Index Funds Roll And Rebalance
Nov 05, 2013
Good Morning! Paul Georgy with early morning comments for November 5, 2013 at 4:45 am. Grain futures are quiet and slightly higher on short covering.
With the USDA Report on Friday, the trade is looking for some fundamental news to key on between now and then. The rainfall in South America has relieved their drought conditions and planting progress is near normal.
Did you miss our October Ag Leader Webinar where we spoke to Geoff Cooper of the Renewable Fuels Association? Watch the recording here.
Harvest progress in MN and IA worked at a record pace to gather their crops last week, says USDA. Overall 73% of US corn is harvested versus 71% normal. Soybean harvest is 86% complete versus 85% average. The winter wheat crop is off to a great start with 63% Good/Excellent which 2% better than last week. Last year’s wheat conditions were rated at 39% Good/Excellent.
Traders are watching spreads as index funds roll out of the December futures contract. Deutsche Bank is buying December ’14 contracts and selling December ’13 contracts in corn, meal and soyoil for the next few days. On Thursday, the Goldman roll begins which is the time when they buy March and sell December ’13. Index funds are doing some rebalancing and traders believe they could be buying a sizable amount of corn contracts.
Corn traders are looking for an increase in yield, a reduction of nearly a million harvested acres and still come up with ending stocks of over 2 billion bushels on Friday’s report. Traders are finding it difficult to expect any bullish news for corn out of this report. This is usually a sign to be cautious.
Soybean production, acreage and probably demand adjustments could make for a very interesting report results. Contact your Allendale representative for some trading ideas.
Hog producers are holding back sows as evidenced by sow slaughter running at 7% below year ago levels. The effects of PED could have a big impact on Dec and 1st quarter slaughter. Pork cutout values were up .87 on Monday.
Cattle carcass weights have declined since feedlots have stopped using Zilmax. Beef production for Dec through March still suggests very tight supplies. Beef cutout values are higher with choice up .96 and select up .29. The CME Feeder Index is 164.52 down .59.
Markets as of 4:45 AM
- Dec Corn + 0
- Jan Beans +4 1/4
- Dec Wheat +1 1/4
- Dec Cattle -.07
- Dec Hogs -.05
- Dec Dlr -.01
- Dec S&P -4.50
- Dec Crude -.34
- Dec Gold -3.00
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