Early Planting May Reduce La Nina Pollination Impact
Apr 27, 2016
Good Morning! Paul Georgy with the early morning commentary for April 26, 2016.
Grain markets are lower on profit taking as US Dollar is weaker and crude oil higher.
Thanks to all who attend the Allendale Ag Leaders Webinar last evening. For those unable to attend, it was recorded and is available now, here.
The fundamentals of the grain market are not changing significantly but sell orders are not large enough to stop buyers momentum. Some of the influences being cited as bullish are the weaker US Dollar, stronger energies in recent sessions and a higher CRB drawing new money into commodities. Bearish arguments build on the large US stocks of grain, improving Argentine weather and China taking action to get control of their commodity bubble.
World Weather Inc. says “… La Nina conditions are expected to evolve this growing season and in the past under such situation’s July and August have tended to be the most stressful months for crop development. Getting much of the corn planted now should have it reproducing far in advance of any late summer drought that might evolve…”
Brazil has given grain trading companies an initial quota of 100,000 tonnes of tariff-free corn on purchases outside of the Mercosur trade bloc.
Ukraine's grain exports in the 2016/17 July-June season are likely to fall by 9.5 percent to 32.4 million tonnes due to a smaller harvest and a decrease in feed usage, says analyst UkrAgroConsult.
Estimates are funds bought a net 6,000 corn contracts, 14,000 soybeans, 5,000 wheat and 6,000 soymeal. They were estimated to have been net sellers of 2,000 contracts of soybean oil.
Friday is first notice day for the May contracts of grain and oilseeds.
Reuters - Argentina's corn ethanol producers are ready to increase output by up to 60 percent depending on how much the government boosts the minimum amount of the fuel required to be used in gasoline, according to a local corn industry chamber.
DOE - U.S. crude oil inventories are expected to see a 3.0 million barrel build with gasoline stocks dropping by 1.75 million and the distillates unchanged. The report will be released at 9:30 am CT.
The macro markets are waiting for comments from the Fed after the conclusion of the FOMC today. Trade is expecting a zero chance of an interest rate hike.
Cash cattle trade has not developed yet this week at the feedlots, however, auction barns may be providing a clue with prices running $2.00 lower than last week.
Weekly slaughter jumped well above trade expectations in the most recent week and USDA has confirmed its accuracy. A reason for the large production may be the large premium of cash to June futures. This strong basis is likely pulling cattle ahead which creates a better picture down the road. However this increases beef production at a time where supplies are already burdensome.
Key technical support is last Friday’s low of 113.80 in the June contract with many indicators suggesting a trend change. The fundamental picture will likely provide resistance on rallies.
The gap between the cash hog index and the June futures contract is providing a reason for the sell-off in futures. Competition for ad space by retailers is giving the advantage to beef.
Chart support is 76.80 in June lean hogs. Seasonal trends suggest lean hogs should find strength into summer.
Dressed beef values were mixed with choice down 1.24 and select up .15. The CME Feeder Index is 146.58. Pork cutout values are up 1.24.
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