Grain Markets Looking For New Price Driver
Feb 12, 2014
Good Morning! Paul Georgy with early morning comments for February 12, 2014 at 4:30 am.
Grain futures are mixed in a quiet overnight session. The agricultural markets are searching for new price drivers as the next event which could create some excitement is the USDA Outlook Conference next week when they release their first projections for 2014/15. After that, we wait until March 31 when the USDA releases Acreage and Quarterly Stocks.
Lack of cancellation news by China is supporting soybean futures. Our contacts believe China has too many soybeans booked both in the US and Brazil. At what price will China sell back their contracts for the cheaper product?
The Brazilian government is hopeful of large safrina crop and CONAB (their USDA) projected their corn crop at 75.47 mmt. While down from last year’s record crop, it’s still over 5 mmt above Monday’s USDA estimate.
Cash grain movement is slow although farmers have been selling corn on the recent rally. The bitter cold and snowy conditions are limiting movement. Soybean bids improved as processors need supplies during this cold weather. Crush margins are positive due to strong meal demand.
The House of Representatives passed an extension to the debt ceiling for 1 year. The Senate is expected to vote tomorrow.
Chart analysts are watching the 5.90 area in March wheat. A close above that level suggests a move to 6.10.
Beef cutout values were sharply lower again on Tuesday with choice down 2.02 and select down .85. There were no deliveries of cattle against the February futures. The CME Feeder Index was 169.33. Live cattle futures were higher on Tuesday with follow through overnight on fund and technical buying. The cash and futures markets are moving toward a more historical relationship as it is normal for April futures to be at a premium to live prices.
Warmer weather in the forecast has lean hog traders expecting a larger run of hogs becoming available. Product was under pressure on Tuesday as cutout values were down .33. April futures are carrying about a $10.00 premium to the cash index with the February contract expiring this week.
Markets as of 4:30 AM
- Mar Corn -1 1/4
- Mar Beans -1 1/4
- Mar Wheat + 3/4
- Apr Cattle +.47
- Apr Hogs +.15
- Mar Dlr -.10
- Mar S&P +4.00
- Mar Crude +.72
- Apr Gold -3.00
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