Good Morning! Paul Georgy with the early morning commentary for October 31, 2014 at 4:50 am.
Traders Focus: Soymeal spreads, outside markets such as dollar, harvest progress in US, weather in South America and end of month book squaring.
Grain markets are mostly higher lead by meal in the soybean complex. Dollar surges higher to test early October highs.
Over the past few weeks, the meal shortages due to congestion on the nation’s rail lines, had some end users double booking (both train and truck) deliveries of meal in the hope that at least one would arrive on time.
After yesterday’s trade many were thinking the problem in meal may have run its course.
However, U.S Gulf soybean basis were higher on Thursday afternoon as China and domestic processors continue to compete for newly harvested soybeans. Midwest basis was steady for soybeans while corn basis was lower at a few locations. Farmers are still resisting selling as they fill bins and look for storage.
Funds were estimated to have bought a net 2,000 wheat contracts, sold 4,000 corn, sold 9,000 soybeans, sold 6,000 in soymeal and bought 2,000 in soyoil.
Weather conditions in South America suggest the majority of the growing areas will get significant moisture over the next 7 to 10 days. Some are trying to spin this as positive to the market as it will delay planting. However, our observers are looking at this pattern as helpful for crop production.
Update – Morning Coffee Commentary:
Safras e Mercado says as of Oct. 1, Brazilian farmers had sold only 12% of the projected 2014-15 soybean crop down from the average of 31% sold at this time over the last five years.
Fall Crop Insurance Discovery Price (Average of Dec corn and Nov beans during Oct): Corn: $3.50, Soybeans: $9.66.
After a volatile week a few key chart points for the Macro markets: the Dec Dollar has resistance at the early October high of 86.87. A close above that level could trigger more buying and have a potentially negative effect on agricultural markets. The Dow futures set new all-time highs overnight. Key support in Dec crude oil comes in at 79.44.
Reminder: the October contract of live cattle stops trading today at 12:00 today. The trading limit today for the October contract is $5.00. All other contracts trading limits remain the as is $3.00.
USDA reported eggs set in the latest week at 102% of a year earlier with chicks placed 104% of last year, up from 102% last week.
Cattle bulls are very happy with the slew of good news on the economy released as the Consumer confidence and the FOMC news indicated continued economic recovery. The first guess of the past quarter’s GDP numbers came in better than expected at a 3.5% year/year growth (3.0% expected).
Trade will be waiting to see active cash trade at higher money this week. Beef values continue to struggle even with reduced production. Choice was down .28 and select down .36. Packer margins are in the red about $100 per head. The CME Feeder Index is 239.30.
Hog futures are getting no help from increasing slaughter and weights. Pork cutout values were down 1.51. Dec futures closed below support at 88.00 with August lows the next downside target.
Expect a steady lower opening in livestock.
Markets as of 4:50 AM CDT
- Dec Corn + 1/2
- Nov Beans +9
- Dec Wheat -2
- Dec Soymeal +6.00
- Dec Dlr +.45
- Dec S&P +23.25
- Dec Crude -.54
- Dec Gold -24.40
Technical Chart of the Day
For more on the current technical outlook for corn and soybeans, listen in to the recording of this week’s Ag Leaders Webinar, here.
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