Can Grain Markets Keep the Momentum This Week?
Sep 24, 2018
Good Morning! From Allendale, Inc. with the early morning commentary for September 24, 2018.
Grain Market Traders experienced a mixed trading session on Friday after a strong week of gains. Soybeans finished the week up 16 ¾ cent from last week while both corn and wheat finished the week over 10 cents higher. As all three commodities approach strong resistance levels, traders will be keeping a close eye on weather forecasts, fund positioning and trade talk developments in order to decide whether to go through these levels or start profit taking from the prior week.
Commitments of Traders Report numbers were released on Friday afternoon with funds shorting an additional -77,806 contracts of corn for the week with a new net position of -141,276 (-230,556 record short position). Soybeans added to their short positions by -1,544 with a new net position of -69,813 (-118,613 record short position). Wheat shorted an additional -19,794 contracts with a new net position of -1,379 (-162,327 record short position).
Canada & US NAFTA Talks are running out of time. With just over a week to go before the October 1st deadline, US economic advisor Kevin Hassett said on Friday they are “very close” to having to move forward with its trade deal with Mexico and without Canada. Hassett added, "I'm a little surprised that the Canadians haven't signed up yet. I worry that politics in Canada is trumping common sense because there's a very good deal that was designed by Mexico and the U.S. to appeal to Canada. And they're not signing up and it's got everybody over here a little bit puzzled."
Brazil’s Soybean Plantings in Parana (Brazil’s #2 producer) increased planting advances to 11.2% of area (1.7% last year and 1.9% last 5-year average).
Russian Wheat consultancy IKAR said on Friday, they see Russia's 2018 wheat production at 69.2 million tonnes versus 69.6 million tonnes forecasted by IKAR in late August.
Cattle on Feed Report numbers were released on Friday. Total cattle on feed for September 1st came in at 5.9% over last year (avg 5.4%, ALDL 5.7%). At 11.125 million head, this is the largest Sep 1 total in the history of the data series going back to 1995. Placements were 7.4% more than last year (avg 4.4%, ALDL 6.7%). The 2.070 million head inflow into feedlots in August was the largest in seven years. Marketing numbers were at 0.2% over last year (avg 0.4%, ALDL 1.0%). At 1.983 million head, this was the largest August marketing since 2011.
Cold Storage will be released today at 2:00 PM CDT. Allendale estimates a 556 million lb. total pork stock level for the end of August. The five-year average is 586 million lbs. Beef stocks are estimated at 481 million lbs., well over the five-year average of 440.
Three New Cases of African swine fever were detected Friday in the province of Luxembourg in Belgium by the Surveillance Network of Wildlife in Wallonia, raising the number of infected animals up to nine. The good news is that none of these cases of the disease has yet been detected among farmed pigs, just wild boar corpses.
December Live Cattle futures traded in a tight range on Friday closing at $118.45. Strong resistance still remains at the $119 level and with key support at $116. With a higher than expected cattle on feed report on Friday, traders are preparing for a lower open during today’s trading session.
Cash Hog Prices continued pushing higher last week finishing up the last 13 out of 15 days (both being the last two Fridays). This week trade will be focused on how quickly plants in North Carolina can reopen after Hurricane Florence and the backlog of market ready hog supply numbers. Last week’s hog kill was 194,000 head below estimates. This week’s kill was 205,000 head below estimates.
Dressed Beef Values were mixed with choice up .28 and select down .20. The CME Feeder Index is at 156.29. Pork cutout value was up 0.23.