Short Covering Halted By Weak Fundamentals

Published on: 11:52AM Mar 03, 2016

Good Morning! Paul Georgy with the early morning commentary for March 3, 2016.

Grain markets are steady to higher with outside markets a bit firmer. Short covering would have to be credited for the rally as new news is limited.

Weekly export sales data will be released at 7:30 am. Trade estimates are: corn 700,000 to 1,100,000 tonnes, soybeans 200,000 to 600,000 tonnes, soymeal 100,000 to 250,000 tonnes soyoil 0 to 10,000 tonnes and wheat 200,000 to 450,000 tonnes.

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Corn planters are running in Louisiana as the US growing season gets underway.

USDA’s March Supply and Demand report will be released Wednesday March 9th. They will be updating only the 2015/16 data. The first new crop report will be released on May 10th.

Crude oil inventories rose by 10.4 million barrels to 518 million in the week to Feb. 26, or the biggest weekly build in almost a year. That was almost triple the 3.6 million-barrel increase expected by analysts.

Ethanol production fell from 994,000 barrels per day to 987,000 in the latest week. This was positive as it was 6% over last year with year to date production pace still above USDA expectations.

Ethanol stocks fell by 481,000 barrels to now 22.624 million barrels which brought the year over year increase from 7.0% to now 5.1%.

The wheat rejected by Egypt because of ergot is reported to have found a home in Spain. It is being sold as feed wheat which would suggest a sharp decline in value from milling wheat.

Macro markets are waiting for the employment figures on Friday morning. Trade estimates are 195,000 jobs with unemployment holding at 4.9%.

Investors are also waiting to see what stimulus action central banks will take, ECB on March 10, BOJ on March 15 and China’s National People’s Congress (NPC) late this month.

With cash cattle markets at a standstill, April futures are turning to the technicals for direction. Futures are overbought with support at 136.00. The 10 day moving average crosses at 135.95 and the 20 day is 134.20. Trade expects support to develop on setbacks due to current cash expectations.

April lean hog futures had a $4.00 trading range in February and current sets at midrange. March is a poor demand month for meat, however, post-Easter and first of month (April) featuring should provide underlying support.

Dressed beef values were mixed with choice up 1.90 and select down 1.04. The CME Feeder Index is 159.08. Pork cutout values are up .47.

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