Stronger Dollar Creating a Headwind For Demand
Mar 24, 2016
Good Morning! Paul Georgy with the early morning commentary for March 24, 2016.
Grain markets are slightly higher while the US Dollar is adding to this weeks gains and crude oil is lower.
Grain and livestock markets will close at regular times today, they will be closed on Friday and will resume normal hours on Monday. Most international markets will be closed on Monday in observance of Easter Monday.
Traders in the grain complex wait for a change in news or a new catalyst to spur a breakout of current ranges. Next week USDA will release some of the most important data of all yearly reports. The March quarterly stocks could be a market mover if USDA ramps up usage for corn in the first half of the marketing year. However a 30 to 50 million bushel surprise in usage will not do much for the bottom line. Prospective plantings could vary greatly from final numbers but historically it is a market mover. March 31st a week from today the USDA will release this data. Get a preview and expectations of these reports in our next webinar, Tuesday March 29th at 8:00 PM CDT. The free registration gets you access to the recording as well.
Weekly Export data will be released at 7:30 today. Trade estimates are: Corn 900,000 to 1,100,000 tonnes, soybeans 400,000 to 600,000 tonnes, soymeal 50,000 200,000 tonnes soyoil 7,000 to 20,000 tonnes and wheat 2015/16 crop 150,000 to 350,000 tonnes, 2016/17 crop 75,000 to 250,000 tonnes.
April CBOT grains and oilseeds options will expire today.
Argentina releases first crop estimate for the 2015/16 crop. They are expecting corn harvest to reach 37.0 mmt compared to last year’s 33.8 mmt. Their soybean harvest is expected to be 60.9 mmt compared to USDA’s 60.5 mmt.
China is expected to release a new plan next week to deal with their growing domestic stocks of corn.
Year to date ethanol production is 2.4% over last year and USDA’s goal is only for a 0.5% increase in corn for ethanol production. There are now only 23 weeks left in the marketing year. Is it getting too late for production to fall enough to reach USDA’s pretty low goal.
US crude oil stocks climb to record high levels of 532.54 million barrels. Distillate stocks raise more than trade was expecting while gasoline stocks declined more than expected.
Friday's Q4 GDP is expected to be unrevised at 1.0% but the market is still expecting an improvement to 2.0% in Q1. This could be an important report for the US dollar. Weakness to the dollar could help spur exports, while strength makes US goods less competitive.
The Quarterly Hogs and Pigs Report will be released on Friday at 12:00 noon. Trade estimates are: All Hogs 100.3%, Kept for Breeding 100.6% and Kept for Market 100.3%.
The March feeder cattle contract goes off the board today at 12:00.
Fed cattle trade is quiet with a group of cattle selling in Nebraska a 218 dressed so far this week. Auction barns have been lower this week than previous weeks with average runs.
Live cattle futures were met with selling pressure from funds on Tuesday. Trade will be looking for direction from outside markets and any sign of active cash trade.
Technical support crosses at 124.72, the 50 day moving average in June Cattle. The 100 day is 124.58.
Lean Hog futures are consolidating after two volatile sessions early in the week and the report on Friday.
Dressed beef values were mixed with choice down 1.73 and select up .15. The CME Feeder Index is 163.10. Pork cutout values are up .65.
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