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Grains

Grain Traders Positioning For Next Move

Commentary — Paul Georgy Date — October 6, 2016

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—Corn futures chart

Good Morning! Paul Georgy with the early morning commentary for October 6, 2016 Grain markets are mostly lower as weather forecasts open up for harvest. The US Dollar is higher and stock indices are weaker.

Weekly export sales report at 7:30 this morning has trade estimating 400,000 to 600,000 tonnes of wheat, 1,100,000 to 1,400,000 tonnes of corn, and 1,200,000 to 1,500,000 tonnes of soybeans.

Technically speaking the December wheat futures rallied from support levels to test resistance on Wednesday. A close above 4.10 could trigger additional buying. Soybeans remain in a trading range and December corn futures are holding above the breakout level which is now support.

EIA ethanol report showed stocks declining but still at high levels. Production last week was 980,000 barrels, slightly less than the previous week however greater than last year. Trade is expecting more plants to come back on line after seasonal repairs. Producer profit margins are in the black.

Allendale’s Chief Strategist, Rich Nelson is suggesting Argentina could plant 4.55 million acres of corn in 2016/17 compared to 3.5 million acres in 2015/16. Argentine farmers are expected to plant 19.25 million acres of soybeans this year compared to 19.53 million last year according to Rich Nelson.

Informa projects corn yield at 174.5 bpa vs their last estimate of 174.8 bpa and USDA 174.4 bpa. They raised soybean yields to 51.6 bpa compared to last estimate of 49.5 bps vs USDA' s 50.6 bpa last month. Informa put total production for 2016 at 4.300 billion bushel vs USDA 4.201 in soybeans. Their estimate on corn was 15.215 vs 15.093 billion bushel by USDA in September.

Anec, the Brazilian grain export association reduced its forecast for the country's soybean exports this year to 52 million tonnes, versus a previous estimate of 57 million tonnes. They expect soybean exports to increase to 53 million tonnes in 2017.

EIA crude oil stocks fell by nearly 3.0 million barrels when trade was expecting a build helped boost WTI crude values on Wednesday.

Macro traders will be looking for the initial claims report this morning to provide some insight into the monthly unemployment data tomorrow morning.

Lean hog futures on Wednesday continued the price slide, when the December contract posted lows not seen since 2002. We have been talking some time about the oversupply of competitive meats and pork. We can certainly use that information as a reason for the market to not rally. However, the sharp decline and the deep discount of December futures to cash index has to be long liquidation, margin selling and shorts piling on. Are traders getting too negative?

Live cattle futures posted a higher close for the second day in a row on Wednesday. Could we really have put a bottom in the cattle markets? Cash cattle bids have firmed up with a few cattle trading at 102 in the south. October cattle options expire on Friday and first notice day is Monday.

Dressed beef values were lower with choice down 2.24 and select down 1.22. The CME Feeder Index is 130.94. Pork cutout value is up .18.

Markets At-A-Glance – 5:00 AM

  • Dec Corn -1 1/4
  • Nov Beans -4 1/4
  • Dec Wheat +1 3/4
  • Dec Soymeal -1.60
  • Dec Soy oil +.01
  • Dec Dlr +.25
  • Dec S&P -4.75
  • Nov Crude -.01
  • Oct Gold-.10

Technical Chart of the Day


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