September 5, 2015

Markets Eye Economic Data Ahead of Long Weekend

September 4th, 2015

Good Morning! It's Friday, September 4th at 5:30 AM.

Grains are higher as trade prepares for a long Labor Day weekend. China remains on holiday today, which should limit some macro influences, but economic reports out early today should be watched.

Traders continue to watch yield estimates ahead of next weeks USDA report, and Informa was the most recent out with theirs. They see corn at 168.8 and soybeans at 47 (very near USDA's August numbers). The next Supply and Demand report is one week from today at 11:00 AM CDT.

Update - Morning Coffee Commentary:

Rich Nelson gave some great information on USDA's yield changes from the August report to September and October. If you missed it, check out the recording, here.

Also out yesterday, StatsCan reported Canada's wheat crop was bigger than expected, at 7.1 million tonnes, well above the average trade expectation of 6.5 million tonnes, but down 32 percent from last year.

Weekly export sales for old crop yesterday were reported at 112.7 tonnes corn (0-200 expected), soybeans were -60.5 tonnes (-150-50 expected). New crop corn sales were reported at 328.3 tonnes (500-700 expected), sobyeans 1,530.0 tonnes (700-900 expected), and wheat 277.5 tonnes (250-500 expected).

On top of the big new crop weekly export sales for soybeans, the USDA reported overnight sales of 110 tonnes of new crop soybeans to China, and 773 tonnes to unknown.

Rich Nelson noted in yesterday's AM Market Movers, "New crop soybean procurement, for the week ending August 27, comes to 494 million bushels. That is 38% under last year at this time (796). USDA thinks the whole year will run only 5% under last year. The overnight sale of 773,400 tonnes sold to unknown last night, and 110,000 tones sold to China, are not included in these numbers. This equals 32 million bushels. That is great to see but does little to improve our situation. As soybean sales are so front loaded in the year, Sep - Jan, this is a concern."

Egypt's state grain buyer bought 170,000 tonnes of Russian wheat in a tender for Oct. 11-20 shipment. While it is rare that Egypt buys wheat from the U.S., Russian prices were more competitive than U.S.

Russia's agriculture minister told reporters that Russia has no plans to change its current wheat export tax system, yesterday. He also re-confirmed that the agency sees the grain crop at a large 100 - 103 million tonnes.

UkrAgroConsult raised its forecast for Ukraine's 2015  wheat harvest to 24.2 million tonnes, up from 22.5. They cite higher than expected yields for the increase.

The economic calendar has a slew of job-related reports out at 7:30 AM CDT including Nonfarm Payrolls, Nonfarm Private Payrolls, Unemployment Rate, Hourly Earnings, and Average Workweek. These reports could have an impact on the US Dollar and influence commodity prices.

Hog futures have posted gains in recent days on the assumption that cash hogs will bottom soon and post a two week long rally as it normally does at this time. October futures are currently pricing in a $7 drop for cash hogs between now and its October 14 expiration. The issue now is that cash hogs have yet to stop their decline.

Cash cattle traded at $142 in Nebraska yesterday, however, the word is that these were large sized overweight animals. That would be down from last week's $144 to $147 action, but the overweight factor could have been the reason for the lower pricing. Yesterday afternoon's boxed-beef had choice down $0.16, and select down $0.59.

Markets close at their regular time today, but grains do not reopen until Monday night at 7:00 PM CDT, and livestock will reopen Tuesday morning at 9:05 AM. Have a great holiday!

Markets as of 5:30 AM CDT

  • Dec Corn   + 1/2
  • Nov Beans +5 1/4
  • Dec Wheat   +3
  • Dec Soymeal +1.20
  • Dec Soyoil + .10
  • Oct Crude   -.31
  • Dec Gold   -.70

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    Allendale Advisory Contributor:

    Pgeorgy

    Paul Georgy

    Paul is one of the founders of Allendale. He is very active in the futures industry and currently serves on the Board of Directors of the National Futures Association.

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