Grains Back In Investors Favor
Apr 14, 2016
Good Morning! Paul Georgy with the early morning commentary for April 14, 2016.
Grain markets are lower on profit taking after the recent sharp rally. The US Dollar Index is higher while other markets have a risk-off bias.
Money flow in recent sessions has dictated the price movement in grains at the CME. Fundamental conditions have not changed significantly when looking strictly at supply and demand. However, the weaker dollar and the relationships of other currencies to the dollar has changed the attitude of investors.
Technical buying has also been a factor. As resistance levels are broken, further buying has been triggered by short-covering and margin clerks directives of “meet your margin call now or get out.” The question is how long will this continue?
Another question we are getting asked a lot from farmers is “Should we sell some cash grain?” I suggest you talk to your Allendale Representative, Today!
Weekly Export sales report will be released at 7:30 am CDT. Trade estimates are: 2015/16 crop, wheat 0 to 400,000 tonnes, corn 900,000 to 1,100,000 tonnes, soybeans 100,000 to 300,000 tonnes, soymeal 0 to 180,000 tonnes and 0 to 20,000 tonnes. For 2016/17 crop, wheat 100,000 to 300,000 tonnes, corn 50,000 to 200,000 tonnes, soybeans 25,000 to 200,000 tonnes and soymeal 0 to 50,000 tonnes.
Reuters reported that on Tuesday funds bought 30,000 corn contracts (although estimates ranged from 20,000 to 35,000), bought 20,000 soybeans (estimates ranged from 15,000 to 22,000), bought 9,000 wheat, bought 12,000 soymeal and bought 4,000 soyoil contracts.
NOPA Crush Data will be released tomorrow at 11:00 CDT. Trade average estimate for March is 156.248 million bushels, up 6.9 percent from February.
Buenos Aires Grain Exchange forecasts Argentine farmers will plant 4.5 million hectares of wheat for the 2016-17 crop. The increase of 25 percent over last year's 3.6 million hectares is due to the lifting of export barriers by the government.
Ethanol production took a sharp seasonal decline in the most recent week. Daily average production went from 976,000 to 938,000 barrels per day.
US crude oil stocks saw a build of 6.634 million barrels last week which was well above the trade’s estimate of 1 million barrel increase. Gasoline supplies drop as US refineries utilization was 89.2% compared to last week of 91.4%. OPEC’s meeting is still on for this weekend in Qatar.
CME Group Inc says they will close the New York trading floor at year-end. The floor will remain open for trading of options on futures contracts, as well as S&P 500 futures contracts.
Live cattle futures are being hit with selling pressure as focus shifts from livestock to grains. Traders are concerned about the rush of producers to move market ready cattle as soon as possible due to sharp discount of June futures to current cash values. Product remains strong as reduced production tightens up meat supplies.
April lean hog futures go off the board today. The premium of June futures to the cash index is creating a selling attitude. Technical selling pressured June hogs when prices broke the 78.50 level on Wednesday. Next major support crosses at 76.20 in the June contract.
Dressed beef values were higher with choice up 2.90 and select up 2.89. The CME Feeder Index is 158.02. Pork cutout values are up 1.12.
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