Money Flow Faucet Wide Open
Apr 02, 2014
Good Morning! Paul Georgy with early morning comments for April 2, 2014 at 4:45 am.
Grain futures are mixed with corn and wheat lower, soybeans higher. Will today be the day for profit taking?
The longs have been in control of the grain markets as weather forecasts, technical buying, fund buying and the Chinese are providing support going into the April 9th report.
Funds bought an estimated net 12,000 corn contracts, sold 6,000 wheat contracts and bought 8,000 contracts in soybeans on Tuesday.
Corn basis is weak as the rally in futures brings out farmer selling. Soybean basis is weak due to farmer selling in the US and in Argentina. South American harvest is underway and farmers want to move grain into a market where China is believed to have cancelled as many as 10 cargoes in recent weeks.
Chinese processor crush margins are deep in the red and banking requirements are changing. Talk of the current rally in soybeans and credit issues are forcing Chinese buyers to price purchases. Watch out when this forced buying is complete.
The technical picture has traders buying and short covering as corn closes above the 5.00 area. Chartists are now suggesting 5.20 to 5.30 as next level of resistance in corn.
The Ukraine/Russia standoff seems to have cooled off for now. The real focus is on the ability of Ukraine to get the spring crops in the ground.
Rain in the forecast for the Southern Plains and Australian dry wheat areas have caused profit taking in wheat futures.
Pork cutout value was up .21 on Tuesday. Futures rebound as traders focus in on true supplies of market ready hogs. Spreaders have been selling June, buying the deferred contracts since the Hogs and Pigs report.
Cash trade has been quiet this week as packers pull in contract cattle. Auction barns are reporting fed prices at 150 early this week. Beef cutout values were lower again as choice was down 1.25 and select was down 2.06. The CME Feeder Index is 177.71.
Markets as of 4:45 AM
- May Corn -1 1/2
- May Beans +7
- May Wheat -3 3/4
- Apr Cattle -.00
- Apr Hogs +.05
- Jun Dlr -.01
- Jun S&P +3.00
- May Crude -.09
- Apr Gold +3.70
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