Funds Rolling From Stocks to Cheap Commodities
Apr 26, 2018
Good Morning! From Allendale, Inc. with the early morning commentary for April 26, 2018.
Grain markets saw a flash of buying by funds on Wednesday as key fund managers were touting “liquidate some stock and buy commodities.” As producers we will take it. Any help to drive grain and oilseeds prices higher will provide marketing opportunities. Planters are running full steam in some areas, with customers in those areas projecting to be done with corn by Saturday (without rain in central IA). Producers are already pointing out the concern of having all the corn planted in a short period of time which make the pollination weather critical. Time will tell.
Weekly exports are expected to be large for corn and soybeans on today’s report which will be released at 7:30 am. Trade average estimates are: Corn 800,000 to 1,200,000 tonnes of old crop 200,000 to 400,000 new crop, soybeans 400,000 to 700,000 for old crop, 400,000 to 700,000 new crop, soymeal 100,000 to 300,000 tonnes, soyoil 8,000 to 30,000 tonnes and wheat -100,000 to 200,000 tonnes old crop and 150,000 350,000 new crop.
USDA attaché sees Brazil 2018/19 soybean output at 115 million tonnes, the second largest crop on record. The 2018/19 planted area is forecast to increase to a record of 35.8 million hectares due to higher prices, higher expected demand by Chinese buyers, and an increase in domestic consumption. Exports for the 2018/19 Marketing Year are forecast at 67 mmt and soybeans destined for processing will reach a record of 44 mmt due to the economic recovery and new biodiesel blending mandate. (Reuters)
Monday is first notice day for May contracts at CBOT. This suggests traders with long positions in the May contract on Monday April 30 have the risk of getting delivered. Check your statements and talk to your broker.
Stats Canada will release planted acreage estimates on Friday. Trade is expecting an increase of 120,000 to 650,000 acres in wheat.
Brazil ports remain on pace for a record monthly load-out with 11.5 to 12mmt likely.
Funds were net buyers of 15,000 corn contracts, 6,000 soybeans, 10,500 wheat and 5,000 soymeal on Wednesday. They were estimated to have been net sellers of 4,500 soyoil contracts.
China's purchases of U.S. soybeans have come to a grinding halt, trade and industry sources say, as fears of further action by Beijing to curb imports of U.S. crops following last week's anti-dumping move on sorghum rattles the agriculture industry. Buyers from China, which takes 60 percent of soybeans traded worldwide, have not signed any new deals to take U.S. beans in the last two weeks, according to a Reuters review of data published by the United States Department of Agriculture (USDA). (Reuters)
Ethanol production slipped in the previous week to 985,000 barrels per day. The previous week it was at 1.009 million barrels. It is normal for production declines during April due to planned annual maintenance.
EIA petroleum data showed crude oil inventory increasing 2.17 million barrels when trade was expecting a decline. Gasoline stock increased by .84 million barrels while distillates dropped 2.61 million barrels last week.
Fed Cattle Exchange had no sales at the Wednesday morning auction. Feedlots are asking 126 for immediate delivery. We would expect to pay up late this week to meet their commitment to retailers. We are hearing cattle being priced at 121 and 119 for deferred delivery.
Packers should be working on a 625,000-production week and possibly the largest production week of the year next week. Product values are strong and weekend weather for the metropolitan areas should provide a chance for cooking out this weekend.
April contract of futures last trading day is Monday April 30. June futures is struggling to close above the 106 level. Support crosses at 101.20.
Cash hogs are increasing in value but not fast enough for traders. The discount of cash to futures is providing selling opportunities on rallies. June futures has support at 73.95 and resistance at 77.00.
Dressed beef values were higher with choice up .88 and select up 1.04. The CME Feeder Index is 138.20. Pork cutout value is up .41.
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