Grains Steady While Crude Slides

Published on: 11:55AM Jan 25, 2016

Good Morning! Paul Georgy with the early morning commentary for January 25, 2016 at 5:15 am.

Allendale’s 28th Annual Ag Leaders Conference Series - January 26th - 28th, 2016.

Grain markets are mostly steady as weather in South America remains on track for a record harvest. Crude oil is sharply lower on Iraq’s announcement of record-high oil production.

Drew Lerner, from World Weather Inc. says Brazil’s weather conditions will remain very good in most of Brazil during the next few weeks. A favorable distribution of rain is expected. Southern parts of the nation that have been drying out recently will get significant relief and experience more seasonable temperatures once again while northeastern areas will get a break from the heaviest rain and experience some slowly improving conditions. (Drew will be presenting his spring and summer forecast on Wednesday at the Allendale’s AgLeaders Conference, LIVE ONLY!)

The weekly CFTC Commitment of Traders report showed managed money funds were buyers in corn and soybeans last week. They bought a net 28,621 contracts of corn leaving net short 158,210 and bought 27,267 contracts of soybeans leaving them net short 25,773 contracts. They bought only 670 contracts in wheat.

(Reuters) China will let the market decide its domestic state corn prices to help cap the country's rising imports and record high level of state reserves, a senior official was cited by state media as saying on Monday.

The Macro markets this week will focus on whether oil prices have at least temporarily bottomed and whether the Shanghai Composite index can hold its tentative upward rebound. Traders will be watching for post meeting comments from the FOMC at its Tue/Wed meeting.

Cattle-on-Feed numbers were a bit of negative surprise to the trade. Placements were expected to be 95% or less and it can in at 98% of a year ago. It is still the lowest placement for December since 1998. On Feed were a little higher than expected at 100% and marketings were a little lower than expected at 101%. After the sharp rally in recent days one would have to expect a lower opening of at least $.50 to $1.00. Weak product values are also weighing on a lower opening.

Hog slaughter for the week was 2,329,000 head which was 1.3% more than last week and .5% greater than the same period a year ago. Combine the lighter weights and total pork production was .2% less than the same period last year.

Expect livestock traders to watch activity in the stock indices and crude oil markets.

Dressed beef values were mixed with choice down 2.84 and select down 2.40. The CME Feeder Index is 157.51. Pork cutout values are up 1.26.

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