May 31, 2016

Traders Position Ahead of Three Day Weekend

May 27th, 2016

Good Morning! Paul Georgy with the early morning comments for May 27, 2016.

Grain markets are mixed as traders even positions ahead of the three-day holiday weekend. Macro traders will have a few reports to trade this morning as they await a Q&A with Fed Chair Janet Yellen.

More Market Commentary:

Morning Coffee Commentary 5-27-16

Weekly export sales were released yesterday morning and had corn sales totaling 1,627,310 metric tonnes (1,381,075 old + 246,235 new). This was within the 1.250 - 1.750 million tonne expectation.

Soybean sales totaled 606,858 metric tonnes (456,835 old + 150,023 new). That was within the 600,000 - 1,000,000 trade expectation.

Wheat sales totaled 344,652 metric tonnes (-9,877 old + 354,529 new). Wheat operates on a June 1 - May 31 marketing year which means there are only 12 days left of the current marketing year (yesterday's sales are as of May 19th). At the end of the marketing year we look at shipments rather than sales. Actual shipments as of the 19th total 687 million bushels.

Export prices around the globe show foreign exporters with an edge over the US. Corn prices in the US Gulf stand at $180 per metric tonne, and $192 out of Portland. This compares with $172 in Brazil, and $178 in Ukraine.

Soybean export prices are at $415 per metric tonne in the US Gulf and $420 in Portland. Brazil is at $415, while Argentina is at $400.

NOAA will release updated maps for its June forecast on Tuesday morning. Expect trade to pay close attention to these updates.

Soybean crush margins in the US have increased and currently stand at $1.67 gross profit per bushel processed.

South American soy crop headlines continue to move the markets. We'll speak to USDA oilseed analyst Mark Ash for his take on the South American crop in our next webinar, May 31st at 8:00 PM CDT. Register free here.

Short covering by funds, with a few rumors of harvest delays in Texas due to excess moisture, have been cited as reasons for the recent strength in the wheat markets.

Funds were estimated buyers of 12,000 corn, 7,000 wheat, and 5,000 soymeal contracts in yesterday's trade. They were estimated sellers of 7,000 soybeans, and 5,000 soyoil contracts. We'll watch the CFTC's Commitments of Traders report this afternoon at 2:30 CDT.

Macro traders will be interested to hear what Federal Reserve Chair Janet Yellen has to say later today. Her comments follow Federal Reserve Governor Jerome Powell's comments yesterday that a rate hike, "could be appropriate fairly soon".

Economic calendar has a few important reports today with GDP second estimates out at 7:30 AM CDT, and Michigan Sentiment out at 9:00 AM.

Livestock markets going into the long weekend are being influenced by outside traders adjusting positions. The big picture fundamental news for cattle remains negative for a few more weeks. Packers are wanting to clean up product inventories before the holiday, however, continued first of month featuring by retailers could be seen next week. Low beef prices compared to a year ago should encourage some excellent clearance at retail counters over the next several weeks.

Cattle futures reversed yesterday after attempting to make new lows. The large outside up could suggest further short covering ahead of long weekend and due to the deep discount futures are currently holding.

Cash hogs are weak as packers have enough inventory for the short production week ahead of us. July lean hog futures have put in approximately a 50% retracement of recent correction. Expect a more subdued trade today.

Boxed Beef values were lower with choice down .85 and select down 1.82. The CME Feeder Index was lower as well at 147.60. Pork cutout values were down 1.46.

Have a great weekend and happy Memorial Day! All of us at Allendale would like to thank those who gave all in the service of our great country.

Markets At-A-Glance – 5:20 AM

  • Jul Corn    - 1/2
  • Jul Beans   +1/4
  • Jul Wheat   - 2 1/4
  • Jul Soymeal -1.60
  • Jul Soy oil +.15
  • Jun Crude   -.39
  • Jun Gold    -2.30

Technical Chart of the Day

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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.
    WUC
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