Soybeans Playing Price to Entice Game

Published on: 10:50AM Apr 04, 2016

Good Morning! Paul Georgy with the early morning commentary for April 4, 2016.

Grain markets are being led higher by the soy complex as US planting expectations suggest “price to entice” more acres. The US Dollar and stock indices are higher while crude oil is steady.

The next USDA report is April 12 where we will see how they breakdown the stocks numbers released on March 31. The first balance sheet for 2016/17 will be released in May.

Baker Hughes has dropped the oil rig count by 10 to 362 compared to the Oct 2014 peak rig count of 1609.

The CFTC Commitment of Traders report showed funds were net buyers of 46,136 contracts of corn leaving them net short 108,433 contracts. They were net buyers of 21,768 contracts of soybeans making them net long 75,450 contracts. Funds were net buyers of 12,005 contracts of wheat, remaining net short 69,832 contracts. Remember these numbers were tabulated as of last Tuesday’s close.

Funds we're estimated to have been net buyers 8,000 soybean contracts, 4,500 corn and 1,500 contracts of wheat on Friday.

Brazil exports have switched from corn to soybeans as harvest gets into full swing. Corn export‘s out of Brazilian ports during the first quarter of 2016 were 11.8 mmt compared to 4.9 mmt last year. Brazilian ports are improving infrastructure as they export more corn and soybeans than previous monthly records.

The International Grains Council said grain stocks will remain near a three-decade high next year. They said global grain stocks will rise by 18 million metric tons to 466 million tons in 2015-16. 

The IGC expects production to fall slightly next year. It predicted production of 2 billion tons, down from 2.01 billion tons in the current year, with a larger corn harvest to be offset by declines in wheat, barley and sorghum.

The Macro markets this week will focus on crude oil prices, the U.S. stock market, the Fed policy as the minutes from the March 15-16 FOMC meeting are released this Wednesday and the U.S. presidential politics where Wisconsin primary will be held on Tuesday.

Livestock futures started a historical weak demand month with lower product prices on Friday. Managed futures were net sellers of 9,634 contracts in live cattle futures in last CFTC report while flat in the lean hog futures.

Technical traders may control the direction in June lean hogs in the short-term where the 50 day and 100 moving averages cross between 78.75 and 78.60 on the weekly charts and 200 day moving average crosses at 78.70.

June live cattle futures contract has key support at 122.27, last week’s low. Technical indicators suggest old condition in live cattle.

Dressed beef values were lower with choice down 1.88 and select down 3.55. The CME Feeder Index is 158.26. Pork cutout values are up .20.

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