CBOT Grain Futures Calls:
-December corn called 1 to 2 lower.
-November soybeans called 5 to 10 lower.
-December CBOT wheat called 2 to 5 lower.
US dollar is down 14 at 77.19. October crude is up $.61 at $71.71. Dow futures are up 3 points.
-OPEC meets in Vienna today to decide output levels. The trade expects no change in production.
-American Petroleum Institute will release its weekly estimate of energy stocks this afternoon. The Department of Energy’s EAI will release the master numbers tomorrow morning. The trade is expecting a 1.5 million barrel drawdown in crude stocks, a 700,000 barrel increase in distillates, and a 1.4 million barrel decline in gasoline stocks.
-Valero, the nation’s largest oil refiner, announced hundreds of job cuts and the idling of some processing facilities.
-Federal Reserve will release the Beige Book report on economic activity by region this afternoon.
-UBS upped its forecast of the Euro/dollar from $1.40 to $1.45. Its three month forecast was raised from $1.30 to $1.35.
-Citigroup raised its price forecast for metals. The gold price forecast for 2009 was raised from $908 to $940 per ounce. The 2010 forecast was raised from $925 to $966 per ounce. These changes were made to due concerns about the strength of the dollar and inflation fears.
Go to our homepage, www.allendale-inc.com, to view our latest market update videos, recorded twice a day (before and after the grain market session).
-Little change in the forecast. Warmer temps will appear off and on with periods of light rain after each.
Grain Market Influences:
Corn summary… Traders came in buying when overnight traders tanked the dollar. Talk of investors moving money to better performing world economies and more rhetoric of moving away from the dollar being the world’s central currency. Obviously the lower dollar would be inflationary to commodities regardless of the weather or crop size and hence buying surfaced. But Chinese selling 1.86 mmt in auction and announcements from Thailand and Philippine to export corn capped gains.
The average guess for Friday’s supply/demand report is to see ending stocks go from 1.621 to 1.768 billion bushels.
Taiwan purchased 60,000 tonnes of US corn overnight. A separate Taiwanese company purchased 58,000 tonnes of US corn overnight.
China has cut its corn production estimate to 165.5 mmt due to severe drought in parts of the country. This is only down .3% from last year’s 165.92. Some analysts had been expecting a 10% drop.
Soybean summary… Last weeks high to last nights low was a $1.08/ bushel slide. This is pretty radical and indicative of the trend if there is no frost. But it is overdone and due for a bounce. Typically a bounce back to old support (942) or to the 50% retracement (964) would be logical. The weak dollar overnight provided the catalyst for today’s bounce against 942 so we will see of there is follow-through towards 965.
The average guess for Friday’s supply/demand report is to see ending stocks go from 210 to 226 million bushels.
China has cut its soybean production estimate to 14.5 mmt due to the drought. That is down slightly from last year’s 15.55 mmt figure.
Last night’s weekly soybean auction sold 29,300 tonnes out of the 500,000 tonnes that were offered.
Wheat summary… The market has found economic value at 475 based on 300 corn but there is no sign the downtrend has stopped. In fact, it looks like it is accelerating. This is getting serious for many producers who did not have protection in place and it is not just a problem for the US farmer but soon it will be a problem for producers around the world. This could have significant consequences for non-developed nations who came into production after high prices and UN seed distribution programs pushed production to respond to higher prices. If these producers lose money, they will lose hope quickly and not be in production very long.
The average guess for Friday’s supply/demand report is to see ending stocks go from 743 to 769 million bushels.
Ukraine has increased its estimate for grain production from a 42 to 43 mmt range up to 45 million metric tonnes. This is closer to last year’s 53.3 mmt figure.
China still has a larger than last year wheat production estimate at 114.95 mmt. That is up from last year’s 112.46 figure.
Contact Allendale to schedule a speaker for your Fall/Winter meetings!
-Wholesale beef closes up $.87 for choice and up $.53 for select.
-Pork carcass cutout closes down $.75.
-Cash hogs are called steady.
October Lean Hogs are called 10 to 30 higher.
----Chart support 46.500 and resistance 51.20
October Live Cattle futures called steady to 20 higher.
----Chart support 86.20 and resistance 89.75.
October Feeder Cattle futures are called steady to 10 higher.
----Chart support 96.65 and resistance 101.50.
Livestock Market Influences:
Lean hogs summary… Futures continued their nice run higher today. The highest close of this three week uptrend was posted. The problem we have here is most of the gains posted recently in futures have not been based on reliable fundamentals. Last week wholesale pork lost $3.86. Those five days individually laid out were -.08, -3.11, +.12, -1.14, and +.35. This afternoon we seen the pork cutout closed yet another 75 cents lower.
Live cattle summary… The news this morning was pretty grim. The smaller than expected sale total in the live based trading states was disappointing. It sets this week’s showlist up potentially burdensome numbers. However, by the end of the day traders are feeling a bit better. Wholesale beef on the midday reports noted increases of 87 and 53 cents for choice and select boxed product. Keep in mind beef ended lower last week.
CBOT Grain Futures Calls: