Weather Forecast Triggers Short Covering
Aug 04, 2014
Good Morning! Paul Georgy with the early morning commentary for August 4, 2014 at 5:30 am CDT.
Grain futures are higher on short covering due to a little drier forecast for 10 to 15 period.
The weather forecast will be monitored closely as the location of moisture over the next 5 days will be beneficial to crops, while those areas missing the rain may be stressed. Check Ryan Martin’s Weather recap by clicking here.
Update - Morning Coffee Commentary:
Trade is looking for a decline in crop ratings this afternoon by 1% to 2% due to dry conditions in western and northern areas. Last week corn was 75% G/E and soybeans were 71% G/E.
Brazilians have approved subsidies to free up 7-8 mmt of corn which could be dumped into the export channels.
The weather problems in Europe and the unrest in Ukraine have provided support to US wheat market. However, the poor quality wheat in France and Germany may cause more pressure to world feed grain prices.
The CFTC Commitment of Traders report showed managed funds decreased their long positions in corn by 7,384 to net long 63,024 contracts. In soybeans funds bought a net 10,224 to leave them short 8,319 contracts. Funds added to net short positions by 17,449 to make them net short 71,968 contracts of wheat.
Police in China have detained six executives of a meat supply company at the center of the latest food safety scare to hit the country, state media reported on Sunday.
China’s chicken exports are expected to rise to 450,000 tonnes this year, according to the China Animal Agriculture Association on Sunday.
In the past few weeks, Russian agriculture and consumer watchdog groups have been working overtime in a response to US and European economic sanctions. They have announced a discovery of harmful levels of antibiotics in US poultry, contaminants in Ukrainian dairy, pests in EU produce and bacteria in US fast food. Russia has either imposed or threatened bans on products in response to violations.
This week there will be more estimates released for USDAs August Report. The "Goldman Roll" out of the September contracts starts on Thursday.
Cash cattle traded at steady to $2.00 lower than previous week. There will be more talk that we have seen a blow-off top in fed cattle values. Beef closed weak on Friday with choice down .53 and select down 2.48. The CME Feeder Index is 126.28.
Hog weights are the key topic of discussion. Will producers become more aggressive sellers as attempts to get current before prices slide further? Or will the reduced numbers of market ready hogs due to peak losses from PEDv keep marketing light?
October futures have seen liquidation and price decline of $16.00 since the July 7 high. Technical indicators are oversold. Pork cutout values were down 1.71 on Friday.
Markets as of 5:30 AM CDT
- Dec Corn +1 1/2
- Nov Beans +7 3/4
- Sep Wheat +7 1/4
- Oct Cattle Steady-Lower
- Oct Hogs Steady-Lower
- Sep Dlr +.06
- Sep S&P +7.50
- Sep Crude +.09
- Oct Gold -1.30
Chart of the Day
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