Can the Report Really Be That Bearish?
Nov 07, 2013
Good Morning! Paul Georgy with early morning comments for November 7, 2013 at 5:00 am. Grain futures are quiet as bulls and bears prepare for tomorrow’s crop production report.
The bears have the upper hand as they expect USDA to raise yields, total production and ending stocks for corn and soybeans. Bears also are getting help from the good planting conditions and good start of the South American crop.
The bulls are touting strong basis, lack of farmer selling and the expectation for USDA to raise demand estimates on the balance sheet. The large purchases of corn and soybeans by China are the main reason for their confidence.
History tells us that going into a major report and the majority is leaning one direction, the results will have to be even more convincing to keep the market moving in the direction of the crowd. Technical indicators are oversold in corn and wheat.
There is talk that the EPA will announce its decision on cutting the corn for ethanol mandate sometime on Friday. Trade is also thinking the odds of extending the bio-diesel tax this year is low as Senate is going to take a long Thanksgiving holiday.
CONAB, the government agency similar to USDA in Brazil, will release their estimates for corn and soybean production on Friday.
Export sales estimates for this morning’s report are: Corn 1.0 to 1.3 mmt, soybeans 800 tmt to 1.1 mmt, soymeal 190 to 250 mmt, soyoil 20 to 60 tmt and wheat 350 to 550 tmt.
Under CFTC’s new position limit rule the amount of positions a fund could hold is as much as 10 times higher than the CME currently allows.
Cattle packer margins are in the red again by as much as $30. They are reducing slaughter in an attempt to support product values. Retailers are getting ready for the Thanksgiving holiday and the featuring of turkey. Beef cutout values were mixed on Wednesday with choice down .89 and select up .64. CME Feeder index is 164.59.
Hog slaughter has picked up this week compared to the last 6 weeks. Pork cutout values are down .26.
Markets as of 5:00 AM
- Dec Corn - 3/4
- Jan Beans +4
- Dec Wheat +1 1/2
- Dec Cattle -.10
- Dec Hogs +.10
- Dec Dlr +.06
- Dec S&P +3.00
- Dec Crude +.23
- Dec Gold -2.60
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