Futures Commentary and Analysis

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With Four Major Reports Expect The Unexpected
Paul Georgy - IF - Wed Jan 11, 5:33AM CST

Good Morning!Paul Georgy with the early morning commentary forJanuary 11, 2017.

Grain marketsare lower as traders adjust positions ahead of reports. The US Dollar is providing some headwinds with it being strong. Other outside markets are higher as traders prepare for the President-elects news conference today.

Traders are waitingfor several potential market moving reports. Winter wheat seedings, US grain end-stocks, US grain quarterly stocks and US corn and soybean production for 2016 are the potential game changers. The USDA will also update their outlook on South American production. There will be something for everybody on Thursday at 11:00 am CT.

Allendale’s 29th Annual Ag Leaders Outlook Conferencewill answer the big questions you have about agricultural markets for 2017. Allendale’s three-day conference will cover fundamentals, technicals, and price outlooks based on the facts for corn, soybean, wheat, cattle, and hogs. Viewers will also receive a technical review of each commodity, and all this data will be pulled together with specific trade strategies for each commodity.Click here for more details.

Reuter’s surveyof analysts has trade expecting a 2.0 million acre decline in winter wheat acres in 2017. Trade analysts are expecting corn stocks on Dec 1 to be more than 1.0 billion bushel greater than a year ago. Soybean stocks are estimated 220 million bushel larger than last year. On average, they are looking for wheat stocks to be 310 million bushel larger than a year ago.

US productionof corn and soybeans are expected to be tweaked with trade looking for a bit of a downward revision in corn yield and harvested acres. Trade average estimates are expecting a lower overall production for soybeans due to higher yields and less acres harvested.

CONABprojects Brazil’s soybean crop at 103.8 mmt which was is an increase from December’s estimate of 1.4 mmt. They are estimating the corn crop at 84.7 mmt up from 83.8 mmt last month and 66.6 mmt last year. Total grain production is expected to be 15% larger than the 2015/16 crops.

Chinese soybeancrush margins have fallen sharply since early December when they posted near record high returns of over $40 per tonne. Currently crush margins are calculated at just over $6.00 per tonne.

Macro Marketsare awaiting guidance from Mr. Trump's press conference today. EIA report will be released at 9:30 am CT.

Allendale’sthree-day conferenceevent will begin on Tuesday, January 24th at 2:00 PM followed by two 1 hour session (approximate) each day. Drew Lerner’s (Live Only) presentation will begin at approximately 2:00 pm on Tuesday. Click here for more details.

Chinese hog marginshave hit record levels as pork demand accelerates going into their January 28thNew Year’s Festival. The real question is what will happen to Chinese pork production after the holiday demand disappears? How will this impact US pork exports?

Lean hog futureshave jumped above the 20-day moving average on Tuesday holding the current uptrend. Chart support crosses at $62.15 with resistance at $66.90. The cash hog index is currently over $6.00 discount to the February futures contract.

Fed cattle Exchangehas over 5,800 cattle offered in the online auction scheduled to start at 10:00 am CT today.

Live cattle futuresrally in the past two sessions has helped support the idea of higher fed cattle prices this week. Although the rally is being supported by fund buying (index fund rebalancing) market ready supplies of cattle are tighter due to the aggressive marketing in the third quarter of 2016.

Product valueshave slipped which is a good thing for beef. It will allow more retail featuring and should create further purchases by consumers. Meat protein supplies will be plentiful in 2017 which should create competition for the consumer’s dollar.

Cattleis in an uptrend however the rally on Tuesday is testing the upper channel resistance. February cattle futures resistance crosses at $120.00 with support at $115.70. Look for more index fund buying this week.

Dressed beefvalues were lower with choice down 3.97 and select down 1.97. The CME Feeder Index is 132.72. Pork cutout value is down 1.64.

Markets At-A-Glance – 5:00 AM

  • Mar Corn -1 1/4
  • Mar Beans -2 3/4
  • Mar Wheat -2 1/4
  • Mar Soymeal -1.50
  • Mar Soy oil +.09
  • Mar Dlr +.32
  • Mar S&P +.50
  • Feb Crude +.31
  • Feb Gold+2.50

Technical Chart of the Day

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