Shorts Covering Fuels Rally!
Feb 26, 2014
Good Morning! Paul Georgy with early morning comments for February 26, 2014 at 4:45 am.
Grain futures are lower as traders take some profits as they wait for more demand news.
The announcement by USDA that an additional 568,000 tonnes of soybeans were sold has traders asking why US origin when South America soybeans $1.00 per bushel cheaper. Most still believe it is a matter of time until cancellations or switching of origin will begin.
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A dominant force going into the first notice day and last trading day of February is margin liquidation. The margin clerks are working hard to clean up margin calls before the end of the month which means pay-up or get out of short positions.
Expect to see more rolling of March positions to a deferred contract going into first notice day on Friday.
Chinese crush margins are deep in the red due to a slowdown in demand for meal from the bird flu-stricken poultry industry.
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Brazil’s #2 soybean producing state of Parana could have lost up to 2 million tonnes, down to 14.5 million tonnes due to this summer’s drought says the state Ag Official.
Oat price limits expand to 30 cents from 20 cents for Thursday’s trade per CME. Oat prices remain strong due to the rail shipment backlog from Canada.
Turmoil remains an issue in Ukraine as the IMF wants to see stability before providing emergency funds. Turkey’s Prime Minister is under fire because of secret funds.
Though we have not started PEDv based slaughter numbers yet, the market is trading what could happen when April arrives. Week to date slaughter at 854,000 head is 30,000 over last year in the first two days of the equivalent week. The next two weeks should also hold adequate supplies. Pork cutout values were up 1.29 on Tuesday.
The packers are bidding for cattle on Tuesday which has feedlots raising offers as it would suggest they need cattle. Traders are now thinking cash cattle could trade 1.00 to 2.00 higher this week. Beef cutout values were higher with choice up .68 and select up 1.31. The CME Feeder Index is 170.32.
Markets as of 4:45 AM
- Mar Corn -1 1/4
- Mar Beans -1 1/2
- Mar Wheat -2 1/2
- Apr Cattle +.50
- Apr Hogs +.35
- Mar Dlr +.04
- Mar S&P +4.50
- Apr Crude +.26
- Apr Gold -2.20
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