Can Corn Go to $5.00?
Feb 04, 2014
Good Morning! Paul Georgy with early morning comments for February 4, 2014 at 4:30 am.
Grain futures are quiet in a narrow range. Corn and soybeans are slightly higher and wheat is lower.
Corn production in 2013 was a record. Early production estimates for 2014 suggest another year where trend yield and lower planted acreage combine for another big crop. Therefore price will be determined by demand and availability of corn. Studies we have done on basis suggest farmers should take advantage of premiums early in the marketing year when a large crop is in producer’s hands. Talk to your Allendale Representative about the full analysis of this study. Futures however can be driven by outside forces non related to a specific grain.
Traders will be watching outside markets and technical chart points as indicators during the next several weeks as fundamental news remains redundant. Many are watching the weakness in the stock market and suggesting money has to go somewhere and it could be into cheap grains. Therefore if a rally ensues in the grain complex it is likely to come from outside forces. Stay close in touch with Allendale’s staff to keep you informed.
The ISM manufacturing index plunged in January, falling from 56.5 to 51.3. This is only the 4th time the past 20 years that the ISM has fallen more than five points.
Cold temps are hampering movement of grain, therefore driving prices up to entice delivery. South America is a little drier which actually is good for harvest and movement of grain. Port loading facilities are very active as the major ports are dry. Their facilities are uncovered and have to shut down when it rains.
Barge movement on the Illinois and Mississippi rivers are being limited to much smaller tows due to ice in and around locks.
Traders will be keeping an eye on the upcoming export sales reports as some are saying that the recent buying by Spain could be switches from the Chinese buying on our books.
Beef product values are sliding after the sharp rally in early January. Futures traders are looking at comparisons of cash to futures and historical tendencies. Normally at this time of year the April futures are $5.00 premium to cash, currently the futures are $5.00 under cash. This allows room for further cash adjustments while futures could find support. Beef cutout values are lower with choice down 3.40 and select down 5.43. The CME feeder Index is 171.04.
Weather is creating havoc for the pork producer again this week. It is not allowing for hog barns to get current. Pork cutout values are up 1.25.
Markets as of 4:30 AM
- Mar Corn + 1/4
- Mar Beans +2 1/2
- Mar Wheat – 3/4
- Feb Cattle +.12
- Feb Hogs +.17
- Mar Dlr +.11
- Mar S&P +7.00
- Mar Crude +.26
- Feb Gold -6.10
Chart of the Day
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