February 1, 2015

Wake Up Call

Firm Farmer Holdings Props Prices

Good Morning! Paul Georgy with the early morning commentary for January 30, 2015 at 5:15 am.

Today’s Traders Focus: Volatility in Macro markets, Cattle Inventory report, economic data and month end “window dressing.”

Grain markets are higher as traders prepare for the start of a new month. Weather in South America looks positive for most crops. Outside markets are retracing some of the aggressive prices swings this week. The Dollar is lower while crude oil is a bit higher.

Floor sources are suggesting the quiet trade with bouts of abrupt moves has been caused by spreading. Soybeans have been supported by the meal/bean oil spread. Since EPA’s announcement of Argentina biodiesel coming to the US, traders have been buying meal and selling soyoil. Due to meal being a greater portion of the soybeans values it has supported prices. World edible oil values around the world continue to slide which is putting additional pressure on soyoil. Soybean meal out of the US is competitive on the world market for March delivery and is providing support to meal values.

Buying wheat and selling corn has been a standout in trading volume.

Gulf basis for corn and soybeans was steady late yesterday. Interior grain demand was quiet as farmers are not opening bin doors at these prices.

The weekly export sales data showed corn sales at upper end of trade estimates while soybeans were much larger than expected. If 2015 follows last year’s pattern we may be seeing the end of robust bean exports as SA harvest gets into full swing.

The Baltic Dry Index plunged 5.1 percent to 632 points, the lowest since Aug. 22, 1986, according to data from the Baltic Exchange in London. The index is measure of global shipping costs for commodities of which the slowing growth in China’s demand exacerbates the effect of a fleet glut.

Funds are estimated to have bought a net 3,000 wheat contracts, sold 4,000 corn, sold 2,000 soybeans and sold 6,000 in soyoil contracts. They were thought to be even in soymeal.

Update – Morning Coffee Commentary:

Australia’s Ag Attaché reduced prospects for Australian winter grains crops to 23.2 million tonnes and reduced exports to only 18.1 million tonnes in 2015.

Major index funds are beginning to roll positions forward, Roger’s fund started yesterday rolling from March to May, and Goldman roll starts Friday Feb 6th.

China’s official PMI data will be released on Feb 1. Trade is expecting an improvement from December’s 50.1.

Outside markets will be influenced by several reports: Employment Cost Index, 4th quarter GDP and Chicago PMI.

JBS USA one of the top U.S. meat processors plans to expand a Utah beef-processing facility, as some of its rivals have been going dark due to tight cattle supplies.

US Cattle Inventory Report this afternoon at 2:00 pm. Trade is estimating “total cattle and calves” equal to a year ago. The average estimate is for beef cow replacement to be 103.4% of a year ago.

Cash cattle trade has been improving as week progressed. Nebraska and Kansas had cattle trade at 160 on Thursday. Beef values continue to slide with choice down 2.70 and select down 2.00. The CME Feeder Cattle Index is 213.90.

Japan is prepared to cut its high import tariffs on beef and pork and slightly ease tight restrictions on rice imports for U.S. producers, in a rush to seal an ambitious Pacific trade deal, Japanese media said on Friday. Japan and the United States are working toward an agreement to cut Japan’s 38.5 percent beef tariff to about 10 percent over more than 10 years.

Pork cutout values are down 2.03.

Markets as of 5:15 AM CDT          

  • Mar Corn   + 1/4     
  • Mar Beans   +3 1/4    
  • Mar Wheat   +2
  • Mar Soymeal -.20
  • Mar Dlr     -.28
  • Mar S&P   -11.75
  • Mar Crude   +.53
  • Feb Gold   +8.60

Technical Chart of the Day

daily chart

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