Better Weather Pressures Wheat
May 14, 2014
Good Morning! Paul Georgy with early morning comments for May 14, 2014 at 4:30 am.
Grain futures are mixed with corn and soybeans higher, wheat lower.
China sold 276,000 tonnes out of the 300,000 they were offering in this week’s auction.
Wheat values are under pressure from several forces. The USDA sees large world supplies which compete with US during the next marketing year. Although wheat conditions deteriorated it becomes a battle of two crops the soft winter wheat and the hard winter wheat.
The soft wheat variety is grown mostly in the eastern cornbelt and has been getting timely rains. Some of the hard wheat area (western cornbelt and plains) has been in a hit and miss pattern with much of the western area a miss. There also is a strong seasonal pattern that is weighing on wheat as harvest is only a few weeks away.
Rosario Grain Exchange in Argentina sees corn crop at 23.9 mmt and soybean crop at 55.7 mmt which is an increase for both from last estimate.
NOPA crush data will be released tomorrow at 11:00 am. This data could have an impact on the old crop/new crop soybean spreads. Processors have been willing to pay up for soybeans.
More discussion by trade believing El Nino will have a presence this summer. That would mean a normal summer and a potential higher than trend yield for corn. This may keep managed money from building a larger long position.
May contracts at the CBOT will expire at noon today.
The US Dollar Index has had a huge turnaround on the charts since last Thursday. It tested long term support at the 79.00 level then rallied to check out the downtrend resistance line. Remember a weaker dollar creates an incentive for exports, especially meats and grains.
The USDA will release the May 1st Cattle-on-Feed Report on Friday at 2:00 pm CDT. Trade estimates are for On-Feed to be down 1%, Placed down 3.6% and Marketings down 2.1% from a year ago. Placements are expected to be less than a year ago due to high price of feeders and the incentive to keep cattle longer to put on more weight. Beef cutout values are higher with choice up 2.79 and select up 2.89. CME Feeder Index is 184.06.
Lean hog futures have been very choppy. Cash hog packers have been cutting back hours to prepare for the tighter hogs supplies due to PEDv. This could cause extremely volatile cash markets during a time of increased demand from holiday and cookout featuring at the retail counter. Pork cutout values are down 2.20.
Markets as of 4:30 AM
- Jul Corn +1 1/4
- Jul Beans +1 1/2
- Jul Wheat -3 3/4
- Jun Cattle -.12
- Jun Hogs +.20
- Jun Dlr -.09
- Jun S&P -1.00
- Jun Crude +.22
- Jun Gold +5.90
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