November 22, 2014

Wake Up Call

How Will Grains Close Out the Week?

Good Morning! Paul Georgy with the early morning commentary for November 21, 2014 at 5:30 AM.

Trader’s Focus Today: December option expiration, RFS announcement out of Washington, 2:00 PM CST Cattle on Feed and Cold Storage Reports.

Grains are trading slightly lower in the overnight session after seeing strength yesterday on export sales, and short covering.

Some in the soybean trade were surprised to see no cancelations of soymeal, despite the news of a cheaper product out of South America. In fact, sales were above analyst expectations of -100,000 to 100,000 tonnes, coming in at a strong 265,749 tonnes. Most analysts, however, caution some of this number was due to late reported sales, and that these sales are not expected to continue considering elevated prices in the U.S.

Corn sales were also viewed bullish yesterday coming in well above expectations at 909,000 vs. the 500,000 to 700,000 estimate. This added to the good ethanol numbers out Wednesday have provided solid demand support to corn.

Chart watchers note that with near term support recently being taken out, good demand stories will need to continue to avoid taking out the 100 day moving average (3.62 1/2) and keep corn moving higher.

The deadline for a new Renewable Fuels Standard mandate is fast approaching, leaving some to expect an announcement as early as today. Most in the trade are expecting an increase to the mandate. Keep an eye on our homepage as we’ll detail any announcement there once it’s made.

NOAA released their long term forecast for the month of December and temps look mostly favorable for winter wheat. They expect normal to below normal temps in the south which shouldn’t cause much damage to the wheat crop. Precipitation looks normal in the plains which would provide an insulating layer of snow for the crop lying dormant in the ground.

Update – Morning Coffee Commentary:

Weather as a whole looks good for planting in South America, though parts of Argentina are reporting standing water in fields and corn planting delays. At this time the delays appear limited.

December options go off the board today which could require some position squaring. First notice day is next Friday.

Hog packers have found it more difficult than expected to move product right now. End users are trying to continually push prices but are keeping an eye on consumption. While consumers should be ready to accept more pork and less beef at these prices, we really have not yet seen much pushback against beef. Packers have cut down this week’s kill expectations with the hope for a better pork/hog margin.

A Wall Street Journal retail meat survey found beef prices 29%, and pork prices 22%, over last year’s level.

For today’s Cattle on Feed report Allendale see’s placements at 6% lower than last year (average guess -4%). For Cold Storage, we see beef stocks at 368, and pork stocks at 538 million pounds. See complete estimates.

Markets as of 5:30 AM CDT           

  • Dec Corn   -1 1/4      
  • Jan Beans   – 3/4    
  • Dec Wheat   -3 3/4
  • Dec Soymeal -1.10
  • Dec Dlr     +.52
  • Dec S&P   +12.50
  • Dec Crude   +1.02
  • Dec Gold   +3.30

Technical Chart of the Day

daily chart

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