9/6/12 GLOBAL COMMODITY ANALYTICS & CONSULTING LLC
CLOSING GRAIN COMMENTS:
After working to new weekly lows in the overnight markets, the grain trade on Thursday saw a demand-led turnaround by mid-day, with the wheat leading the price recovery. Egypt’s GASC tending for 475,000 tonnes of Black Sea Wheat for October-November shipment brought with it short-covering by fund traders. This amount was likely bigger than trade expectations.
Giving the prices support into the Thursday’s close was probably mid-day weather models depicting key growing HRW areas as mostly dry into next weekearlier week models suggested a nice rain event for KS and NE.
With the wheat up nearly 3% the corn was able to erase earlier losses and break back above $8 in the Sep. Futures. Earlier in the day USDA had reported a new export sale to Unknown Destinations of corn for 217,000 tonnes. This likely underpinned prices in the pits as well.
Beans were a follower on Thursday; between the bean/corn spread being overdone on some charts and the fact that private trade guesses were coming in a little higher for September bean yield estimates, the beans and soy oil were unwilling to rally with the feed-grains.
CLOSING LIVESTOCK COMMENTS:
After working sideways to lower most of the trading session, the livestock markets turned decidedly weaker in late-session trade on Thursday, led by hogs and feeder cattle. Because these two complexes were the ones driving the downside pushand with little cash or fundamental news present most of the trading dayI would guess that the hard break in hogs and the turn lower in feeders was led by the reversal higher in the wheat and corn markets. As a result, the lead-month October Hogs finished 2.5% lower, making new contract lows as well. Dec. Hogs were also down hard on Thursday, but the closing price was about a dollar from its contract lows.
Live cattle were able to eek-out a slightly higher close on Thursday probably as a result of the fats once again being the buy side of spread trading. Choice boxes were also up over a dollar on Thursday, breaking above 192 so this probably added some strength as well.
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