Commodity Prices Slip Ahead of EU Summit
Jan 30, 2012
Good Morning! Paul Georgy with early morning comments for January 30, 2012 at 5:00 am.Grain futures are starting the week lower as money flow takes a risk off attitude. The Euro Summit in Brussels brings the focus back to the European debt crisis. Spain’s released a shrinking GDP number this morning. China returns from holiday with no new financial policy. Cash corn markets are starting to see basis setback after several weeks of improvement. We will be watching basis closely this week as it should provide an indication for the direction in futures. The commitment of traders report showed managed money reducing their long position in corn last week by more than 14,000 contracts. They increased long positions in soybeans by 11,000 and increased their short positions in wheat by 5,000 contracts. Drew Lerner World Weather Inc says; "Sufficient rain will fall over the coming week to further reduce Argentina crop stress. Crop conditions will likely improve with the soon to be reproducing soybeans, late corn and sorghum to benefit most from the next two weeks of rain." USDA released Cattle inventory report on Friday afternoon can be looked as a little positive. The beef heifer replacement number was a surprise. The message for this report is that beef production for the next year will tighten even more than previously thought. Expansion has started and will slow the decline in beef production set for 2013. Beef cutout values were lower on Friday. Choice was down .49 and select was down .65. Cash cattle traded at 124 on Friday afternoon which was 2.00 less than last week. Many feedlots passed with ideas for higher prices this week. Pork cutout values were down .03. Get more details on the Allendale Research Center and watch the Morning Coffee Video at 8:00 am this morning at www.allendale-inc.com. Subscribe today!
Markets as of 5:00AM
Corn -4 to -5 Live Cattle called lower US Dollar Index +35
Beans -12 to -13 Lean Hogs called lower Crude Oil -52
Wheat -4 to -7 S&P Index -7.75 Gold -12.30
Allendale Advanced Charts
Corn futures closed the week near the 100 day moving average. We are now caught in a range between the 100 day and the steep uptrend support line. Watch for a close out side of the range for a significant move in direction of breakout.
Nelson Notes from the desk of Rich Nelson
The Commerce Department revised fourth quarter 2011 GDP from its previous estimate of +1.8% up to +2.8%. While this is an improvement, and represents a rebounding economy, the trade was expecting a revision to +3.0%. Economists would suggest the market’s expectation was a little too aggressive. It would also back up Bernanke’s more cautious comments noted in this week’s press conference.
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