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Demand sinks wheat

09/09/2011 @ 3:47pm

Wheat fell for the fourth day, as demand concerns continue to pressure the markets. The U.S. dollar was stronger today on continued European debt fears. World traders are worried that the financial crisis in Europe might be spiraling out of control. This has them selling the Euro and buying the U.S. Dollar. A higher U.S. Dollar is negative to U.S. wheat exports. This is important as exports make up 46% of our total consumption. For Monday’s USDA report, Allendale is looking for a downward revision of spring wheat yields. However, this lost production will be offset by a reduction in exports due to the higher dollar and competition from Russia. Last month, the USDA estimated wheat ending stocks at 671 million bushels. The average estimate for ending stocks for Mondays report is 667 million bushels. Allendale is estimating ending stocks to come in at 663 million bushels. USDA reported weekly export sales at 512,200 tonnes. This was higher than the trade estimated range of 350,000 to 450,000 tonnes.  The trade will be monitoring tropical storm Nate in the Gulf of Mexico to see if it will bring much needed relief to the drought hit region of the plains. As of today, there currently is not much rain in the forecast for the drought hit Plains. The USDA report will be out Monday morning at 7:30…Jim McCormick.

Cattle 

July beef trade was great. Imports were very low, at 17% below last year. Exports rose from 17% higher than last year in June, to 33% over last year in July. The July export number, at 272 million lbs, was a new record for any previous month in history! Not only is this data good but the weekly beef export numbers since July have been strong too. This morning’s weekly beef export sales report showed last week’s shipments 40% over last year. For short term direction, it appears the expected dip in cattle prices was only a short lived event. Cash cattle traded actively at $117 and $118 vs. last week’s $113. Our expected long term bull move is happening right now…Rich Nelson

 

Working Trade:

·       (08/16) Bought April cattle/sell December hogs 41.45, risk 41.00, objective 48.45. Closed 42.20.

·       (08/30) Sold October 118 call/sold April 118 put 3.90, risk 6.25, objective 0. Closed 4.97.

·       (09/07) Sold 2 April 118 puts 2.57, risk 4.32, objective 0. Closed 2.47.

 

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