April S&D Report Expected To Be A Non-Event
Apr 12, 2016
Good Morning! Paul Georgy with the early morning commentary for April 12, 2016.
Grain markets are higher lead by buying in soybeans. Commodities are starting Tuesday with a risk-on attitude. The weaker dollar in recent sessions is providing world buyers to shop the US again for soybeans and soymeal.
USDA April Supply and Demand report will be released at 11:00 am. Trade is expecting minor changes in ending stocks for corn, soybeans and wheat. Key areas that may hold a surprise are Corn for ethanol usage and changes in the residual category. Soybean traders are wondering when USDA will adjust crush usage numbers. This report setup makes it important to place “just in case” orders with your broker. Algo traders may provide the opportunity for the unexpected.
US Ending Stocks estimates: wheat April estimate is .977 billion bushel vs. USDA March estimate .966; corn April estimate 1.845 billion bushel vs. USDA March 1.837; soybeans April estimate .454 billion bushel vs. USDA March .460.
USDA released national winter wheat conditions which showed a 3% decline while the state of KS was down 5% and OK down 7% in the Good to Excellent category.
Corn planting progress was seen at 4% complete compared to 7% for the 5 year average. However, the 2012 planting progress was way above normal and could be said to skew the realistic average for April 10.
Weather conditions and forecasts should be considered as non-supportive for grains. However, the talk of when La Nina might arrive in the Midwest is providing support. Slow movement of farmer held cash grain is underlying support.
Market consensus for Wednesday's weekly EIA report is for a 1.0 million barrel rise in crude oil inventories, a 2.0 million barrel decline in gasoline inventories, a 100,000 barrel rise in distillate inventories, and an unchanged refinery utilization rate of 91.4%.
The Macro markets are focusing on Thursday's Chinese Q1 GDP report, which is expected to ease to a new 7-year low of 6.7% from 6.8% in Q4. Technical support at 17,400 in the Dow Index is major support and a close below that level could trigger more selling.
Cattle futures slid under profit taking pressure. The June contract rallied to test the 50 day moving average only to be met with selling pressure. Trading volume was light on Monday. Chart support crosses at 122.90 in June futures.
Technical traders are looking at the flag formation in the June hogs which if broken on the downside could mean another leg lower. Key chart support crosses at 78.52 in the June lean hog contract. Livestock traders watch for the stops building under the key technical support.
Cash hogs could find support this week as Midwest farmers go to the fields.
Dressed beef values were mixed with choice up 1.65 and select up 1.80. The CME Feeder Index is 157.86. Pork cutout values are up .37.
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