Allendale Early Calls: Cash Cattle Rallies $6 In 3 Weeks, Corn Starts Day Lower
10/29/2009 08:30AM
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CBOT Grain Futures Calls:
-December corn called 2 to 5 higher.
-January soybeans called 3 to 7 higher.
-December CBOT wheat called 2 to 4 higher.
US dollar is down 8 at 76.50. December crude is up $.30 at $77.76. Dow futures are up 22 points.
Economic Information:
-Third quarter GDP, out this morning, is expected to show 3.3% growth. This would end four straight quarters of contraction and likely the recession as well. Some economists suggest this GDP number is inflated a little by Cash for Clunkers and home purchase tax credits.
-Next week the government will release monthly job numbers. The trade is talking for a slight increase to 9.9% on that report and for it to reach up to 10.5%.
-This morning the weekly jobless benefit claims report is expected to drop to 521,000. Last week’s number was 531,000.
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Weather:
-The big Thursday through Saturday rain system has started. There is no change in the precip totals expected. There was a secondary Saturday and Sunday system for the eastern cornbelt in previous forecasts. That was removed this morning. Next week should be mostly dry with warmer temps.
Grain Market Influences:
Weekly export sales are viewed as neutral to corn, soybeans, soymeal, and soyoil and bearish wheat.
Corn summary… Corn started the day as low as the overnight market gave us much as expected. Shortly after that we saw something we have not seen in weeks and that is grains divorcing themselves from outside markets. With the dollar significantly higher and crude over a dollar and a half lower a start near double digits lower is not a surprise.
Taiwan purchased 23,000 tonnes of US corn.
One report suggests that as Brazil slows its ethanol exports that go to the US, our ethanol processing margins are temporarily improving. Brazil is processing more of its sugar crop into saleable sugar rather than ethanol due to high sugar prices.
Soybean summary… We can leave outside markets out of the beans for now. There is a mixed bag of short term weather news to go along with China and the lot. Our forecast now calls for as much as a 6 or 7 day window next week of no rain or just hit and miss rain. We have held to the thought that yields are out there it is just a matter of going out there and getting it.
Reports are suggesting China is now buying for the post-February import period. This is getting awfully close to the time of year when South America dominates the picture.
Taiwan purchased 12,000 tonnes of US soybeans.
Wheat summary… Here we go again. It’s a broken record but one that continues to prove accurate. While other grains were able to divorce themselves from outside markets through most of the day, it was the wheat in the end which just could not shed the higher dollar.
Ukraine’s Agriculture Minister has raised their estimate of 2009/10 grain exports from 16-17 mmt to now 20 mmt.
Japan’s Ministry of Agriculture purchased 39,407 tonnes of food wheat in its regular tender. Only 304 tonnes will come from the US.
Brazil expects to import 3 million metric tonnes of wheat this year due to the sharp fall in last year’s Argentine wheat crop.
The Buenos Aires Grains Exchange ups its wheat production forecast for Argentina from 7.5 to 7.75 mmt.
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Livestock Comments:
-Wholesale beef closes up $.13 for choice and up $.14 for select.
-Pork carcass cutout closes up $1.34.
-Cash hogs are called steady to 50 cents lower.
Livestock Futures:
December Lean Hogs are called steady to 20 higher.
----Chart support 54.70 and resistance 58.350.
December Live Cattle futures called 10 to 20 higher.
----Chart support 85.20 and resistance 87.60.
November Feeder Cattle futures are called 10 to 20 higher.
----Chart support 94.75 and resistance 97.00.
Livestock Market Influences:
Lean hogs summary… Getting the cash hog news out of the way first, we will note early morning trades had a lower bent while end of the day sales were made about right on yesterday’s price. Having said that neutral news, the trade right now is noting cash pork prices are picking up.
Live cattle summary… Later in the day we saw cash cattle trading start with gains of $1 to $2 from last week at $87. Let’s put this into perspective. Cash cattle have rallied a full $6 in just three weeks! If that doesn’t tell you something about this market than nothing will.