Technical Indicators Dominate Price Direction
Nov 20, 2013
Good Morning! Paul Georgy with early morning comments for November 20, 2013 at 5:00 am. Grain futures are mostly unchanged in a very quiet overnight session.
The market is looking for new news to trade. We have been dealing with excellent South American weather and planting progress, a large corn harvest, changes to the EPA mandate, China rejecting a cargo of corn and technical oversold conditions. Without fundamental news, traders turn to technical indicators such as moving averages, retracement levels and overbought/oversold signals.
Traders are already talking about the January USDA report. They are concerned that USDA has underestimated corn production on the November report and overestimated the demand. Historically the USDA has the propensity to increase corn production from Nov to Jan reports. Allendale will be crunching numbers to give our clients and readers our best guess.
Midwest weather forecast is for dry weather into the weekend which should allow for a rapid completion to the 2013 corn harvest. Basis levels are mostly steady across the cornbelt. Soybean river basis is lower likely due to demand at the gulf.
Allendale is moving this year’s conference from Crystal Lake, IL to your computer. We will be providing the same information and forecasts but you will be able to listen and watch from your office or home. Sign up to today!
The University of Illinois issued a report on the crop insurance outlook for 2014. The probability of lower price guarantees could put producers at a negative return even with 80 to 85 % coverage for corn and soybeans. Bottom line is, it will be more important to market ahead the 2014 crop. Allendale has several strategies which could offer marketing opportunities for the 2014 crop.
Current weakness in cattle futures may set the stage for the springboard to higher prices in the 1st quarter of 2014. Replacement heifer demand is showing up across the plains as feed supplies improve. The Cattle on Feed report on Friday could show larger placements than last year but should not be much of a surprise as feed cost were high and feed supplies were tight. Beef cutout values were lower with choice down 1.54 and select down 1.81. CME Feeder Index is 165.23.
Pork cutout values were down 1.72 on Tuesday. A close below the 100 day moving average in nearby lean hog futures could trigger more fund and technical selling.
Markets as of 5:00 AM
- Dec Corn -1 3/4
- Jan Beans -0
- Dec Wheat – 1/4
- Dec Cattle -.00
- Dec Hogs -.05
- Dec Dlr -.06
- Dec S&P -2.50
- Dec Crude -.13
- Dec Gold -3.10
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