South American Crops Continue To Get Bigger
Mar 20, 2017
Good Morning! Paul Georgy with the early morning commentary for March 20, 2017.
Grain markets are higher on reaction to CFTC report and bargain hunters. The US Dollar, crude oil, and stock indices are a bit lower to start the week.
RJ O’Brien Annual IB Conference speakers were leaning toward a bigger than USDA projected South American crop for both corn and soybeans. Panelists were also expecting managed money to become active buyers in grains on any site of weather threat to US crops.
CFTC Commitment of Traders report showed managed money funds reversing from a long to a short position in corn. Last week managed money funds were net sellers of 103,683 contracts of corn leaving them net short 23,602 contracts. They were net sellers of 29,284 contracts of soybeans and 37,449 contracts of wheat.
Argentine Grain Union is calling for a 1 day strike April 6th.
Brazil’s government is evaluating a request made by the country's sugar and ethanol industry to reinstate a 20 percent import tax on ethanol according to their Agriculture Ministry.
Weather in South America remains favorable for growing crops in Argentina. Brazil’s for some rain to delay harvest in some areas but nothing which would damage crops.
US oil rig count increases by 14 to 631 with US weekly crude production up to 9109K BPD vs. 9088K BPD last week.
U.S. Macro markets this week will focus mainly on Fed speakers with seven appearances by various Fed officials including an address by Fed Chair Yellen on Thursday. This week's U.S. economic calendar schedule is light.
Weekly cattle production was 585,000 head or 6.3% over last year. Carcass weights are 12# less than last year lowering total beef production to only a 4.3% increase over last year.
April live cattle futures closed $1.00 below the January high of 120.32. The discount of futures to cash and the strong cutout values should provide support for futures traders.
Weekly hog production ran a little larger than expected at 2.335 million head and was the largest in four weeks. This was 6.7% over last year. Hog weights are equal to last year which puts total pork production 6.6% over last year.
April lean hog futures are caught in a trading range between 66.00 and 72.00. A breakout of the either direction of this trading range could likely push markets further in the direction of the breakout.
Dressed beef values were mixed with choice up 1.07 and select down .61. The CME Feeder Index is 129.27. Pork cutout value is up .26.
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