April 24, 2014

Wake Up Call

Spread Unwinding Drives Price Movement

Good Morning! Paul Georgy with early morning comments for April 24, 2014 at 4:40 am.  

Grain futures are quiet with prices holding near unchanged.

We talked about spread unwinding yesterday morning which was the driver during yesterday’s session. Long positions have been building in the old crop soybeans and meal while selling corn, wheat and new crop soybeans.

Traders will have to reduce position size to 600 contracts by next Wednesday which is first notice day for May contracts.

There is more talk that 2 to 3 cargoes of Brazilian soybeans have been sold into the US. This seems like the only way for USDA to solve the balance sheet issue.

Wake-Up Call Updates – Morning Coffee:

A senior member of the Sunrise group from China is reported as being in the US. Many traders believe he is here to renegotiate previously sold soybean or meal cargoes. No confirmation of this being the reason for his visit.

Stats Can is out this morning with the trade looking for canola acres to be up 1.2 million to 21.1 million acres.

The corn market is being impacted by spread unwinding and weather forecasts. Although not an unexpected forecast, the cold and wet weather for next week has many thinking corn will not get planted. We think otherwise as some of our customer believe they will have more than 50% planted by this weekend.

The possibility of rain in the western southern plains is weighing on wheat futures. Many observers are saying rain will help but they need it now, time is running out for the wheat crop.

This morning at 7:30 the USDA will release the weekly export sales numbers. Trade estimates are:

                            Trade Estimates            Trade estimates

                                  2013/14                         2014/15

Wheat               200,000-400,000             250,000-500,000

Corn                 500,000-800,000             150,000-250,000

Soybeans        -200,000-+100,000           350,000-550,000

Soymeal             25,000-125,000              50,000-100,000

Soyoil                          0-25,000                         0-10,000

This week’s cold storage report for pork has sparked reality in the minds of livestock trader. Pork supplies in storage are very tight and we haven’t seen the real effects of PEDv on cash hog supplies yet. Pork cutout values were up .32 on Wednesday.

Cattle packers are waiting as long as possible this week even with beef price improvement. Friday afternoon the USDA releases the April Cattle-on-Feed report. Choice beef is up 1.43 and select is up 1.05. The CME Feeder Index is 177.35.

Markets as of 4:40 AM

  • May Corn    + 3/4
  • May Beans   -1
  • May Wheat   – 1/2
  • Jun Cattle  +.15
  • Jun Hogs    +.25
  • Jun Dlr     -.06
  • Jun S&P     +6.50
  • Jun Crude   +.15
  • Jun Gold    -.80

 

 Chart of the Day

daily chart

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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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