Grains React to Dollar Strength
Mar 01, 2012
Good Morning! Paul Georgy with early morning comments for March 1, 2012 at 5:15 am. Grain futures are lower on profit taking after the US Dollar rallied late yesterday. Comments from Fed Chairman Bernanke that QE3 is not likely at this time and the ECB’s LTRO suggesting the 530 billion Euros which it dumped into the system may be the last caused profit taking in gold and silver. The euro dropped sharply which has strengthened the dollar. This news took the air out of the inflation scenario on Wednesday. The grain markets have received a benefit the past several days as money was trying to find a place to go. The weather in South America has given good coverage rains through Argentina and Southern Brazil. Moisture in the form of snow will help relieve some of the dry conditions in the US northern plains. The ISDA is the industry group that determines whether Credit Default Swaps have been triggered. Today’s ruling is only expected to determine whether or not the ECB’s preferential bond swap agreement with Greece triggered a default. Ethanol news is not supportive for the moment. Gasoline usage is declining and ethanol prices are near 14 month lows. Ethanol supplies in storage continue to grow weekly. Export shipments of ethanol to Brazil have been curbed due to Brazilian sugar price decline. Nearby corn and soybean futures should find support on setbacks as long as farmers hold grain. March 30 Planting Intentions report will keep spreads volatile between corn and beans. Allendale needs your help on our 23rd
annual planting survey. Go to www.allendale-inc.com
and fill in your data. Export sales will be released at 7:30. Traders are expecting wheat sales of 500 to 700 tmt, corn sales 650 to 850 tmt, soybeans sales 400 to 800 tmt, soymeal sales 75 to 150 tmt and soyoil sales 5 to 25 tmt. The livestock futures closed sharply higher on Wednesday but the late rally in the dollar has traders taking some profits overnight. Cash markets were inactive with choice beef up .15 and select up .47 on a load count of 264. April cattle futures have retraced approximately 50% of the recent sell-off. A close above 130.00 is needed to rekindle hopes of making a new contract high. April hogs remain in a slight uptrend with resistance at 91.00. Only a few days left before the Riverside IA meeting, please reserve your seats today.
Markets as of 5:15 AM
Corn -3 to -4 Live Cattle +02 to +10 US Dollar Index -.01
Beans -3 to -6 Lean Hogs -20 to -30 Crude Oil +37
Wheat -3 to -5 S&P Index +1.00 Gold +4.70
Allendale Advanced Charts
KC wheat poked above the long-term downtrend on Wednesday, but settled back below it. Recently the market bounced off the uptrend support line. These trend lines have created a wedge formation which could have significant impact on the direction of breakout.
Nelson Notes from the desk of Rich Nelson
The Department of Commerce revised its estimate of fourth quarter Gross Domestic Product up from its previous estimate of 2.8% to 3.0%. This increase in growth, compared with Q4 2010, may help stabilize the US dollar index.
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