This coming week quarterly earnings shift into high gear. Early results have been fair, but not dramatic. Washington remains disturbingly befuddled regards the debt ceiling, spending cuts and entitlements. With all of that, the S&P 500 is within 93 points of its high, at Thursday’s close, with resistance at 1500. European markets have been out of the spotlight, but no less uncertain. Chinese data is mixed with inflation projections rising, and that would be new economic management problem for them.
The grain and soybean markets USDA report release time is changed to 11 CST, and that seams foolish to me as it comes right in the middle of the traditional session when the bulk of trading still occurs. The market came into the reports near their lows, but position balancing was at a minimum. Winter wheat plantings will also be out and a four year high is expected, but crop conditions are poor, with Kansas at 24% good to excellent, or one half the normal. Corn stocks are estimated at 8.2 b bushels and soybeans at 2.37 b. Final corn production 10.7 b and soybeans at 2.93 b. Looking ahead corn plantings are seen receding as oil production ramps up, or less ethanol. Heavy flooding rains in Louisiana will not help the low levels of the Mississippi, north of there. South American soybean harvest is underway in Brazil, and the crop is estimated at 83 MT. Argentine production is also adequate, but troubled by excessive rains and resulting disease concerns. Chinese soybean demand has made a normal turn to South American supplies, as evidenced by reduced weekly export sales.
January is usually not a good demand month for beef. Cash cattle settled back $1-2 to $128 in the south and $204 on northern beef. Boxed beef at weeks end was holding at $194 on choice. Pork demand is also dimmed at the top of the year. Chart support is at $131.20 on Feb cattle and $84.17 on Feb hogs.
Watch CME group volume, yesterday at 12 million, with Globex (electronic) at 105 m and outcry at 850,000. Also stock value at $53, as the pending ICE-NYSE combine will cut activity.
Crop report:
Corn production 10.8 b, soybeans 3.01
Corn stocks 8.03b and soybeans 1.97 b
Winter wheat planting 41.3 m up from 40.6 m
Be that as it may the market action turned vicious as computer crazies ran values up on short covering. Volume in March corn was 73,000 contracts pre report to over 243,000 near the traditional close. March corn range was $6.86 to $7.24 late. This is why it is not a good idea to release crop report during the session.