Grains Struggle To Rally As Record Harvest Starts

Published on: 06:04AM Sep 05, 2014

Good Morning! Paul Georgy with the early morning commentary for September 5, 2014 at 5:30 am.

Grain futures are higher on short covering after post-holiday selloff. Nearby contracts in livestock add more strength.

Traders Focus Today: Direction of the US Dollar, oversold condition of grain futures, Ukraine/Russia talks and next week’s USDA reports.

We have been drawing attention to the US dollar Index in recent days. Yesterday’s strength in the dollar was triggered by the European Central Bank interest rate cut from a negative .1% to negative .2%. The following chart depicts the dollar’s negative correlation to the CRB Index (or commodity prices).

090414-us dollar and commodity prices

The USDA weekly export sales report will be released later this morning at 7:30.The following trade estimate have be gather by Reuters.

                          2013-14                 2014-15

Wheat                        N/A          250,000-450,000

Corn           (-100,000)-100,000         550,000-750,000

Soybeans             (-150,000)-0       900,000-1,100,000

Soymeal                 0-100,000         100,000-300,000

Soyoil            (-5,000)-10,000                0-15,000

The weather models have been disagreeing on frost potential for mid next week. However, the use of the frost word is not enough to support the grain futures. The rains across the Midwest are slowing maturity and could cause some harvest problems later in the season.

China’s cornbelt has received rain easing crop stress from drought. They sold 27% of the corn offered at this week’s state auction.

Yield reports are coming in are much bigger than normal and have many producers in awe about the size of their crops. If you are harvesting corn, beans or wheat and want to share your results you can email them to me at [email protected].

EIA ethanol production remains strong coming in at 921,000 barrels per day compared to 913,000 last week.

Update - Morning Coffee Commentary:

Cash soybeans have been extremely choppy as processors need soybeans on any given day. Decatur, IL beans basis went from 3.50 over Nov to 2.50 over Nov late yesterday.

Ukraine/Russia peace talks continues while NATO leaders prepare to force Russia back to its borders.

Economic calendar for today: Retail Sales and Business Inventory at 7:30.

Livestock futures have been extremely volatile in recent session. There are many reasons influencing this movement such as: the strength in dollar which limits export competitiveness, the release of the vaccine for PEDv will increase pig production for deferred contracts and current tight supplies of market ready cattle and hogs provide support for October contracts.

Average beef prices in weekly grocery-store advertisements showed 15-cut average for beef prices this week was $5.51 a pound, up from $5.39 a pound last week and well above the $4.41-per-pound average in the same period a year earlier.

The five-cut average for pork prices dropped to $3.24 a pound from $3.54 last week, pushed lower by discounts on bacon in cities like Los Angeles and Kansas City, Mo. The five-cut pork average price was $3.01 a pound.

Beef values were higher with choice up .54 and select up .75. The CME Feeder Index is 222.91.

Pork cutout values are up 1.89.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   +1 1/2    
  • Nov Beans   +3 1/4
  • Dec Wheat   +4
  • Oct Cattle  +1.20
  • Oct Hogs    +1.35
  • Sep Dlr     -.05
  • Sep S&P     -7.50
  • Oct Crude   +.24
  • Oct Gold   -.50

Chart of the Day

daily chart

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