Good morning! Paul Georgy here with early morning comments for Oct. 12, 2012, at 5:10 am. Grains are lower on profit taking after yesterday’s bullish reaction. The USDA served up data yesterday for both sides of the line. The statistics branch increased planted acres and harvested acres by more than trade was expecting. The USDA put the harvested acre percentage at 90.5% when the trade was expecting 88%. We would expect further adjustments in harvested acres as we go forward. On the demand side, we did not see much change except in the exports and the beginning stocks. As prices move higher, we are likely to see more consumption cuts in upcoming reports. Soybean data was in line with trade expectations. Cash markets will dictate movement. It will likely take a rally to entice farmers to open bin doors going into the end of year.
Now that the USDA data has been released, traders will be focusing on macroeconomic issues and weather in South America. The tight US supplies of corn and soybeans will make weather in the Southern Hemisphere a market mover as we go through their growing season. Weakening of a key El Niño feature has the Australian Bureau of Meteorology already saying that the odds of an El Niño occurring have diminished considerably. The lack of an El Niño could raise the odds of adverse growing conditions in South America. Chinese and European financial instability will shape traders' confidence (especially funds).
Technical traders now have a reason to be optimistic in corn. Can Dec corn close above the 7.68 level for the week? This could suggest a seasonal low has been made. November soybeans have consolidated this week but have more work to do to suggest the seasonal low is in. Export sales estimates for this morning’s report are: corn 300 to 400 tmt, soybeans 750 to 850 tmt and wheat 350 to 550 tmt. Livestock producers have been thrown another curveball, as higher feed cost means larger losses. The fourth quarter of 2012 has sizeable losses projected for hog producers. Bear spreads in lean hog futures are telling the story. Choice beef was up 0.33 and Select up 0.40. Pork cutout value was up 1.04 on Thursday.
Markets as of 5:10 AM
Dec Corn -4
Nov Beans -13 1/4
Dec Wheat -6 1/2
Dec Cattle -.02
Dec Hogs +.25
Dec Dlr -.19
Dec S+P +2.75
Nov Crude -.16
Dec Gold -.90
Allendale Advanced Charts
Yesterday Dec Live Cattle suffered a short term loss of bullish momentum that likely tips the odds that we make a push for the 9/27 pivot low of $123.95. A close below the pivot low would reconfirm the downtrend…Frank La Placa
Get technical analysis for corn, beans, wheat, cattle, hogs, crude and dollar markets.
Nelson Notes from the desk of Rich Nelson
With lower beginning stocks, almost no change to production, and only a moderate adjustment to exports, USDA lowered ending stocks from 733 million to 619. That was lower than the average guess of 648. That ending stock number would imply a move to $8.00 on December corn. We don’t believe it will happen but that is what the numbers would suggest.
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