Short Covering in the Grains Pushes Prices Higher
Jun 13, 2014
Good Morning! Steve Georgy with early morning comments for June 13, 2014at 4:30 am CDT.
Energy markets were strong yesterday with concerns again in the Middle East. Islamic Extremists are moving through areas of Iraq and pushing toward the capital of Baghdad. The trade has been talking about threats from these insurgents of taking over an oil pipeline. That pushed crude oil as well as heating oil and unleaded gas to very strong levels. If this talk continues will we see the grain markets react as well?
Exports yesterday were in line with expectations but we typically would see any old crop sales for beans push prices higher due to the idea of tighter old crop ending stocks. That was not the case as July beans fell sharply. The Goldman Roll is now over and helped push the July/November bean spread back near a spread difference of $2. This spread will get a lot of attention in the next few weeks as we move toward the end of the month Quarterly Stock and Acreage numbers.
Informa will be releasing revised acreage numbers this morning at 10:30 and the trade is expecting to see an increase in bean acres as well as an increase in corn acres.
Basis levels remain firm across the country for corn, beans and wheat. That should give some support to old crop contracts and potentially see some short covering.
The weather is still going to be looked at as bearish as good rain moved across the Corn Belt and warmer temperature finally set in. The trade is expecting to see very good crop conditions again on Monday.
Cattle closed yesterday into some new highs in most contracts after a surprise cash trade that was $2 higher than last week. Kansas and Texas both traded $148 keeping a strong tone on the cash market as Box Beef finished mixed on the day. Choice was down .93 and Select up .65
Hogs are working higher this morning with cutout values up $2.56 at 123.45. The trade has seemed to find strength this week and have some optimism that we should be seeing tighter supplies showing up due to PED at the same time that we have summer demand picking up.
Markets as of 4:30 AM CDT
- Jul Corn +4 1/4
- Jul Beans +9 1/4
- Jul Wheat +3
- Aug Cattle +.35
- Jul Hogs +.85
- Sep Dlr -.10
- Sep S&P +.75
- Jul Crude +.61
- Aug Gold -.50
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