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Bean Market Catches Bid

04/27/2014 @ 1:13pm

The bean market caught a bid to close the week out on a strong note. News that China was canceling the auction of 3 mmt of beans out of their reserves gave the market a boost overnight and that carried through to the day sessions.  Reports that China was going to auction off the beans helped press the beans lower earlier in the week.  It is not a surprise that China would choose to cancel the auction as there is an over-abundance of beans in their ports at this moment.  News continues to flow that Chinese traders are still trying to cancel bean buys on the book and in some cases on their way to the port. The trade continues to debate if the US will run out of beans. With the importation of both beans and meal projected to be at record highs due to plentiful world supplies, the ending stock pile will be tight but we will not run out. As for this week’s trading it definitely was a volatile on,e putting in a 51 3/4 cent range. The weeks lows were put in early and we closed only a cent lower from last Fridays close and this was 33 3/4 cents of the week’s low. The overall trend of the bean market continues to be higher and a close below $14.44 would need to happen to take out the long term trend. Near term support should be found at this week’s low at the $14.60 1/2 level.

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Cattle Commentary

Posted 04/25/14

The monthly Cattle on Feed report showed March Placements last month were 4.7% under the previous year. This was a bit lower than the average guess of a 0.8% increase. As these are cattle which will finish out from August through October this is supportive for those two contracts by 50 cents on Monday. There are two explanations for this decline in placements. Keep in mind there was a strong incentive for very big placements due to the biggest profit closeouts on outgoing cattle since 2003. The first explanation is that we are now reaching the point where supplies of calves and feeders are just too tight. In the previous five months, the placement total was 6.6% higher than last year. Considering that last year’s calf crop was only 1% lower than last year this would mean we would be moving into some deficit numbers for future placements. The trade was just not thinking it would have happened in March. The other explanation here is that weather was a bigger than expected problem in early March. Though we are all set in the spring weather mentality right now, don’t forget that the first week and half of March was terrible. Some sale barns and county roads were closed at that time. Based on the minor rally in futures ahead of the close, and the gains made in early April feeder prices, we would assume the market will believe supplies are getting harder to find.

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