Grains Oversold and Seasonals Suggest Rally
Aug 17, 2017
Good Morning! From Allendale, Inc. with the early morning commentary for August 17, 2017.
Grain markets are finding some bargain hunters providing support. Dec corn futures were down 8 cents for the first 3 days of trading this week. Nov soybeans and Dec wheat are down 20 cents so far this week. Equity markets will be waiting for several economic reports out today.
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Corn market in recent sessions has seen some commercial buying support while fund money appears to be the seller. December futures chart support is 3.58 ½ which looks to be the downside magnet for now as it was a contract low made on August 29, 2016.
Wheat futures continue to get pounded by technical and fund selling after setting new contract lows on Wednesday. Technical indicators are showing oversold.
Funds were estimated to have been net sellers of 7,500 corn contracts and 7,500 wheat contracts. They were net buyers of 2,000 contracts of soybeans.
Weekly export sales report will be released at 7:30 am CDT this morning. Trade is looking for old crop corn sales of 0 to 200,000 tonnes, soybeans 50,000 to 250,000 tonnes as crop will end on August 31st. For 2017/18 marketing year trade is expecting sales of wheat 300,000 to 600,000 tonnes, corn 400,000 to 700,000 tonnes and soybeans 300,000 to 600,000 tonnes.
Farm Journal Crop Tour starts next Monday and runs through Thursday. The results should be released on Friday August 25th.
Ethanol Processors were hard at work last week producing 1.059 million barrels per day. Compared to 1.0121 million barrels the previous week. Ethanol stocks increased jumped from 21.3 million barrels to 21.8 million.
Several economic reports trade will be watching are US unemployment claims, US manufacturing production and US leading economic indicators.
Fed Cattle Exchange auction had offered 1184 head this week and all were no sales. One pen sold for 112 but then turned down by seller. The weakness in product has packers reluctant to pay up for cattle. However, the large daily production is positive for fed prices down the road because feedlots are very current. Once packers get current on inventory we should see cutout values improve.
Positive basis for fed cattle is making it easy for packers to accumulate cattle, feedlots are willing to move cattle that have been hedged using futures.
October futures contract has established a trading range with resistance at 110 and support at 106.
Lean hog futures saw liquidation on Wednesday from bear spreading and surprised weakness in pork product.
October lean hog futures contract has support at 67.50 and resistance at 72.00.
Dressed beef values were lower with choice down 1.44 and select down .83. The CME Feeder Index is 144.49. Pork cutout value is down 2.30.
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