Good Morning! Paul Georgy with the early morning commentary for October 2, 2014at 5:30 am.
Grain futures are mixed with corn and soybeans lower and wheat higher.
Traders Focus: Weekly export sales (7:30), Factory Orders (9:00) and US Employment data on Friday. Chinese holiday until early next week.
A weather system moving across the Midwest over the next 48 hours will chase farmers from the fields. This news is providing a reason for traders to take some profits as some rains are very heavy which will cause further harvest delays.
US ethanol production last week was less than the previous week. Year to date production numbers are 7% over last year but that will drop to closer to last year as the weeks progress. Ethanol producers are dealing with declining margins despite falling corn prices. Recently ethanol prices have fallen more than corn.
Trade estimates for today’s weekly USDA export sales report: Wheat 400,000-600,000 mt, corn 650,000-900,000 mt, soybeans 700,000-1,000,000 mt, soymeal 125,000-300,000 mt, soyoil 0-10,000 mt
Traders are beginning to hone in on the October 10th monthly Supply and Demand Report. The question being asked is: How much will USDA raise yields and how will they adjust acreage? Bottom line, the October report historically does have some significant adjustments and can be a market mover.
Allendale suggests using various strategies to protect insurance payments. A rally in corn and soybeans now could cost the producer dearly because insurance payments are based on the average price of December corn futures and November soybean futures during October.
FC Stone raises corn yields to 178.4 bu/ac and soybean yields to 48.4 bu/ac.
Goldman Sachs lowered its three- and six-month price forecasts for Chicago Board of Trade soybeans to $8 a bushel, below the current spot price near $9. They are forecasting the 2014/15 CBOT soybean-to-corn price ratio trading at 2.6 in coming months.
Tens of thousands of protesters gather for a sixth day in Hong Kong, their demand for the right to choose their leaders in fully democratic elections poses the biggest popular challenge to the ruling Communist Party since Chinese president Xi Jinping took power two years ago. The Umbrella Revolution, so called for the protesters’ use of umbrellas to shield against pepper spray, comes at an inopportune time for Xi. He is trying to steer a slowing economy while moving against powerful vested interests in one of the most wide-ranging purges and anti-corruption campaigns since the Communists came to power in 1949.
New contract highs were reached for the October through April live cattle contracts on Wednesday. Feeder cattle futures hit, and closed at, record prices all the way out through the May contract. In the short term the trade is feeling more comfortable with the idea that packers will have to pay up for cash cattle through this month. The October contract is implying cash will be $164 at the end of October. December is implying $164 and $165 at the end of the year.
Beef values are not keeping up with the enthusiasm in futures as choice is up .11 and select is up .73. CME Feeder Index is 233.86. Pork cutout is down .18.
Markets as of 5:30 AM CDT
- Dec Corn -1 1/2
- Nov Beans -4
- Dec Wheat +1 1/4
- Oct Cattle +.57
- Oct Hogs -.97
- Dec Dlr -.18
- Dec S&P -1.25
- Nov Crude -2.15
- Oct Gold +.40
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