to soybean planting. Estimates for Brazil’s soybean crop range from 86 to 89.5 mmt. Corn crop production’s estimated range is 70 to 79.2 mmt.
Current weather conditions for Brazil and Argentina are extremely favorable for getting the crop off to a good start. US grain traders will be watching for any shift in South America to a dry, hot pattern which could support prices at the CBOT.
Basis improves for corn and soybeans in the east while western processors were lower.
Yesterday funds sold an estimated net 12,000 corn contracts and 1,500 wheat contracts. They bought 4,000 soybean and 2,000 meal contracts on Monday.
China rejected a cargo of U.S. corn because it contained a genetically modified variety that is not approved for import.
The CBOT December contract option expiration is Friday. With the recent sell-off in corn, expect more volatility as traders adjust positions going into expiration.
The technical picture points to 3.90-4.00 as a possible support level. I suggest listening to the Allendale’s Weekly Strategy Session from yesterday afternoon. Rich Nelson discusses a study comparing similar fundamentals to this year’s corn crop.
Technical selling pressures lean hogs and cattle futures on Monday. Cash cattle strength last week and sliding beef cutout values are putting packers margins further in the red. They will be tough to deal with this week and trade is expecting lower cash trade. With Thanksgiving approaching expect some fill-in buying by retailers as they prepare for post-holiday features. The Cattle on Feed report is Friday at 2:00 pm. Beef cutout values were mixed with choice down .60 and select up 1.27. CME Feeder Index is 165.50. Pork cutout value was up .71.
Markets as of 4:45 AM
- Dec Corn +1 1/2
- Jan Beans -2 1/4
- Dec Wheat +5
- Dec Cattle -.22
- Dec Hogs -.32
- Dec Dlr -.03
- Dec S&P -2.50
- Dec Crude -.10
- Dec Gold -.60
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