Weekend Weather Favorable To Row Crops
May 23, 2016
Good Morning! Paul Georgy with the early morning commentary for May 23, 2016.
Grain markets are lower as US crops improve and investors start week with a risk off attitude. The US Dollar and crude give back some of their recent gains while stock indices test chart support.
US Cornbelt weather should remain in highly favorable conditions for crop development during the next week.
South American temps are expected to be seasonal to a bit cooler. Rain will continue frequently in interior southern Brazil and Paraguay where too much moisture threatens wheat planting.
Outside markets last week were volatile with crude closing up 1.54, US Dollar up .75 and the stock indices only slightly lower.
Planting progress is expected to have advanced 11% to 86% last week in US corn. Soybean progress could have increased up 25% to 61% complete.
Weekly Commitment of Traders report showed managed money funds adding 6,009 and 3,371 contracts to long positions in corn and soybeans respectively. They reduced net short positions in wheat by 5,606 contracts to leave them net short 72,575.
Safras & Mercado forecast the Brazilian second crop of corn at 52.1 mmt compared to CONAB’s 52.91 mmt.
Macro markets are focused this week on any further shift in FOMC rate hike expectations with five appearances by Fed officials this week and Fed Chair Yellen speaking on Friday. They will be watching whether the dollar index extends its 3-week rally on the increased chances for a Fed rate hike by mid-year and the S&P 500 index, which has corrected mildly lower in the past 1-1/2 months from the March-April rally on increased worries about a Fed rate hike.
Cattle on Feed report was a bit bearish. USDA counted 7.5% more cattle placed into feedlots in April compared to last year. That was a surprise to the trade as they were expecting a 0.8% year/year decline. It marks three months in a row of above last year placements. Marketings during April were less than expected but remember Weekly slaughter in May has been well above the level needed to stay current.
Hog production last week was a little smaller than a year ago and the smallest since July of last year. This week will be the last full production week before the holiday on Monday. Today we will see the monthly cold storage report. Pork stocks a year ago were dealing with the backlog due to the west coast port strike.
The chart picture looks weak with the June contract in Lean Hogs closing below the May 10 low on Friday. Next chart support crosses at 78.90, the 200 day moving average. June cattle should find support at the 20 day moving average which crosses in the 120 area.
Dressed beef values were lower with choice down 1.20 and select down 2.73. The CME Feeder Index is 148.53. Pork cutout values are up .11.
Markets At-A-Glance – 5:10 AM
- Jul Corn -3 1/4
- Jul Beans -12
- Jul Wheat -4 1/2
- Jul Soymeal -2.60
- Jul Soy oil -.25
- Jun Dlr -.04
- Jun S&P -4.50
- Jun Crude -.61
- Jun Gold -1.00
Technical Chart of the Day
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