ECB Concessions Support Greek Deal
Feb 08, 2012
Good Morning! Paul Georgy with early morning comments for February 8, 2012 at 5:30 am. Grain markets are higher as risk-on money flow drives commodity prices. Greek debt negotiations near another deadline and the European Central Bank has agreed to relax its position. The hope of a Greek Debt deal is supportive to the Euro and improves chances for US exports. The USDA will tell us tomorrow morning how tight corn supplies will be at the end of marketing year. The focus is on reduced ending stocks in corn, beans and wheat. Traders are convinced the USDA has under estimated the ethanol usage. Year to date ethanol production (Sep 1 to present) is up 3.0% over last year. USDA suggests corn use for ethanol will fall from 5.021 billion to 5.000 (-0.4%). Ethanol production declines seasonally into March. The recent rally in corn and the drop in ethanol values have put many ethanol plant operations in the red. Another area the trade will be looking at closely is the South American crop; a further reduction of their production could increase US exports. Be prepared for a sharp move after the report. The newswire survey of analyst predictions for the 2012 corn planted acreage suggests an increase of about 2.5 million acres of corn. The spreads between old crop and new crop corn is likely to widen if USDA lowers ending stocks. The lower dollar provided a buyers incentive in livestock markets on Tuesday. The packers will have a tough time getting any inventory with cattle futures within striking distance of contract highs. Cutout value for choice beef was up 1.02 and select was up 1.04. Pork cutouts were up.43 on Tuesday. An improvement in export demand is needed to boost product values and ultimately feedlot closeouts. Subscribe today to the Allendale Research Center for a special low price. Meet us in Carrington ND on February 24, 2012.
Markets as of 5:30AM
Corn +3 to +5 Live Cattle +20 to +40 US Dollar Index -.02
Beans +6 to +7 Lean Hogs +10 to +30 Crude Oil +1.03
Wheat +3 to +4 S&P Index -0.25 Gold -1.00
Allendale Advanced Charts
Cattle market bounced sharply off of short-term uptrend support line on Tuesday. Do we have enough momentum to make a run to new contract highs above 129.75?
Nelson Notes from the desk of Rich Nelson
Analysis firm, UkrAgroConsult, forecasts 2012/12 wheat exports at 6.3 million tonnes. This comes from a shortfall in production from 22.3 mt last year to 13.7 for the upcoming new crop. This seems like an aggressive export total given the production loss.
There is a significant risk of loss when trading futures and options contracts. This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities herein named, and each investor should consider the appropriateness of trading on this information, based on their objectives. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed as to accuracy. Past performance is not indicative of future results.