Good Morning! Paul Georgy with the early morning commentary for July 27, 2016.
Grain markets are mixed with corn steady, soybeans higher and wheat a bit lower. The US Dollar is higher and crude is lower. Trade is waiting for Fed meeting comments later today.
Weather forecast has periods of rain through much of the Midwest over the next 6 days or so. While the soybean crop still needs key rainfall in some areas and dryness in others, the corn crop will be affected by temperatures during dry down. Traders will likely relax focus on weather forecasts and hone in on yield potential over the next few weeks.
Cash grain values at the gulf are firm as export demand picks up. US corn values are cheap enough to buy some business however world wheat supplies are tempering the demand. Farmer selling is at a standstill as current prices are not very enticing.
The Wheat Quality Council, on their first of three-day tour of North and South Dakota and Minnesota fields, are calculating an average yield for hard red spring wheat at 43.1 bushels per acre. That figure compares with the 2015 day one yield of 51.1 bpa and the tour's five-year average of 45.0 bpa.
Australian farmers are reported to be holding on to their wheat stocks and not forward pricing. They have hopes that the La Nina weather event later this year will reduce world wheat stocks enough to lift prices from current 10-year lows.
Safrina corn harvest in Brazil is estimated at 56% complete compared to 28% last year.
First notice date in the August soybean, soymeal and soyoil contracts is Friday July 29th.
Funds were estimated to have been net sellers of 6,000 wheat contracts on Tuesday. They were net buyers of 5,000 soybeans and 3,000 soymeal contracts while being even on corn and soyoil.
Macro traders believe there is a zero chance the FOMC meeting will result in a rate hike. Durable goods orders are expected to show another lackluster report and U.S. pending home sales are expected to show a small upward rebound.
Weekly EIA report consensus for today's report is for a -2.25 million barrel decline in U.S. crude oil inventories, a -500,000 barrel decline in Cushing crude oil inventories, a 600,000 barrel rise in gasoline inventories and a 750,000 barrel rise in distillate inventories.
Cash cattle trade is at a standstill as packers and feedlots have a month end stand-off. Stronger futures give us the indication we may have seen the lows made in the cash trade as feedlots will be holding out for higher money this week. However, packers have a wildcard which is pulling contract cattle ahead to fill their needs.
August cattle futures were higher on Tuesday but lagged the performance of the deferred contracts as traders were reducing size with first notice day approaching. The October contract closed above the 20 day moving average and above a sharp down trend resistance line. The next upside goal will be the 50-day average at 113.55 and then the long-term down trend resistance at 115.00.
Pork cutout values continue to slide. We are currently in the “waiting period” where meat supplies are plentiful and retailers need to clear coolers from first of month specials before getting ready for Labor Day featuring. Time should fix the negative attitude.
Lean hog futures fell below the previous day’s lows and now seems to be eyeing key support at 73.75 in the August contract.
Dressed beef values were higher with choice up 1.34 and select up 1.38. The CME Feeder Index is 138.61. Pork cutout values are down 2.38.
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