Is China Done Buying US Grain For A while?
Dec 06, 2013
Good Morning! Paul Georgy with early morning comments for December 6, 2013 at 5:00 am. Grain futures are mixed as traders adjust positions going into the weekend.
Weather is not really a factor in South America at this time as rain systems move across the crop growing areas every 5 to 7 days. Southwestern Argentina is reportedly a bit dry but not a major impact on the big picture.
Exports for last week were less than trade was expecting but sales are still on a very aggressive pace. US exporters have sold 73% of USDA’s whole-year goal for corn compared to 50% for the five year average. Soybean sales have reached 95% of USDA goal compared with 69% five year average. Wheat sales are 76% of USDA estimate compared with a 70% five year average. With this aggressive sales pace the USDA may make some adjustments to the export targets on the balance sheet. We are reminded that historically USDA makes minimal changes to corn and soybean balance sheets on the December report; they wait until January to make major revisions.
Agroconsult says Brazil should produce a record 90.7 mmt of soybeans and 76.1 mmt of corn. That compares to their last estimate of 86.0 mmt of soybeans and 75.7 mmt of corn.
A major index fund roll starts today, traders are watching the Jan/March meal spread as it is estimated that nearly 50,000 contracts will be moved in the next 5 sessions.
There has been more talk of Argentina reducing its export tax from 35% to 20% for 90 days in order to get farmers to move soybeans.
The monthly employment report covering November will be released later this morning. Trade is expecting it to show an 180,000 increase in non-farm payroll. Last month saw an increase of 204,000. Total unemployment is expected to drop to 7.2% vs. last month’s 7.3%.
Pork exports were 12% below a year ago and imports were down 16% during October. Beef exports during October were 5% higher than a year while beef imports increased 30% from the same period a year ago. Chicken exports have picked up pace by increasing 4% over last year. Livestock futures rally has stalled due to technical and fund selling. Lean hog futures and cash index has come in line. Traders are now waiting for hog supplies to tighten. Pork cutout values were .14 higher.
Cash cattle traded at 132 on Thursday which would be steady with last week. Beef cutout values are lower with choice down .89 and select down .42. CME Feeder Index is 165.22.
Markets as of 5:00 AM
- Mar Corn +2 1/2
- Jan Beans -5 1/4
- Mar Wheat +2 1/4
- Feb Cattle +.07
- Feb Hogs -.07
- Mar Dlr +.11
- Mar S&P +7.00
- Jan Crude -.13
- Feb Gold -2.10
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