Headlines Not Enough - Traders Want a Deal

Published on: 11:26AM Feb 27, 2019

Good Morning from Allendale, Inc. with the early morning commentary for February 27, 2019.

Grain markets are slightly higher this morning after the overnight session opened a little later than usual due to technical issues. Traders are looking for stability as technicals and trade headlines drive markets. A new month and First Notice Day liquidation could add to the volatility.

First notice day for the March contracts is tomorrow. Longs positions held through today's close have delivery risk starting tomorrow.

Sovecon has raised its estimate for Russia's wheat exports up from 35.6 million tonnes to 35.9 tonnes. The Russian Ag Ministry has given quota's to its exporters so that grains are not oversold.

Ukraine's Agriculture Ministry has raised its estimate of grain exports for the 2018/19 season to 49 million tonnes, up from their previous estimate of 47.2 million tonnes. If realized, the total would be a new record for the country.

A judge in Mexico has ruled against a 2017 measure that allows higher ethanol levels in gasoline, saying it could worsen air quality, attorneys for environmentalists fighting the provision said on Tuesday. Mexico raised its cap on ethanol in gasoline to 10 percent from 5.8 percent in 2017, even as environmentalists warned that the action would exacerbate pollution. (Reuters)

Through February 12th, managed money funds were sellers of 29,063 corn contracts to be net-short 14,693. In soybeans they were sellers of 16, 027 contracts to be short 10,038, and in wheat they were sellers of 6,910 for a new short position of 16,053. The next Commitments of Traders report will be released this Friday.

Managed money funds were estimated sellers of 25,000 corn contracts, 9,000 soybeans, 6,000 wheat, 4,000 soymeal, and 5,000 soyoil in yesterday's trade.

The economic calendar is busy this morning with MBA Mortgage Applications at 6:00 AM CST, Retail and Wholesale Inventories at 7:30 AM, Factory Orders and Pending Home Sales at 9:00 along with Fed Chair Powell's monetary policy testimony. Crude oil inventories will be out at 9:30 AM.

In livestock, funds were buyers of 3,608 live cattle contracts are were long 111,082 contracts. They sold 6,902 hog contracts and were short 9,892 thorough 2/12/19.

The Lean Hog Index, the delayed measure of cash hog prices across the nation, will fall to new lows for its downtrend today at 52.85. Wholesale pork has its current low posted from Tuesday of last week. Current prices are 1.01 over that amount.

USDA's meat production numbers for the week ending February 9 had the average hog carcass unchanged at 213 lbs. Compared with last year, that is 0.9% over. The average steer carcass was unchanged at 885 lbs (0.4% under last year). Converted to a live basis, the average steer is only 6 lbs. lighter than last year. The average heifer carcass rose by 2 lbs. in this week to now 822 lbs. (1.3% under last year). On a live basis, this converts to 17 lbs. under last year.

China plans to divide its hog industry into five key geographic regions under a wide-ranging plan aimed at protecting pork supplies as African swine fever continues to spread across the world's top pork producer. The plan also called for an expansion of it frozen pork reserves.

Dressed Beef Values were mixed with choice up 0.12 and select down .84.  The CME feeder index is 140.33.  Pork cut-out values were up .04.