Spreaders Support Grain Trading Volume
Sep 27, 2013
Good Morning! Paul Georgy with early morning comments for September 27, 2013 at 5:15 am. Grain futures are higher in a very quiet overnight session. The uncertainty of a potential government shutdown in the US adds to rationale for a reduction in volume and volatility in grain futures ahead of the stock report.
Spread unwinding between soybeans, corn and wheat help prop up trading volume going into the end of month.
Wheat has taken the lead at the CME as weather problems in China and Brazil has degraded the quality of harvestable crop. Because they are such large wheat consuming countries, they have been buying high quality supplies around the world. The previously reported large fund short positions in wheat futures has also been a factor of support.
Ukraine winter wheat seeding is expected to be reduced due to recent heavy rains.
China sets its 2014 wheat import quota at 9.6 million tonnes and its corn import quota at 7.2 million tonnes.
Central IL soybean basis has slipped to the lowest level since early 2012 as harvest picks up momentum. Bunge announces that they will restart their Emporia, KS soybean processing plant within a few weeks as new crop beans supplies become available.
Harvest reports on corn continue to be above producer expectations which could have USDA raising yields on the October 11th supply and demand report. Traders seem to be reluctant to press prices from current levels until confirmation of larger yields is provided by USDA.
Monday’s quarterly stocks report has traders eyeing wheat stocks for indications of abnormal usage during the last quarter because of tight corn supplies.
Talk of Mexico enforcing the anti-dumping on poultry which they passed earlier this year. This could have an impact on the acceleration of poultry production in the US and add competition for higher beef and pork prices at the retail counter.
Livestock futures are supported by tight market ready hog supplies. This afternoon the USDA will release the September Hogs and Pigs Report which traders are hoping will explain the disappearance of market ready hog supplies. Lean hog futures remain in an uptrend led by strength in the nearby contracts. Pork cutout values were up 1.09.
Beef cutout values are not providing much support for higher fed cattle prices with choice up .01 and select down .42 on Thursday. Cash cattle are expected to develop late today. CME Feeder Index is 158.79 up 1.31.
Markets as of 5:15 AM
- Dec Corn + 1/2
- Nov Beans +5 1/4
- Sep Wheat -1 1/4
- Oct Cattle -.00
- Oct Hogs +.10
- Dec Dlr -.10
- Dec S&P -5.25
- Nov Crude -.50
- Dec Gold +1.80
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