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Weather Forecast Creates Fuel for Traders

Published on: 10:47AM Apr 11, 2016

Good Morning! Paul Georgy with the early morning commentary for April 11, 2016.

Grain markets are mixed with soybeans higher and wheat lower. The Dollar is slightly lower while stock indices and gold are stronger.

Malaysian palm oil output was 1.219 mmt compared to Reuters traders survey of 1.126 mmt and 1.043 mmt last month. Stocks fell by 13.1% TO 1.885 mmt which was below trade estimate of 1.945 and last month’s stocks of 2.168 mmt. Exports rose 22.9 percent to 1.33 million tonnes in March.

Weather conditions for the southern plains hard red winter wheat should show some improvement this week. A light system is expected to provide some moisture early this week and then a much heavier amount of rain is forecast for late this week.

Fieldwork should get started this week across the Midwest. Temperatures may not be ideal for seed growth but farmers will plant if field conditions are right. They know it is going to warm up soon.

USDA's April Supply and Demand report will be released on Tuesday. Trade is not expecting any major changes on this report. The May report will be the first look at 2016/17 balance sheet estimates.

This afternoon we should see our first national crop progress for corn. Trade is expecting it to be behind the 7% average. Wheat conditions are expected to improve.

Managed money funds added to net short positions in corn by 53,432 contracts making them net short 161,865 contracts. They only adjusted soybean positions by selling 1,709 and in wheat they were net buyers of 2,094. We have to remember the market seen significant moves after this data was collected by CFTC on Tuesday after the close. Trade will be focusing in on this week’s data.

US crude oil production continues to slide as the rig count dropped 8 to 354 compared to the 1609 peak rig count in 2014.

The Macro markets this week will focus on Thursday's Chinese Q1 GDP report, which is expected to ease to a new 7-year low of 6.7% from 6.8% in Q4. There will be six appearances by various Fed officials and trade will try to glean any expectations for Fed policy. The beginning of Q1 earnings season is today and we have a fairly active U.S. economic calendar this week

(Reuters) The U.S. Food and Drug Administration on Friday moved to revoke approval of a drug used to treat certain diseases in pigs because it could leave a cancerous residue that may affect human health. The drug, carbadox, is made by Teaneck, New Jersey-based Phibro Animal Health and is used to control swine dysentery and bacterial enteritis, the agency said. The drug, which was approved in 1972, has also been used to promote weight gain in pigs.

Managed money funds were net sellers of 6,000 to 7,000 contracts in cattle and hogs last week according to the CFTC.

Production levels in cattle and hogs last week were less than trade was expecting which could support cutout values. Live cattle futures provided a strong close for the week on Friday which should give follow-through strength this morning. Outside markets will also have an impact as we start the week. Technically the June cattle closed on the 20 period moving average. Key support starts at 122.50 and then at 120 area in June cattle.

Lean hog performance last week was positive closing near the weekly highs and bouncing off the 50 and 20 period moving averages. Support crosses at the 78.50 area.

Dressed beef values were mixed with choice up .18 and select down .54. The CME Feeder Index is 158.62. Pork cutout values are down .55.

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