Good Morning! Paul Georgy with the early morning commentary for July 31, 2014 at 5:30 am CDT.
Grain futures are lower as quiet markets follow the long-term trend.
The weather model runs were basically the same as yesterday. They expect rains expanding to all of cornbelt late next week.
Update - Morning Coffee Commentary:
Lack of new news is keeping grain futures in a trading range. Traders are waiting to see if it is going to rain across the cornbelt. Farmers are telling us one more good rain will put the final touches on an outstanding crop.
Ethanol production last week was 954 million barrels per day which was 5,000 barrels less than last week. Current corn usage pace is below the amount needed to meet USDA target.
Spot cash basis bids for soybeans was steady to lower at U.S. Midwest processors and elevators on Wednesday as farmers remain uninterested in selling soybean crops. Corn bids were steady with limited farmer movement.
Weekly export sales data released at 7:30 this morning: Corn exports sales estimates are 300,000 to 400,000 tonnes for 2013/14 and 500,000 to 800,000 tonnes for 2014/15.
Old-crop soybean export sales estimates range from 100,000 to 200,000 tonnes and new-crop export sales estimates range from 800,000 to 1.1 million tonnes.
Trade estimates for weekly sales of wheat are 350,000 to 550,000 tonnes.
Russia has been an aggressive competitor in the export sales of wheat, however, this may change as new sanctions put in place this week could have an impact on further sales. The sanctions will make it harder for the Russian Ag Bank to be involved in international trade.
The 2nd quarter U.S. GDP climbed 4%, which was much higher than the 3% growth rate expected. Growth in inventories contributed 1.66 percentage points. The higher than expected GDP number was a boost to the US Dollar, which makes US products more expensive on the world market.
The Federal Reserve did exactly what investors expected. It scaled back its support for the economy, while pledging to keep short term interest rates low "for a considerable time" after it stops buying bonds. The Fed reduced the QE funding by 10 billion per month to $25 billion.
Tight supplies of market ready cattle and strong retail demand equals higher prices. There is no fundamental change that says the top is in. However, the saying "All things that go up must come down" is true, but from what price? Maybe it is time to use some risk management to lock in profits. Beef values continue their run with choice up 1.52 and select up 1.80. The CME Feeder Index is 224.95.
It is difficult to point to the exact reason for the sharp sell-off in lean hog futures but several factors are influencing the move: lower cash markets, lower product values, fund liquidation, end of month margin selling and technical sell stops. Pork cutout values are down .90.
Markets as of 5:30 AM CDT
- Sep Corn -2 1/4
- Aug Beans – 1/2
- Sep Wheat -2 3/4
- Aug Cattle -.25
- Aug Hogs -.85
- Sep Dlr +.06
- Sep S&P -12.50
- Sep Crude -.86
- Aug Gold -.50
Chart of the Day
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