Can The Market Rally On Bearish News?
Aug 07, 2013
Good Morning! Paul Georgy with early morning comments for August 7, 2013 at 5:00 am. Grain futures are mixed in a very quiet overnight session.
An observation: the futures market is being inundated with bearish news. It is starting to feel like we could be in for a bounce simply because everyone is in the same camp and it is so obvious to be selling. The technical indicators are showing oversold. A suggestion to those piling on the short side at these levels, make sure to use risk protection.
Basis for cash corn has jumped at ethanol plants in some locations. Movement of grain by farmers has been limited due to the price break that has occurred over the past few weeks. Processors in the central cornbelt have raised bean bids but are seeing very little selling. Meal basis continues to weaken which is deteriorating crush margins.
Traders are expecting an increase in corn and a reduction in soybean production on Monday’s report. Newswire survey of analysts have average corn yield at 157.72 compared to the 156.5 USDA estimated in July. Total production for corn average is 13.980 billion bushels compared to 13.950 billion in July. Soybean estimates put yields at 43.57 bushels per acre and total production at 3.338 billion bushels. This compares to USDA’s July numbers of 44.4 bushels per acre and 3.420 billion bushels total production.
Many are looking for China to come in and be a buyer of US corn because of the decline in price. A comparison of US to Brazil corn gives advantage by $30 to $35 to Brazilian sales. Listen in to the "Morning Coffee" around 7:30AM central time to get more details.
Boxed beef was higher on Tuesday with choice up .71 and select up .36. The CME Feeder Index was up .20 to 149.79. August futures finally surpassed the Lean Hog Index yesterday. The discount of October futures to cash is providing buyers with incentive as the August nears expiration. Fundamental traders are preparing for aggressive hog movement in a few weeks. Pork cutout values were up .79 on the close Tuesday.
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Markets as of 5:00 AM
- Dec Corn + 1/4
- Nov Beans -2 1/4
- Sep Wheat -2
- Aug Cattle +.57
- Aug Hogs +.40
- Sep Dlr +.07
- Sep S&P -7.75
- Sep Crude +.10
- Aug Gold 9.20
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