Are We Really In A Weather Market?
Feb 14, 2018
Good Morning! From Allendale, Inc. with the early morning commentary for February 14, 2018.
Grain markets are doing some back and fill as South American weather is very important to row crop production. Argentina being a large processor of soybeans, soymeal is the spotlighted commodity. Remember, Monday is a trading holiday and weather forecasts in Argentina could create excitement when we open Monday night. Weather markets have the propensity to be active going into the weekend and on the reopen after the weekend.
World Weather Inc. comments are: “In Argentina, erratic shower and thunderstorm activity is likely Friday through at least next Tuesday. There will be some meaningful rainfall; though, this will be localized with some areas also missing out. A more widespread heavy rain event is needed to reduce overall crop stress in the country.”
CME raises the margin requirement for soymeal and wheat contracts by $200.00 and $50.00 respectively.
Weekly exports sales will be watched closely this week, especially after the USDA increase year corn exports and lowered the soybeans on recent supply and demand report. That report will be release Thursday morning at 7:30.
NOPA Crush data will be released on Thursday at 11:00 am CST. Trade is expecting 165.51 million bushels which would be the second largest monthly crush on record.
Chinese New Year’s celebration begins today and will likely keep any purchasing news limited until next week.
U of IL updated their average crop budgets for 2018. Corn breakeven $3.91 cash and Soybeans $9.56 cash.
Mexico's Agriculture Minister says Mexico will import 13 mmt of corn this year, a similar amount to 2017, and produce 27 mmt in 2018, up from the roughly 26 mmt of corn grown last year.
China, the biggest buyer of American soybeans, picks up about a third of the entire U.S. crop, which it uses largely to feed 400 million or so pigs. President Xi Jinping’s administration is studying the impact of restricting soybean imports in retaliation for U.S. tariffs on washing machines and solar panels, people familiar with the situation told Bloomberg last week. The article also does an excellent job of analyzing the reasons they would not use soybean purchases as retaliation.
Packers were buying some cattle in IA at 128 to 129.50 early this week. Packers appear to be a bit short bought which may give the advantage to the feedlots. The Fed Cattle Exchange has only 255 head being offered at today’s auction.
Product firmed yesterday as the lighter production is supporting values. Export market this week could slow as the Olympics are in session and Chinese New Year Holiday begins today.
April live cattle futures are remaining at a discount to cash which should provide support. Technical resistance is 127.00 and support is 122.80. Look for further consolidation as funds seems to the be providing the buyers support.
April lean hog futures put in a possible reversal pattern on Monday and Tuesdays inside day makes the 71.00 level key resistance. A close above that level could give hope for a further rally. Support crosses at 68.55.
Dressed beef values were lower with choice down .88 and select down .84. The CME Feeder Index is 147.57. Pork cutout value is up .79.
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