Good Morning! Paul Georgy with the early morning commentary for December 30, 2015 at 5:15 am.
Grain markets are higher on continuation of short covering and concerns of cold temps in Russia damaging the wheat crop. The US Dollar is higher while crude oil is taking back yesterday’s gains.
Traders continue to struggle to find reasons for the grain market price movement this week. Some are citing the concern China will stop DDG imports and increase movement of corn out of their reserves. This should increase soymeal or protein demand. However there has been no confirmation of either story.
The Christmas weekend moisture which fell across the Midwest is having an impact on grain futures prices with wheat getting the most benefit. The high water on the Mississippi at St Louis is stopping grain from moving to the gulf causing basis fluctuations at up river locations. The heavy rains are causing flooding and or standing water on wheat fields which is suffocating the crop not in dormancy.
Overall the news has not turned friendly, however, new bearish news has stopped which could be a reason in itself for a short covering rally.
(Reuters) - Argentina on Tuesday removed limits on how much corn and wheat the country's huge farm sector can export, the latest measure aimed at revitalizing agriculture in the grains-producing powerhouse. The new center-right administration of President Mauricio Macri eliminated taxes on corn, wheat and soy exports earlier this month, making good on a campaign pledge to take steps to encourage agricultural production.
Funds were estimated to be net buyers of 4,000 wheat contracts, 2,000 corn, 3,500 soybeans, 1,000 soymeal and 2,000 soyoil contracts.
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Trading activity in livestock was reduced as players even up books for yearend. Spreading was the main feature in lean hogs while profit taking dominated live cattle. Cash cattle markets are expected to be firmer than last week as cutout values improve packer’s attitude. However the poor feedlot conditions will encourage some producers to move cattle quickly.
Tuesday’s sell-off in cattle was warranted after the sharp rally in recent sessions. Weather and feedlot conditions will have an impact on cattle rate of gain for several months which should provide underling support. Look for more choppy action as supply and demand come into balance.
Dressed beef values were higher with choice up 5.08 and select up 4.46. The CME Feeder Index is 157.05. Pork cutout values are up .26.
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