July 4, 2015

Wake Up Call

Big Week for Grains Ends with Big Weekend

Good Morning! It’s Thursday, July 2nd at 5:30 AM.

Grain markets are mixed as consolidation and profit taking trade occur after the week’s big run up and ahead of the three day weekend.

Update – Morning Coffee Commentary:

After trading much of the day lower yesterday, big buying on the close allowed corn to close higher and soybeans and wheat to close off their lows. This buying can likely be attributed to managed money positioning which is estimated to have been very large this week. One clue to their activity, the CFTC Commitments of Traders reports, will be delayed until Monday due to the 4th of July holiday this weekend.

CME reported that agricultural products traded record volume on June 30th, further highlighting the volatility the markets have seen this week.

The EIA reported ethanol production down for the week at 968 vs last week’s 994. Stocks were reported down as well at 19.5 this week vs last week’s 19.8.

The USDA will release weekly export sales data today at 7:30 AM CDT. Trade estimates for old crop corn are 300,000 to 600,000 tonnes, and soybeans 100,000 to 200,000 tonnes. New crop estimates have corn at 150,000 to 350,000 tonnes, soybeans at 150,000 to 350,000 tonnes, and wheat at 250,000 to 500,000 tonnes. Stronger than expected demand from exports could further propel the grain markets.

Informa will be out with updates to their grain production estimates later today. A wide range of estimates to both yield and acreage continue to circulate the trade, and with very big ranges, so it is likely that trade will pay attention to these numbers.

Weather models have taken some rain out of the forecast, as Allendale metrologist Ryan Martin noted in his morning commentary. Traders will watch forecasts closely for a change in rains, and this could quickly cause a sharp move in grain trade one way or another. Keep up with the daily ag weather forecasts here.

The Greek debt situation will be watched closely this weekend as Greece will hold a referendum Sunday to decide if they will accept the austerity measures being called for by the IMF and other creditors. Some analysts suggest that a “no” vote will most certainly lead to Greece leaving the euro.

The economic calendar is busy this morning with a slew of employment data out at 7:30 AM CDT (jobless claims, nonfarm payrolls, unemployment rate, etc.). Factory orders are due out at 9:00 AM CDT.

The positive momentum in the hog market may be the fact that production this week has been lower than expected. Estimates were for the holiday shortened week were expecting +430,000 head from Monday through Thursday. Instead they have all been under 430,000. They are only 3.2% over last year.

JBS USA Pork has agreed to purchase Cargills pork business for 1.45 billion dollars. The purchase remains subject to regulatory approval.

The Brazilian Beef Export Association expects to ship beef to the US starting in September with an annual quota of up to 64,000 metric tonnes. They expect up to 100,000 tonnes in the coming years and to eventually supply up to 10% of imports. Up until this point Brazil was only able to ship us cooked/processed beef.

Grain markets will close at 12:00 PM CDT today (mini contracts 12:30), and livestock will close at 12:15 PM. Markets will remain closed Friday and grains will reopen for overnight trade at 7:00 PM CDT Sunday night. Livestock will reopen at it’s usual 9:05 Monday morning time.

Have a safe and happy 4th of July! The Wake-Up Call will return Monday morning.

Markets as of 5:30 AM CDT

  • Sep Corn    -1
  • Nov Beans +1/4
  • Dec Wheat   -7 1/4
  • Jul Soymeal -.20
  • Aug Crude   +.18
  • Aug Gold   -7.10

Technical Chart of the Day

daily chart

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