Market Wrap-Up
by Chris L. Haverkamp
Date: 05/21/13
Estimated Update: 05/22/13
Company:
Paragon Investments, Inc.
Phone:
888-452-8751
eMail:
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Website:
www.ParagonInvestments.com
Fundamental: July Wheat finished up 2 at 685 1/4, 4 3/4 off the
high and 10 3/4 up from the low. December Wheat closed up 1
at 708 1/2. This was 10 3/4 up from the low and 3 off the high.
July Chicago wheat saw choppy and two-sided trade early today
but found sell pressure late in the session and posted a new low
for the move. This pushed the market down to the lowest level
since April 2nd. Paris milling wheat futures hit a fresh 11 month
low on favorable weather for Russia and ideas that the US price
may need to be lower to attract new export business. Traders
noted that advancement in the French soft wheat crop has been
seen over the last week as temperatures warmed up. A private
analyst in Russia raised their 2013/14 Russian production forecast to 53.8 million tonnes, up from
52.5 previously but down from the USDA estimate of 56 million. In addition, weekend rains for the
central and eastern plains added to the negative tone. Weekly export inspections came in at 21.149
million bushels as compared with 25.75 million necessary each week to reach the USDA projection
for the year. Cumulative exports have reached 94.3% of the USDA projection for the season as
compared with 92.9% as normal for this time of the year. The market found some early support from
ideas that spring wheat plantings are still well behind normal but the Canadian wheat production
forecast of 29 million tonnes, the highest since 1996, helped to keep the upside advance limited.
Technical: JULY WHEAT scored a new low for the move, reversed to close higher on the day with
small gains, but remains under the pivotal price area (now 699 to 705, which is in a negative mode)
keeping the market trend negative. Chart action is seen sideways. Open interest was near unch on
Friday in low volume suggesting little fresh interest by longs or shorts; today's volume was seen even
lighter. Stochastics are in a negative mode working towards oversold levels; the RSI is between
midrange and oversold levels. Market set-up has rally attempts limited to the pivotal price area.
Support seen at 679 then, 674.
Corn Futures
Fundamental: July Corn finished down 3 1/4 at 649 1/2, 11 1/4
off the high and 6 3/4 up from the low. December Corn closed
up 3/4 at 520 1/4. This was 6 1/4 up from the low and 2 3/4 off
the high. December corn traded moderately lower for most of
the session and down to the lowest level since June 15th (511
was June 15th low before the market took off with drought
issues last year) as traders see active plantings this past week
and great weather for emergence and early growth. Traders see
this afternoon's weekly crop update showing that the crop is
63% planted from 28% last week and 84% as the 10-year
average. Some traders looking for record week of progress and
70% complete. The July and September contracts led the market to the downside today as traders
took profits in July/December and September/December bull spreads from last week. Weekly export
inspections came in at 14.55 million bushels as compared with 15.15 million necessary each week to
reach the USDA projection for the year. Cumulative exports have reached 68.8% of the USDA
projection for the season as compared with 68.4% as normal for this time of the year. The USDA
reported this morning that US private exporters sold 120,000 tonnes of US corn to an unknown
destination for the 13/14 marketing year. Many in the trade suspect the buyer to be China as they
continue to dip their toe in the market as prices move lower in an attempt to rebuild domestic
reserves.
Technicals: JULY CORN saw two-sided trade and closed with small losses while remaining above
the pivotal price area (now 647 to 646, which is trying to roll into a positive mode) putting the market
trend positive. Chart pattern is in the middle half of a long term down trending channel. Open interest
was up on Friday in moderate volume suggesting new longs and shorts entering the market; today's
volume backed off a bit. Stochastics are in a positive mode just above the midrange levels; the RSI is
hovering around midrange levels. Market set-up has trade working both sides of the pivotal price
area over the near term. Resistance seen at 661 then, 666. Support seen at 643 then, 638.
Fundamental: July Soybeans finished up 16 at 1464 1/2, 1 1/2
off the high and 21 1/4 up from the low. November Soybeans
closed down 3 1/4 at 1225. This was 14 1/4 up from the low and
4 off the high. July Soymeal closed up 10.2 at 435.3. This was
10.6 up from the low and 0.5 off the high. July Soybean Oil
finished down 0.32 at 49.2, 0.56 off the high and 0.34 up from
the low. July soybeans traded higher on the day and pushed up
to the highest level since March 8th as strength in the cash
market and ideas that producers will continue to be tight holders
of old crop helped to support. November soybeans traded down
double digits as traders see little impact on the crop "if" soybeans are planted a little late. In addition,
traders see the potential for corn delays in Minnesota to result in higher soybean plantings as further
delays with heavy rains early this week might spark some switching soon. The July/November spread
made a new contract high this morning as the market attempts to shut down crush demand in the face
of tight supplies. Weekly export inspections came in at just 3.328 million bushels as compared with
5.88 million necessary each week to reach the USDA projection for the year. Cumulative exports have
reached 93.3% of the USDA projection for the season as compared with 86.2% as normal for this time
of the year. July meal was up sharply this morning as traders see short-term tightness but plentiful
global supply by the fall. July and December oil traded down moderately on the day. Analysts see US
soybean planting at 24% complete in this afternoon's planting progress report. This would be the
slowest pace for this time since 1996. Plantings were estimated at 6% complete last Monday.
Technical: JULY SOYBEANS posted another new high for the move and closed with good gains
while remaining above the pivotal price area (now 1418 to 1403, which is in a positive mode) keeping
the market trend positive. Chart pattern has the market reaching for the top end of long term sideways
trading range. Open interest was up on Friday in moderately active volume suggesting new longs
entering the market; today's volume backed off a bit. Stochastics are in a positive mode working
towards overbought levels; the RSI is at overbought levels with today's gains. Market set-up is for set-
backs to be limited to the pivotal price area. Resistance seen at 1466 then, 1480. Support seen at
1454 then, 1447.
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Live cattle futures finished higher on the day following profit
taking after a negative reaction to the cattle on feed report early
in the day. The cattle market showed some sign of recovery
today bouncing off of contract lows from last week as the market
appeared to be over sold coming into today. Midday wholesale
beef prices were mixed with choice making new contract highs
at 209.96 +0.45 and select at 193.76 +1.45 with 102 loads
trading. Estimated daily slaughter was 125,000 head to start the
week compared to 123,000 head last week and 125,000 head a
year ago. Technical aspects are showing near term strength with
both June and August closing over the pivot with first areas of
support around 11910 with 11805 behind in June with resistance at 12090 on the upside. The long
term trend remains negative at this point with traders looking to sell rallies. Feeder cattle closed
mixed with May remaining under pressure posting triple digit losses while August and September
posted triple digit gains on profit taking. Technically futures are showing signs of near term strength
closing over the pivot in August with first areas of support around 14285 and 12125 behind with
resistance at 14550 on the upside. The CME feeder index closed at 131.98 -3.42 on 5/17. Feeders
appear show near term strength yet the fundamental weakness is likely to limit upside in the interim
thus bears will look to sell rallies.
Lean hog futures closed higher on the day staging a slight recovery from losses last week on profit
taking and new longs after the dust settled from the PEDV scare on Friday. Expectations for higher
pork prices are likely to continue to support hog futures this week as long as holiday demand
continues to be active. Midday mandatory FOB plant prices were higher with carcass at 92.80 +0.19
holding premium to futures with strength in bellies holding the average up. Estimated daily slaughter
was 410,000 head to start the week compared to 400,000 head last week and 415,000 head a year
ago. Technically futures are showing a slight sideways pattern in June and July closing right at the
pivot with June support around 9150 and resistance at 9260 on the upside. The market looks to hold
firm as long as cash and product prices remain supportive seasonally. The CME index closed at
93.18 +0.25 on 5/17.