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Will Funds Be Back as Buyers Today?

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Will Funds Be Back as Buyers Today?

Feb 01, 2018

Good Morning! From Allendale, Inc. with the early morning commentary for February 01, 2018.  

Grain markets have taken a breathier after the recent rally. Trade will be looking forward to tomorrows CFTC commitment of trader’s report. Weather, short covering and direction of the US Dollar index is influencing grain price as we begin a new month. The average price during February for corn and soybeans will determine the crop insurance price.

Allendale Ag Leaders Presentation will be in the following location: click on the event for details

February 6, 7:00 — 9:00 pm, Highland IL. Sponsor: First Mid-Illinois Bank & Trust

USDA’s weekly export sales report will be out at 7:30 am CST. Trade estimates are: corn 1,000,000 to 1,500,000 tonnes, wheat 300,000 to 500,000 tonnes, soybeans 600,000 to 1,000,000 tonnes, soymeal 150,000 to 350,000 tonnes and soyoil 8,000 to 35,000 tonnes.

Cash basis markets firmed in soybeans as futures drifted lower. Corn basis however was lower at Midwest locations.

Funds were estimated net sellers in soybeans and wheat on Wednesday. They were net buyers in corn.

Weekly ethanol production fell from 1.062 million barrels per day down to 1.040 per day. This new number is a disappointment and continues the trend which started with the cold snap five weeks ago. Year to date production through December 22, before the cold snap, ran 4.3% over last year. Since December 22, production is down to a 2.9% increase over last year. USDA’s whole-year goal is a 1.6% increase.

Russia’s grain harvest is expected to amount to 106 million tonnes in 2018, according to their Agriculture Ministry. Previously the Ministry’s outlook envisioned 110.6 million tonnes of grain to be harvested in the country this year. In 2017, Russia’s grain harvest in net weight amounted to 134.1 million tonnes, an 11.2% increase compared with 2016.

Crude oil stock reported by EIA showed a rise by 6.78 million barrels last week as trade was expecting an increase of 1.26 million barrels. Gasoline stocks decline while trade was looking for a buildup and distillates declined more than expected.

U.S. Federal Reserve kept interest rates unchanged on Wednesday but said inflation likely would rise this year. Stock indexes sell -off highs on inflation concern.

Cattle inventory report showed All Cattle and Calves as of January 1, 2018 grew to its largest size in nine years with 94.399 million head. That was a 0.7% over last year. At 6.131 million head of beef heifer replacements, this was the first year over year decline numbers after six straight years of increases.

Fed Cattle Exchange was a bust on Wednesday with no cattle selling. After the auction several majors were bidding 200 dressed in Nebraska. When the calendar rolls over to a new month the packers have a tendency to try and play tough with feedlots as they pull contract cattle ahead. Due to tight supplies of market ready cattle, we will have to wait and see if it works this month.

February live cattle futures are in a trading range with support at 122.22 with resistance at 126.75. Strength in cash trade is supporting the February contract as options expire on Friday and first notice day on Monday.

After two weeks of weather related shortfalls in hog production, this week should balloon to 2.440 million head. That would be 4.9% over last year in the same week. This is needed to clean up some of the small backlog in numbers. Weekly pork export sales will be out at 7:30 am.

April lean hog futures closed at low end of trading range on Wednesday on a few ticks above key support. Major chart support should be found at 71.00 with resistance at 76.25.

Dressed beef values were lower with choice up .37 and select down .05. The CME Feeder Index is 147.51. Pork cutout value is up .17.

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