How Much Upside Is Left In Short Term Uptrend?
Dec 12, 2013
Good Morning! Paul Georgy with early morning comments for December 12, 2013 at 5:00 am. Grain futures are lower on profit taking.
Traders are looking for exports to help support the recent rally in grain futures. Estimates for this morning’s weekly export sales are: corn 600 to 750 tmt, soybeans 750 to 950 tmt, soymeal 100 to 200 tmt, soyoil 0 to 30 tmt and wheat 300 to 500 tmt.
Ethanol production last week was the highest level since Dec of 2012. Ethanol production profits are strong as exports and demand for DDGs drove crush. Current year to date production is now 9% above a year ago and USDA is expecting a 5% increase year over year.
There are reports of a processor offering free DP for corn delivered between now and January 1. This kind of move could fill some immediate needs and destroy basis. Heavy movement of grain is expected in early January as farmers deal with tax issues.
Price differences between US and Brazilian soybeans for March/April is growing in favor of Brazil as ideal weather increases crop size.
Volume was light at the CBOT yesterday with funds buying an estimated net 1,000 wheat contracts, 4,000 corn contracts and 3,000 contracts in soybeans.
Seasonal and technical buyers continue to support corn and soybeans on dips. The two week uptrend in corn has resistance at 4.40 and then 4.49. The January soybean contract has been in an uptrend now for 6 weeks with resistance at 13.53 ½. Wheat is oversold but still in a downtrend based on the chart picture.
Poor profit margins and demand disruption because of the east coast snow storm has packers bidding 129 to 130 while feedlots are asking 133 to 134 for cattle. Futures traders are waiting for cash sales to give them direction for the balance of week. Beef cutout values were mixed with choice up .49 and select down .91. The CME Feeder Index is 166.33.
IA/MN hog weights continue to set new record highs for the sixth straight week. Any loss of numbers is being offset by the heavier weights. Fund selling and premium of Feb futures to cash index is keeping pressure on the February contract as December expires on Friday. Pork cutout values were down 1.25 on Wednesday afternoon.
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Markets as of 5:00 AM
- Mar Corn -1 1/2
- Jan Beans -6 3/4
- Mar Wheat – 1/4
- Feb Cattle -.05
- Feb Hogs +.20
- Mar Dlr +.06
- Mar S&P -.75
- Jan Crude +.13
- Feb Gold -13.80
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