Weather Market Begins as Forecasts Shift
Apr 15, 2016
Good Morning! Paul Georgy with the early morning commentary for April 14, 2016.
Grain markets are quiet after a volatile week. The US Dollar is slightly lower with crude oil giving back some of this weeks gains.
Are We in For a Big Acreage Shift? Join us in our next webinar, April 26 at 8:00 PM CDT. Register Here. Allendale's Rich Nelson will share the latest thoughts on US corn and soybean acreage, including how recent price swings could impact the final planting numbers, and how the market could react to acreage changes.
Weather forecasts are projecting rain for the plains from TX through the Dakotas over the weekend. Most of the Midwest is dry with field work getting into full swing. Argentina rains should start to recede over the weekend followed by several days of drying. Look for any shift in the forecast to cause a reaction in grain markets.
Funds continue to increase bets in grains as they chase value or perceived value. The direction of the US Dollar in the near term will have an impact on how far and how long the rally will last. Call your Allendale Broker to work out strategies if you're selling cash grain.
USDA weekly corn export sales report showed another good week and total sales now have reached 80% of whole year goal. The 5 year average suggests we should be at 88%. Allendale’s calculations suggest USDA should lower total sales on the 2015/16 balance by 24 million bushel.
Soybean sales are running ahead of the 5 year average and may lead to USDA raising export demand on the balance sheet. Wheat sales are in line with USDA’s goals.
NOPA Crush data will be released at 11:00 am this morning. Trade is estimating 156.2 million bushel processed during March of 2016 that is about 10 million bushel less than March of 2015.
Brazil’s political drama with the attempted impeachment of current the president has farmers and exporters waiting to make sales. The hope is the new regime will be more business friendly.
Argentina's Rosario Grains Exchange raised its estimate for the 2015/16 corn crop to 25 million tonnes, from a prior forecast of 24.5 million tonnes. They left soybean production at 59.0 million tonnes. Other private analysts are starting to reduce production in Argentina because of recent heavy rains.
Macro market expectations are for U.S. consumer sentiment to snap its 3-month losing streak, U.S. industrial production to show another decline, but manufacturing production is expected to edge higher, and April Empire manufacturing index to edge a bit higher into positive territory. The prospects look good for a nearly-meaningless oil production freeze agreement this weekend by OPEC.
There has been cattle traded in the Cornbelt at 135 live and 214 to 216 dressed. There also has been cattle reported being traded at 130 live for May delivery. With June futures trading at a discount to the April, one has to expect cash trade will work lower over the next several weeks.
Lean hog futures were hit with technical selling once the uptrend line was broken. The premium June contract is carrying over the cash index is also weighing on the futures prices. Trade is looking for some evening up of positions going into the weekend. Fieldwork is in full swing throughout most of the Midwest which is slowing down hog movement.
Dressed beef values were higher with choice up 2.22 and select up 2.30. The CME Feeder Index is 157.01. Pork cutout values are up .04.
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