Good Morning! Paul Georgy with the early morning commentary for August 13, 2014 at 5:30 am.
Grain futures are up slightly on short covering. Technical indicators are showing oversold although rallies will be met with selling after USDA’s record crop projection.
Traders Focus Today: Reality of a record corn and soybean production. And the expectation of further yield increases on the September Report.
Update - Morning Coffee Commentary:
The USDA increased yield in by 2 bushels per acre to 167.4. The increase puts total production at 14.032 billion bushel of corn.
Soybean yields were raised by .2 of a bushel to 45.4 bushels per acre which projects total production at 3.816 billion bushel. Ending Stocks estimate for the 2014/15 crop year is 430 million bushel.
US wheat production was raised by 38 million bushel but offset in the balance sheet by an increase in exports.
The USDA raised the Russian wheat crop by 6 mmt and the Ukraine wheat crop by 1 mmt.
The average farm price was lowered by 10 cents in new crop corn (3.55-4.25) and 15 cents in new crop soybeans (9.35-11.35).
Looking past the USDA report the trade will have to bide its time until next month’s report. The concern over an early frost due to cool temps and slow maturity of crops is on trader’s minds.
Weather models are putting a little more moisture in the 6 to 10 day forecast for the Midwest. Temperatures are trending a little warmer for the 6 to 15 day timeframe.
The US attaché in China says the soybean crop is expected to be 1.6% less than last year.
The drought in central China is the worst in a decade but not expected to have a huge impact on total corn production due to the increase in acres this year.
Economic news such as Retail Sales and Business Inventories is on the docket for 7:30 this morning.
China has barred pork imports from six U.S processing plants and six cold storage facilities effective on Wednesday to enforce its ban on the use of a feed additive that promotes lean muscle growth, the U.S. Department of Agriculture said on Tuesday.
Livestock futures are be bombarded with technical selling and weak demand fundamentals causing futures traders to cover long positions. The lean hog contracts are dealing with the heavier hog weights and an increase in supply. The cattle complex is dealing with the "sticker shock" consumers are finding at the retail counter. Beef values were mixed with choice down 1.29 and select up 1.51. The CME Feeder Index is 222.55. The Pork cutout value is down 3.50.
Markets as of 5:30 AM CDT
- Dec Corn + 1/4
- Nov Beans +3 1/2
- Sep Wheat +5
- Oct Cattle -.67
- Oct Hogs -.77
- Sep Dlr +.14
- Sep S&P +7.50
- Sep Crude -.00
- Oct Gold +.20
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