Oversold Condition Prompts Bargain Hunting
Jun 16, 2014
Good Morning! Paul Georgy with early morning comments for June 16, 2014 at 4:30 am CDT.
Grain futures are higher on bargain hunting. The Goldman Roll is complete which could provide some support for bull spreads although time is running out. Traders are waiting for May NOPA crush at 11:00 am which will give some idea what USDA could say on the quarterly stock report in a few weeks.
Crop rating this afternoon for corn is expected to be steady to 2% higher than last week’s 75%, last year the G/E was 64%.
Soybean ratings also are expected to be steady to 2% higher vs. last week’s 74%, last year the G/E was 64%.
On the weekly CFTC Commitment of Traders report, managed money funds reduced corn net long positions by 27,724 contracts, soybeans by 24,007 contracts and wheat by 28,172 contracts. They are now long in corn by only 80,143 contracts and net short wheat by 27,135 contracts.
Australian farmers are holding back new-crop wheat sales on concern that the El Nino weather pattern could slash yields. This strategy could be risky as the European sales could make inroads in the Asian markets. We are already seeing Russia and Ukraine taking some of the Indonesian business, which is traditionally dominated by Australia. Australia’s new wheat marketing season starts in September.
EU member states have agreed on the sensitive issue of genetically modified organisms (GMO), opting for greater national control over authorizing or banning GMO cultivation.
Soybean basis was down .05 in interior locations as corn was mostly steady. Farmer selling was light.
Funds sold a net 2,000 wheat contracts, bought 4,000 corn and 5,000 contracts of soybeans on Friday.
Cash cattle traded $4 to $6 higher last week. Feed cattle supplies are tight and packers need meat to fill the July 4 holiday demand. Beef cutout values were higher with choice up .98 and select up .12. Trade will be watching for fill-in business after yesterday’s Father’s Day weekend. Futures are expected to start the week steady to higher. USDA will release June Cattle on Feed Report Friday. The CME Feeder Index is 198.91.
Pork cutout value is down 1.77. It has been a real tug-o-war between pork supplies and live hog supplies. We are reaching the time where hog supplies could be 15% below last year based on PEDv case reporting. Livestock markets could start the week on a firm bias.
Markets as of 4:30 AM CDT
- Jul Corn +2 1/2
- Jul Beans +7
- Jul Wheat +5 1/2
- Aug Cattle Steady-Higher
- Jul Hogs Steady-Higher
- Sep Dlr -.02
- Sep S&P -6.00
- Jul Crude +.16
- Aug Gold +7.20
Chart of the Day
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