Grains Higher on Thoughts of Renewed Demand
Nov 01, 2012
Good Morning! Paul Georgy with early morning comments for November 1, 2012 at 5:10 am. Grains are higher on ideas of renewed buying by China. Harvest progress in US slightly slower than trade was expecting. USDA released crop progress figures yesterday afternoon putting corn harvest at 91% up 5% from last week and soybean harvest at 87% compared to 5 year average of 79%. The eastern producing states are behind on bean harvest with OH 79%, IN 81% and KY at 70%. Winter wheat plantings were 88% versus 5 year average of 85%. The good /excellent ratings for winter wheat start the year at 40% compared to 46% last year. The weekly ethanol data will be released this morning but the weekly export sales will be released on Friday morning at 7:30. Grain trading volume picked up on Wednesday as end of month buying and algo traders jumped into the action. Traders are estimating funds bought 11,000 corn contracts, 6,000 soybean contracts and 4,000 wheat contracts on Wednesday. Technical traders are now looking at this week’s low as a seasonal low. The 7.32 in Dec is critical support while 7.63 (50 day moving average) is overhead resistance. Cash traders are reporting a slight pickup in corn and soybean sales after yesterday’s rally. Soybean deliveries of 500 contracts yesterday went to the street therefore it is expected that most of the contracts will be redelivered. The weather forecast for South America has not had any significant change. Argentina should have drier weather into next week and models are conflicting on the amount of rain in the next system. Cash cattle trade is at a standstill as boxed beef values come under pressure. Choice was down 3.40 and select down 1.23. The disruption in demand on the east coast combined with the seasonal competition from other meats is causing this pullback in beef values. Pork cutout was up .99. Lean hog futures have been finding strength from risk-on investor attitude.
Markets as of 5:10 AM
Dec Corn +5
Nov Beans +14 3/4
Dec Wheat +5 1/4
Dec Cattle -.02
Dec Hogs +.62
Dec Dlr +.12
Dec S+P -3.75
Dec Crude +.14
Dec Gold +4.40
Allendale Advanced Charts
Jan Soybeans are building a head and shoulders bottom that will be confirmed with a close above $15.76 and projects to $16.60…Frank La Placa
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Nelson Notes from the desk of Rich Nelson
Argentina: Tuesday may have marked an important turning point in psychology in the grains. Part of the reason prices had fallen off their October highs were forecasts for rain in South America. Now the perception is the Argentina has received too much. One analyst, Manuel Ledesma suggests corn fields will be lost and there will be replanting. He is already taking 20% of his original production estimate and now sees the crop at 22.4 mt. This would be a good deal down from USDA’s latest 28.0 mt estimate. He suggests soybean production will need to be trimmed 10% to 50 mt. USDA’s latest is 55.
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