December 1, 2015

Wake Up Call

EPA Raises Mandate As Climate Change Talks Take Place

Good Morning! Paul Georgy with the early morning commentary for December 1, 2015 at 5:15 am.

Grain markets are higher supported by the EPA announcement and short covering. Outside market traders have a risk-on attitude as most commodities are posting a higher price at the start of a new month.

The EPA set the mandate for total 2016 US Renewable Fuels at 18.11 billion gallons. Of that amount, 14.5 billion gallons are expected to come from ethanol. This is an increase of 0.5 billion gallons from their suggested target earlier this year. These announcements come as world leaders are in Paris for the Climate Change Conference.

Stats Canada will release the government’s estimate for 2015 crop production on Friday December 4th. Traders are looking for an increase in wheat and canola production due to beneficial late season rains.

Weekly export inspections were positive for soybeans, neutral for wheat and a bit negative for corn with only 298,692 tonnes shipped.

Brazil continues to get beneficial rains for newly seeded corn and soybean crops. US winter wheat areas are getting moisture before crop goes into dormancy.

Join us in our next live webinar December 15th at 8:00 PM CST for a look at how South America's economy will impact US grain prices. Register Here.

Australia cuts wheat production forecast for the 2015/16 season from 25.28 in September to 23.98 million tonnes. They also cut canola production from 3.15 million tonnes to 2.99 million tonnes. The adverse conditions of too dry, frost and fire damage were all reason for a smaller crop.

The USDA’s last winter wheat conditions report for the season put 55% of wheat in Good/Excellent condition compared to last week’s 53% and last year 58%.

Monday’s CFTC Commitment of Traders report showed managed money funds increasing short positions in corn, soybeans and wheat. They are now net short 99,808 contracts of corn, 52,925 contracts of soybeans and 47,353 contracts of wheat.

Funds were estimated to have been a net buyer of 7,000 corn contracts, 6,000 soybeans, 2,000 soymeal and 4,000 soyoil contracts on Monday. They were estimated sellers of 6,000 wheat contracts.

Macro traders will be looking for the ISM Manufacturing Index and Construction Spending reports are 9:00 am today.

Hog Production is expected to reach near record level again this week after a shortened holiday work week. Seasonals suggest the record production pace should peak within the next 2 weeks.

Packer margins improve as product values firm. Retailers are expected to feature beef this week as counter space becomes available after Thanksgiving.

Volatility remains high in the livestock sector. Will turnaround Tuesday attitude provide buyers support in cattle and hogs today?

Dressed beef values were higher with choice up .31 and select up 174. The CME Feeder Index is 172.16. Pork cutout values are up .68.

5:15 am - Markets At-A-Glance

  • Dec Corn   +2 1/2
  • Jan Beans +3 1/2
  • Dec Wheat   -2 1/4
  • Dec Soymeal +1.20
  • Dec Soy oil +.26
  • Dec Dlr     -16
  • Dec S&P   +9.75
  • Jan Crude   +.31
  • Dec Gold   +2.70

Technical Chart of the Day

daily chart

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