Weather Remains Supportive While Crude Oil Slides
Apr 18, 2016
Good Morning! Paul Georgy with the early morning commentary for April 18, 2016.
Grain markets are mostly higher as South American weather supports soybeans and wheat sees short covering. Crude oil is lower reacting to no freeze for OPEC. Oil traders were looking for an agreement by OPEC to freeze production but it did not materialize. Crude drops sharply overnight causing pressure on stock markets around the world.
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Weather conditions remain about as expected. Argentina is still too wet and there are areas of Brazil which are still are too dry. The cornbelt should provide open conditions for planting this week. The plains received some generous moisture which should help the wheat crop.
The weekly CFTC commitment of traders has to be a bit of a surprise as the report showed managed money funds reducing their net short corn position by only 25,160 contracts to a net short position of 136,705 contracts. Last week may corn futures were up 16 ¼ cents.
In soybeans, managed money funds added 26,475 contracts to their already net long position bringing the total to 100,216 contracts. May soybeans were up 39 ¼ cents last week.
Funds jumped on the sell side of wheat as they were net sellers of 38,425 contracts raising their net short position to 106,163 contracts. May wheat was down ½ cent on a weekly basis.
Planting progress and crop conditions will be released this afternoon. Trade is looking for 10% to 12% corn planting completed.
The US oil rig count dropped by 3 last week to 351 which is 73% of the peak in October of 2014.
China’s GDP growth was only 1.1% for the quarter when expectations were for a much greater rate of growth.
Cash cattle were actively traded at 134 late last week as packers scrambled to gather inventory. Beef production was up last week due to the heavier than normal weights going to market.
Last week's hog production was 2.197 million head which was the largest in five weeks. Given the recent problems with holidays, weather, and plant upgrades the total was in line. This makes five weeks in a row of smaller numbers than last year. Given the situation with lower weights the week's pork production ran 2.3% under last year.
Livestock futures closed out last week with June cattle down 1.85 and June hogs down 3.25 from the previous weekly close. Look for technicals to provide support and expect more choppy action this week.
Dressed beef values were higher with choice up .70 and select up .90. The CME Feeder Index is 157.01. Pork cutout values are up 1.10.
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