Late March Weather Provides Support

Published on: 10:47AM Mar 22, 2016

Good Morning! Paul Georgy with the early morning commentary for March 22, 2016.

Grain markets are higher with three weather systems forecast to move across the Midwest. Trade is talking of planting delays. Outside markets are quiet with the US Dollar higher and crude oil unchanged.

Wheat crop conditions improved in Kansas and Texas by 1% from last week. The Oklahoma wheat good to excellent rating dropped from 67% last week to 63% this week. Kansas wheat is 20% jointed compared to 7% average. The maturity of the Kansas crop has traders concerned about recent cold weather and the fluctuation to temperatures in the forecast later this week.

Chinese Premier Li Keqiang has urged in a written document, for more efforts to modernize agriculture and increase the incomes of farmers to ensure the 2016-2020 period gets off to a good start for the rural sector.

Funds were estimated to have bought a net 6,000 soybean contracts, 5,000 corn, 4,000 wheat, 2,000 soymeal and 3,000 soyoil contracts on Monday.

Argentine farmers planted a lot of this years corn crop late in the season after the presidential election and export taxes were dropped. In January corn exports grew to 1.780 million tonnes versus 1.015 million in January 2015, according to Argentine customs data. February exports jumped to 2.120 million tonnes from 778,267 tonnes in the same month last year.

The recent weakness in the US dollar and the strength in crude oil has some drillers resuming work on wells that had already been started. This could increase US supplies by the year end.

EIA report is expected to produce a new record high in U.S. oil inventories. The market consensus for Wednesday's weekly EIA report is for a 2.7 million barrel increase in U.S. crude oil inventories.

The markets are expecting today's Jan FHFA house price index to show another solid increase of 0.5%, adding to the 0.4% month over month increase seen in December. The FHFA index is up 5.7% year over year and has risen by a total of 27.8% from the housing bust low posted in March 2011.

Cash traded at $139 on Friday, only up $1 from the previous week but below the $140 and $141 expected. The Cattle on Feed report was a little bearish with a 10% year over year jump in placements. Many traders are now thinking the season high may have been put in after Monday’s selloff. However seasonal lows are usually made in late April.

This week’s showlist count came in with 16,000 more head being offered.

Monthly cold storage report will be released this afternoon at 2:00 pm. The Quarterly Hogs and Pigs report will be released at noon on Friday. The livestock futures markets will be closed on Friday.

Technically the lean hog futures closed below the 50 day moving average which has traders worried about underlying support in the April contract. However the June contract has a more positive picture. June cattle has long-term support at 124.90 and resistance at 133.00.

Dressed beef values were lower with choice down 2.01 and select down 1.66. The CME Feeder Index is 163.45. Pork cutout values are up .56.

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