Kleist Comments

CLOSING AGS 5/8/14
CLOSING AGS 5/8/14

Cattle: Cash cattle last week: $146.00 south, $1470150.00 north; on 88 boxed loads cut outs dn. $1.76(c) to up. $.66 (s) on moderate midday movement.
Comments: Last take on cash cattle I saw was a limited test at $148-150.00 Neb. and $238.00 dressed; Ks. $148.00. Basically all higher. Futures responded to that and sharply higher feeder cattle futures due to expectant abundant corn supplies. USDA report slightly bullish, more on Monday.

Hogs: Interior hogs No/Comp. East/West;
Pork cut outs rose $.26, quiet trade.
Comments: Certainly seemed more longs exited the June in favor of the July, perhaps to buy more time for PEDv to kick in. May hogs of course need to track the lean. USDA report possibly slightly negative, more on Monday.

GRAINS & OILSEEDS:

Corn: The USDA reports were at first neutral/bearish and secondly just bearish. Why? While we still have delayed plantings to deal with, the prospects are decidedly for ‘ample’ world course grain supplies for 2014-2015. While the old crop carryover came in lower than trade estimates, a breakdown of the report had the tie-breaker of ethanol that was estimated up 50mln.bu. far and away the largest usage number. Nonetheless, it supported old crop corn with spreaders selling (and hedgers rightly hedging) the December contract. However, old crop corn had a negative distraction: world old crop carryover was raised 10.4mln.m/t’s and new crop 13.3mln.m/t’s over that. New crop longs didn’t like the odds since now bulls have only 1) sharp decline in plantings or 2) drought or something in summer weather to cling to. $5.00 December area a reasonable hedge but at least in put (spread?) options to avoid the ‘whip’ of futures. Old crop might jack around until more known about plantings but if all goes well there I expect exports to fall. And with it old crop prices. Will advise.
Soybeans: A tale of two cities: just like yesterday’s old crop sales as small as they were offered fodder for even more rationing needed, so to the USDA report. Old crop carryover declined 5mln.bu. as exports rose, imports rose even more but the tie-breaker was the raising of the crush that offset some of the imports. Bravo. World old crop carry reduced by 2.4mln.m/t’s while new crop world carry raised by 15mln.m/t’s on expected record global production. Hey, it is EXPECTED world new crop production and the U.S. has barely seeded. Hence, decidedly the remaining may shorts more nervous than the remaining longs and May led the old crop sharply higher. And lifted Nov. sharply off its lows. My initial take I delayed until Monday
was a sell area $13.80-13.90. Will advise.
Wheat: Nobody could find a bull-spin to the wheat? What slackards. 2014-2015 production seen off 10% on lower stocks/imports/production and new crop carry at a 6-year low? All-winter wheat yields down 4.5bu. to avg. 42.7bu. with production off 9% and spring wheat sees higher acreage but lower yields producing a 6% lower crop. World old crop carryover declined 200,000t but old crop rises 900,000t. Usage the problem? Lower world wheat feeding; import demand from China, Iran, Algeria, Canada, Brazil and Mexico all lowered. Oh yea: Ukraine production estimated at 20mln.m/t’s and exports at 8.5mln.

Kleist Comments

This is John Kleist, of Kleist Ag Consulting.
Questions? Email me: johnwkleist@sbcglobal.net

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