December 12, 2017

Money Flow Can Be An Influencer

Good Morning! From Allendale, Inc. with the early morning commentary for December 5, 2017.

Grain markets are caught in the holiday markets syndrome. The number of fundamental events affecting the markets are reduced as farmers complete harvest. They have the grain stored until the new year and focusing on fall field work where weather conditions permit. Weather in South America is very important and can suggest problems on the horizon, however this year only a chance of a problem in Argentina is presenting itself. Money flow can be an unexpected factor at a time where there is no dominant fundamental excitement.

Funds were estimated to have been net sellers in corn of 9,000 contracts and 3,000 in wheat on Monday. They were net buyers of 6,000 soybean and 6,500 soymeal contracts.

World Weather, Inc.'s expectations and impact on crops sees their official weather outlook in most production regions in Argentina as unchanged. There will be some occasional scattered showers and thunderstorm activity as expected in southern portions of the region through Friday and in some central production areas Friday into Saturday. A few local rain totals this week will be meaningful; though, many locations will not receive enough rain to counter evaporation.

US Stock Indices may have given the first signal a correction is possible with the sharply higher trade on Monday with a near low session close. Just an observation at-this-time.

Brazil soybean planting is projected at 91% complete, which is in line with last year and ahead of the average. While corn planting is 94% done which is 4% behind last year but close to average.

China sells 2.78% or 3,600 tonnes of 2013 imported wheat offered at auction this week.

Soybean basis improved at a central IL processor but was weaker at river terminals. Corn basis was flat as lower futures price created no incentive for farmer selling.

Weekly export inspections for soybeans were larger than expected while corn fell short of expectations. Wheat was in line with the trade guess.

Feedlot Showlists this week are reported with 25,100 head more than last week. The reduced cutout and increased supplies will likely have packers expecting to fill their needs at lower money this week. Fed Cattle auction tomorrow may give us some indication of price action.

Friday's weak close was followed by technical selling on Monday. Chart support in February cattle futures is 120.00 and resistance crosses at 122.75 today.

Cash hog prices have stabilized after the largest weekly slaughter recorded this year of 2,535,000 head.

Spreading was a factor in the lean hog contracts on Monday with December contracts losing ground to the deferred.

February lean hog futures have support at 69.37 and resistance at 73.30.

Dressed beef values were higher with choice up 2.20 and select up 1.93. The CME Feeder Index is 156.69. Pork cutout value is up .57.

Technical Chart of the Day

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