Quiet Trade As We Wait For A Resolution
Oct 16, 2013
Good Morning! Paul Georgy with early morning comments for October 16, 2013 at 5:00 am. Grain futures are slightly higher on light volume. Global financial markets are waiting for Washington to make a decision on the debt ceiling and reopening of the government before tomorrow’s deadline.
Spreaders take some profits out of their long wheat/short corn spreads on Tuesday. We saw some buying wheat/selling corn overnight. Traders are reluctant to get too excited without data from the USDA. There is trade talk circulating that China bought 300,000 tonnes of US for Feb-Apr shipment. Export sales data from the USDA (when they return to work) could be large as they play catch-up on reporting.
Yield reports from corn harvest are much larger than most producers expected. This translates into traders being cautious on either side of the market.
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Many analysts have put together their balance sheets and are raising yields from September USDA estimates. A well respected analyst, Rich Feltes from RJ O’Brien is using 161 bushel per acre for corn yield to get near a 2.5 billion bushel carryover for 2013/14 corn. His soybean estimate is 42.5 bushels per acre with ending stocks at 205 million bushel for 2013/14 marketing year.
The index fund rolls could begin as early as next week. The large long positions in the nearby contracts could setup some volatility going into the roll period.
NOPA crush data was 108.68 versus trade expectations of 106 million bushel.
Corn futures have rallied up against the 20 day moving average in the December contract. A trade above the 4.46 level opens the door for a test of 4.50.
India may cut the floor price for wheat exports from government warehouses by 13%. This could give China another source for wheat purchases other than the US.
There was no clear reason for the sudden jump in hog futures yesterday. At one point the December contract was up a full 2.07. The market was able to hold most of those gains. Those are days where we would appreciate government data on cash hog, cash pork, or slaughter activity to see if there was a change in fundamentals. Chart resistance in the December contract crosses at 88.45 and then at 89.00. Support crosses at 86.00.
Most analysts are estimating a 2% to 4% increase in Placements for the month of September. Newswires will be releasing estimates ahead of what would have been the Friday Cattle on Feed report.
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Markets as of 5:00 AM
- Dec Corn +1
- Nov Beans +6
- Dec Wheat +1 1/4
- Dec Cattle -.02
- Dec Hogs -.05
- Dec Dlr -.07
- Dec S&P +7.00
- Nov Crude +.14
- Dec Gold +8.10
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