Daily Perspective
fyii.net
by Paragon Investments, Inc.
Phone Toll Free: 888-452-8751
CORN:
Fundamental: Corn had a narrow trading range and closed slightly lower for the session. The weekly export inspections were disappointing and helped pressure the corn lower. The trade is still looking for a lower production number next week in the monthly USDA supply and demand report. We expect a smaller number also, but no big surprises, it is too early for that. Both the U.S dollar and the European Euro broke out of their 2-½ week trading ranges, the dollar up and the Euro down. This was one more factor to keep the pressure on the grains today. The trade was looking for a slight improvement in the crop condition, but it came in 2 points lower. Most states were close to last week; Kansas and Missouri showed the largest improvements and South Dakota the largest decline. Corn maturing was at 20% versus 25% a year ago and the average of 16%. Kansas is 12% harvested versus last year at 16% and the average of 5%. Missouri is 10% harvested, a year ago it was 14% and the average is 11%. Paragon Investments has an 18-page special corn report available at www.4-paragon.com.
Technical: The December corn broke out of the wedge formation to the upside on Friday, and closed on the trend line today. To breakout to the downside of the wedge it would take a trade of 2.27 ¼. We must still see a move outside the wedge and follow through before we can be a believer. It is do or die time for the corn market, with harvest around the corn (seasonal pressure).
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SOYBEANS:
Fundamental: Once again the soy meal was the strong sector of the soybean complex. The news of a sale of 110 TMT of soybeans to unknown destinations (thought to be China) was price supportive. The weekly export inspections were of no help as they came in less than expected. This afternoon the trade was looking for crop condition improvement in the soybeans. The good to excellent condition stayed unchanged at 52%. With the improved weather we have seen the last week and half it has to be a surprise to see no improvement. Soybeans that were dropping leaves were at 11%, compared to last year at 16 and the average is 8%.
Technical: For the last seven of eight sessions the November soybeans have had a 15 ½-cent trading range. In those seven sessions November has traded under 4.80 six times and closed under 4.80 twice. The soybeans have broke out to the bottom side of the wedge formation and are starting to show follow through to the downside. The price of 4.92 is the 38.2% retracement of the April low and July high, 4.78 is the 50% mark. There is an open gap at 4.55 ¾ to 4.45 ½ and a major trend line support area at 4.52 ½.
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WHEAT:
Fundamental: Wheat moved lower again here today as the following of the corn and soybean’s lead continues. Traders were also surprised by the heavy deliveries today in Chicago after Friday’s deliveries were rather light. All and all the market was very thin today and traders noted that no one is aggressively selling at these levels. This is a new twist to the recent market psychology, as traders now appear willing to buy the dips in the wheat market. We’re not sure what this means but we’ll keep our ear to the ground!
Technical: Technically the market held contract lows in KC and the current sideways trend in Chicago. We feel better about today’s trade at the close than we did early in the session. A stable market tomorrow could give us our first signal in several sessions.
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LEAN HOGS:
Fundamental: Hogs closed sharply higher today with traders pointing toward Friday’s monthly Hogs and Pigs report data as the primary influence. We ourselves have NOT given these reports much merit and continue to question the numbers; however traders today liked to talk about them. We find more stemming from the discount futures had vs. cash hogs and a technically oversold market as the primary influence today. As we spoke last week, we are looking to enter a short position and we have this listed below. Cash hogs continue to struggle and we find little reason to get overly bullish. We maintain our neutral bias. The pork cutout was up $0.14 at $77.11 on 88 loads.
Technical: We broker through last week’s highs which caused some decent volume on short covering today; however tomorrow’ trade will be the true indicator on market direction. A failure to maintain a close above $59.40 would indicate that the correction has run its coarse and a return to lower prices is in the cards. There is an outside chance that we are going to run to the gap created between $60.50 and $60.80 at which time we would become more aggressive.
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CATTLE:
Fundamental: It was another strong close for the feeders and slightly higher for the live cattle. Volume today was less than on Friday. Good fund buying and spillover support from the hog complex was a big help to the cattle complex today. The lower box prices on Friday and at noon today kept a lid on the live cattle upside. The feeder cattle prices continue to run ahead of the live cattle faster than they should. In the last five sessions the high to low in the October feeders was up $2.80, while the December live cattle was only 1.05. High priced feeders cause larger feedlot losses than increased cost of gains. The estimated volume in the live cattle was 11,381 contracts and in the feeders at 2,290 contracts. This afternoon the light choice boxes were down $0.41 at $117.81 on 183 loads and the light select boxes were down $0.93 at $111.53 on 119 loads. The CME 7-day average feeder steer cash price for 700-849 pound steers was up $0.30 at $91.65.
Technical: Friday the October live cattle had a technical reversal to the upside and a little carry through today, this is positive but a long way from a turnaround. October live cattle have made lows in a narrow trading range of 72.40 to 72.47 every session last week. The weekly low last week of 72.40 is only 45-cents from the contract low. On the October live cattle monthly continuation chart the up trend line off of the 1998 and 2000 lows comes in at 70.30. The October feeders had been working lower every since they made their contract high of 92.10 in June. Last week they traded into the open gap left in May and have bounced to the upside in an impressive fashion. Friday in thin volume the feeders broke above the downtrend line that extended back to the contract high in June. In the last 5 trading sessions the October feeder cattle from low to high have moved up $2.80 and today’s high was only 1.10 from the contract high |
