2/22/13 GLOBAL COMMODITY ANALYTICS & CONSULTING LLC
CLOSING GRAIN COMMENTS:
Prices ended the week with a surge of profit‐taking by longs just before
lunchtime in Chicago, with soybeans seeing the biggest reversal of around
30 cents within 20 minutes of time. Contacts on the floor and at newswire
desks both suggested that the sudden shift in sentiment came as a result
of fears of near‐term fundamentals that have taken us higher, i.e. the
weather and port logistics problems, could quickly become bearish
indicators over the weekend. It seems as though the bird in the hand was
worth more than 2 in the bush.
With this shift to intra‐day sell signals in the beans, wheat also gave
up its 8 cent rally and moved back to steady; it’s interesting to see
that the heavy selling we’ve become accustomed to this past two weeks was
absent from the wheat on Friday—maybe the better than expected weekly
export sales and continued talk of drier 6‐10 day conditions for the
southern plains in the Noontime weather models gained some traction.
Also heading into Friday’s close, we saw the corn find some pretty good
support given the bean sell‐off; pretty much the whole week it was under
pressure from bearish rhetoric coming out of the USDA Ag. Forum; because
of this, corn really hasn’t had a chance to trade friendly export sales,
Chinese purchases, strong cash basis, and good ethanol demand. It has
also seemed to be unable to track with the meal and with the Argentine
weather. Maybe these factors started to underpin the corn on Friday.
CLOSING LIVESTOCK COMMENTS:
It was a mixed finish for the livestock market on Friday, as hogs fell to
new weekly lows in the final few minutes of trade, while the cattle and
feeders were able to see short‐covering develop after mid‐day.
Cash fundamentals seem to have made the difference in the price‐action at
the Merc on Friday; while traders were looking up on beef demand at the
retail level, packers in some locations continued to talk about softer
pork demand; and even though cash hog prices on Friday were seen as
mostly steady and the pork cut‐out held at around $81, fears of demand
over the next two weeks seemed to be more important.
As a result of this divergent price action, the nearby cattle‐hog spread
widened to over $1.50 premium to cattle, the biggest premium since the
end of last year.
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