Chinese Officials Comments Re-ignite Supply Fears
Mar 23, 2012
Good Morning! Paul Georgy with early morning comments for March 23, 2012 at 5:20 am.
Grain futures are higher due to comments made by a Chinese think tank on future corn usage. Spreading will continue to impact grain prices as we close out this week. Inter-commodity spreading between corn/beans and corn/wheat has traders trying to guess the report next Friday. The volatility in these spreads doesn’t have fundamental justification on a daily basis. However the Sept corn versus Dec corn has narrowed nearly 10 cents this week. The early planting of corn certainly suggests the current 27 cent premium of Sept over Dec is too much. We are hearing reports of corn out of the ground already after being planted for only 5 days. After the current weather system moves through the Midwest, there will be many more planters running next week. Many producers want to hold off until the April 6 crop insurance date but this weather is just too hard to pass up. Rich Nelson did a study yesterday using normal maturation, this early planted corn could be pollinating in mid-June. The slowdown of the Chinese economy has funds moving money to the commodity they think provides the most opportunity. On Thursday it was let’s sell gold and buy corn. Expect more choppy action as we approach March 30th
. The reduced packer production has not been the answer for improving cutout values and ultimately better margins. Packers paid steady to 1.00 higher this week for live cattle but choice beef was down .05 and select was down .65 yesterday. Pork cutouts were down .17 on Thursday. Higher gasoline prices have to be the major reason for sluggish beef demand as weather should provide a chance to do some early barbequing. The rally on Thursday in livestock futures helped move away from key support but a weak close today could trigger more selling pressure. We are running a Spring Planting Special for the Allendale Research Center; 6 months for only $99.00 click here to sign up
Markets as of 5:20 AM
May Corn +6 Apr Cattle -.20 Jun $ Index -32
May Beans +16 Apr Hogs -.35 April Crude +.48
May Wheat +4 Jun S&P +.25 June Gold +8.20
Allendale Advanced Charts
Feeders bounced off the 50% retracement level on Thursday, which is also above the 100 day moving average. This was the second day in a row the market has held above Tuesday’s low at 151.85.
Nelson Notes from the desk of Rich Nelson
Wednesday morning, the EIA indicated ethanol production in the previous week was 893,000 barrels per day. That was 2% below last year in the same week. It is the second week in a row of lower than last year numbers. We should expect production to run week for several weeks now. We are not concerned about meeting USDA’s ethanol pace though as the first six months of the marketing year were made with a 3% higher than last year pace.
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