Grains Firm On Cold Weather Forecast
Dec 09, 2013
Good Morning! Paul Georgy with early morning comments for December 9, 2013 at 5:00 am. Grain futures are higher as cold weather forecast provides underlying support.
US winter wheat area was hit with ice and extremely cold temps over the weekend and extreme cold temps are expected to be around most of this week. Traders are talking about potential winterkill but we will not see the true effect until spring. Weather conditions in South America, on the other hand, remain favorable to growing crops. The weekend rains should be enough to maintain crops during a week with warmer temps in the forecast.
Traders will have to deal with several factors this week. The USDA will release the December Supply and Demand report on Tuesday which many are expecting an upward adjustment in demand and a reduction in ending stocks. Our research suggests the USDA will make very minimal changes if any. Many are now thinking we are past the peak Chinese buying of US soybeans. And the calendar is suggesting we could see more movement of grain in the US as farmers take advantage of year-end tax planning.
Technical reversal patterns posted last week could motivate more buying in corn and selling in soybeans and wheat. Chart resistance in corn crosses at 4.39 and 4.49 in March corn. January soybeans have consolidated into a range between 13.46 and 13.11. March wheat closed out last week settling on major support at 6.47 ¾.
Managed Money funds were buyers in most contracts at CBOT. They reduced short corn positions by 22,237 and wheat by 2,028 contracts. Funds added to long soybean positions by 4,910 contracts.
Livestock futures at CME saw sharp moves last week as funds adjusted positions. Lean Hogs sold off early in the week and bounced off the 100 day moving average on Friday. Live cattle sold off late in the week with support at 132.32 in the Feb contract. Managed Money funds added 11,436 contracts to their already long position in Live Cattle. Cash markets should provide some direction to futures as week progresses. Beef cutout values were lower on Friday with choice down .94 and select down 2.64. The CME Feeder Index is set at 165.79. Pork cutout values were up .99. We would have to call live cattle steady lower and lean hog futures steady higher.
Markets as of 5:00 AM
- Mar Corn +1 1/2
- Jan Beans -+6 1/4
- Mar Wheat +2 1/4
- Feb Cattle Steady-Lower
- Feb Hogs Steady-Higher
- Mar Dlr -.06
- Mar S&P +.50
- Jan Crude +.14
- Feb Gold-1.30
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