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Managed Money Funds Large Sellers in Soybeans

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Managed Money Funds Large Sellers in Soybeans

Dec 26, 2017

Good Morning! From Allendale, Inc. with the early morning commentary for December 26, 2017.

Grain markets are battling large US and world supplies. Weather and technicals will likely be the factors which will move markets this week.

Technically, the soybean market is oversold and with large selling by funds last week it is possible to see some short covering before year end.

Corn futures closed above the 20 day moving average on Friday which could lead to further short covering today. Last year corn rallied at year end.

World Weather Inc. says, “The bottom line remains very good for the heart of corn, soybeans and peanut production areas while northern and south-central Argentina will need to be closely monitored for increasing or ongoing stress. Next week’s outlook is not very good or Argentina in terms of rainfall which adds even more pressure for the rain slated for this coming weekend.”

CFTC Commitment of Traders Report showed managed money funds increasing net short positions in corn by 24,961 contracts and in soybeans 60,526 contracts. They were net buyers of 4,075 contracts in wheat. The large increase in shorts in corn and soybeans could provide some buying interest on today.

Funds were net buyers of 3,000 corn contracts on Friday and net sellers of 1,000 soybeans and 1,500 wheat contracts.

U.S. Economic markets this week will focus on any last-minute year-end positioning by investors and this week’s moderately busy U.S. economic schedule.

Cattle on Feed report was a bearish surprise with 2.099 million head of cattle placed into the nation’s feedlots in November. That was 13.9% over last year compared to trade expectations of a 5.7% increase. Monthly Cold Storage was moderately bullish with 486.954 million lbs. of beef in inventory at the end of November.

Beef production will be decreased the next few weeks due to holiday scheduling by packers. Historically this means higher trending product values and supportive to cash cattle values.

February live cattle futures have major support at 117.57 with a close below that level will likely trigger more selling pressure. Resistance crosses at 122.00.

Hogs and Pigs report was bearish for the industry. Trade was expecting minimal increases in most major categories however the report showed producers have not really changed their plans. The pork industry will have to deal with large supplies into 1st and 2nd quarters of 2018.

February lean hogs closed higher on Friday after a negative Hogs and Pigs report. Resistance crosses at 72.00 with support at 66.00.

Dressed beef values were lower with choice up 1.44 and select up 1.01. The CME Feeder Index is 149.92. Pork cutout value is down .02.

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