DTN Morning Comments on Livestock; Live & Feeder Cattle, and Lean Hogs

Cattle Futures to Open Cautiously Mixed as Trader Wait for Cash News

Live and feeder contracts seem set to open slowly mixed with traders split over cash prospects and the technical significance of yesterday’s sell-off. Lean hogs are likely to begin moderately higher thanks to bull spreading interest and stronger carcass value.
By John Harrington DTN Livestock Analyst
Cattle: Steady-$1 HR Futures: mixed Live Equiv $130.72 + 0.06* Hogs: Steady-0.50 HR Futures: 10-30 HR Lean Equiv $110.66 + $1.39** * based on formula estimating live cattle equivalent of gross packer revenue ** based on formula estimating lean hog equivalent of gross packer revenue

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The risk of trading futures and options can be substantial. Trading foreign exchange carries a high degree of risk, and may not be suitable for all investors. All information, publications, and reports, including this specific material, used and distributed by Sweet Futures 1, LLC shall be construed as a solicitation. Sweet Futures 1 does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71. This website contains information obtained from sources believed to be reliable, but its accuracy is not guaranteed by Sweet Futures 1. Past performance is not necessarily indicative of future results.

DTN Morning Comments on Grains

Grains Mixed Early Friday

Corn futures are lower at 6 a.m. CDT; soybeans higher; wheat higher.
By Darin Newsom DTN Senior Analyst
6:00 a.m. CME Globex: Corn 1/4 cent lower, soybeans 5 cents higher (November), and wheat 2 cents higher.
CME Globex Recap: Grains were quiet again overnight with traders seemingly waiting on something to happen in the weather. Corn posted another three cent trading range while wheat moved six cents and soybeans eight cents. Outside commodities were mostly lower with gold posting a sharp $24 loss.

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The risk of trading futures and options can be substantial. Trading foreign exchange carries a high degree of risk, and may not be suitable for all investors. All information, publications, and reports, including this specific material, used and distributed by Sweet Futures 1, LLC shall be construed as a solicitation. Sweet Futures 1 does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71. This website contains information obtained from sources believed to be reliable, but its accuracy is not guaranteed by Sweet Futures 1. Past performance is not necessarily indicative of future results.

Midday Comments on Livestock

Lean Hog Paper Likely Open Higher

Look for lean hog futures to open moderately higher this morning, supported by midweek short covering and improving carcass value. On the other hand, the cattle pits will probably start trading on a mixed basis thanks to cautious positioning ahead of more definitive cash and product news.
By John Harrington DTN Livestock Analyst
Cattle: Steady-$1 HR Futures: mixed Live Equiv $130.92 – 0.10* Hogs: Steady-0.50 HR Futures: 10-30 HR Lean Equiv $109.35 +$1.24** * based on formula estimating live cattle equivalent of gross packer revenue ** based on formula estimating lean hog equivalent of gross packer revenue

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The risk of trading futures and options can be substantial. Trading foreign exchange carries a high degree of risk, and may not be suitable for all investors. All information, publications, and reports, including this specific material, used and distributed by Sweet Futures 1, LLC shall be construed as a solicitation. Sweet Futures 1 does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71. This website contains information obtained from sources believed to be reliable, but its accuracy is not guaranteed by Sweet Futures 1. Past performance is not necessarily indicative of future results.

 

DTN Midday Comments on Grains

Soybeans Lead Grains Higher at Midday

Grain trade is positive across the board at midday is slow trade.
By David Fiala DTN Contributing Analyst
General Comments
The U.S. stock market is flat to higher with the Dow futures up 70. The interest rate products are higher. The dollar index is 10 higher. Energies are higher with crude up $1.25. Livestock trade is mixed. Precious metals are lower with gold down $19.
CORN
Corn trade is fractionally to 3 higher in quiet midday trade. Outside markets are generally pretty neutral. Upside December resistance is now the $4.84 10-day, then the $4.98 20-day moving average. The weather forecast looks to bring better moisture to many areas in the near term, but continued below-normal temperatures are raising concerns. These concerns are limiting sellers at new lows. Ethanol production was off slightly on the week, but stocks dipped 800,000 barrels after consecutive draws, so overall fairly neutral as far as corn goes. The basis has started to show some signs of recovery.
SOYBEANS
Soybean trade is 13 higher on the August, and 2 to 5 higher on most other contracts at midday, meal is mixed and bean oil is up 10 to 20 points. Chart momentum has turned down, but is showing signs of stabilizing November soybean support is at $12.00 and resistance is at the $12.42 10-day moving average. Trade breached 12.00 overnight but has recovered so far. The USDA confirmed 120,000 metric tons of soybean sales to an unknown destination. Weather remains mostly non-threatening for beans in the near term as well. Old-crop basis has started to stabilize after the big break, and will be watched closely. The August contract goes into delivery today, which will tell us quite a bit about the amount of beans remaining if significant deliveries occur.

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The risk of trading futures and options can be substantial. Trading foreign exchange carries a high degree of risk, and may not be suitable for all investors. All information, publications, and reports, including this specific material, used and distributed by Sweet Futures 1, LLC shall be construed as a solicitation. Sweet Futures 1 does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71. This website contains information obtained from sources believed to be reliable, but its accuracy is not guaranteed by Sweet Futures 1. Past performance is not necessarily indicative of future results.

Market Update From Mike Kuta " The Squawk Trader " Part 2

July 31, 2013
U.S. funds’ equity allocation at six-year low.
U.S. money management firms trimmed share holdings in July to their lowest in more than six years, taking profits after a strong first-half rally, and also shifted out of bonds into cash and alternative assets. Since the start of the year, the average equity allocation in a model global portfolio has fallen 8.5 percentage points to 56.2 percent, the lowest since at least April 2007, a monthly Reuters survey showed. In June, equity took 57.9 percent share. Average bond holdings also fell this month, to 35.4 percent from 36.3 percent in June, while the average cash holding rose to 3.6 percent from 2.1 percent. U.S. bond yields have risen substantially this year partly as a result of the improving economy, and with most analysts convinced that the Federal Reserve will soon start to scale back its $85 billion of monthly bond purchases. Government bond holdings were cut to 45.8 percent from 50.2 percent in June. Firms recommended a bigger share of bond portfolios be in high-yield debt and other credit such as agency debt. This category rose to 13 percent from under 10 last month. The poll of 12 U.S.-based fund firms was conducted between July 17 and 30. Some pegged the latest decline in model stock holdings to shareholders cashing in on an extended rally in both U.S. and Japanese equities. The U.S. benchmark Standard and Poor’s 500 index is up a little over 18 percent so far this year, while the Nikkei 225 index is up more than 30 percent. “The market has moved substantially, and it’s giving investors an opportunity to book some profits, especially at a time when it appears that there is a slowing in overall corporate profits,” said Alan Gayle, director of asset allocation at RidgeWorth Investments, who manages $325 million in four portfolios. Companies in the S&P 500 are expected to post a blended earnings per share growth rate of 4.0 percent in the second quarter, according to Reuters data, down from 4.9 percent in the first quarter.
What Does the Plastics Revolution Mean for Gas Producers?
It looks like the U.S. plastics revolution is upon us. Many observers have been forecasting a petro-chemical boom in America. Driven by cheap natural gas as feedstock for the industry. Last week, two major players in the chemicals space threw their weight behind the idea. Sasol and Ineos announced they will build a 426,000 mt/year plant–likely on the Gulf Coast–to manufacture high-density polyethylene. A major input in plastics-making. The announcement adds more fuel to the fire beneath the burgeoning U.S. chemicals sector. Sasol has previously announced plans for two other Gulf Coast facilities to make low-density polyethylene. All of this added polyethylene capacity could have some interesting effects for natural gas producers. That’s because America is right now experiencing a major glut of ethane–a natural gas liquid that E&P companies sell to end-users like Sasol, as an input for making polyethylene. Because of increased drilling for natural gas liquids lately, there’s been a lot of ethane on the market. To the point where ethane prices have fallen to almost nothing. Developments like the one above thus make a lot of economic sense, able to cheaply source their inputs. But the increased demand could help to bring prices back up to some degree. Which would be great news for producers who’ve seen their profits shrink as ethane has fallen. A number of polyethylene facilities are now planned or being built. As the first ones get completed, we’ll see what effect the plastics revolution has for gas producers.

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The risk of trading futures and options can be substantial. Trading foreign exchange carries a high degree of risk, and may not be suitable for all investors. All information, publications, and reports, including this specific material, used and distributed by Sweet Futures 1, LLC shall be construed as a solicitation. Sweet Futures 1 does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71. This website contains information obtained from sources believed to be reliable, but its accuracy is not guaranteed by Sweet Futures 1. Past performance is not necessarily indicative of future results.

DTN Morning Comments on Cotton

Cotton Trades Cautiously Down Few Ticks

Traders await results of Federal Reserve policy review and a variety of other reports. Cash grower and business trading both were inactive on The Seam.
By Duane Howell DTN Cotton Correspondent

Cotton futures moved cautiously a bit lower early Wednesday on this last day of the month ahead of results later in the day of a Federal Reserve policy review and a passel of other reports this week.
Benchmark December hovered off four ticks at 85.10 cents at 6:52 a.m. CDT, trading within only a 48-point range from 85.02 and 85.50 cents on a thin contract volume of 790 lots. March traded off 12 points to 83.42 cents.
The policy statement by the Fed, which began a two-day meeting Tuesday, will be followed by an announcement of the outcome of their respective policy reviews on Thursday by the European Central Bank and the Bank of England.
A report on U.S. second quarter gross domestic product growth also was scheduled for release today, and U.S. employment data for July will be issued on Friday.

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The risk of trading futures and options can be substantial. Trading foreign exchange carries a high degree of risk, and may not be suitable for all investors. All information, publications, and reports, including this specific material, used and distributed by Sweet Futures 1, LLC shall be construed as a solicitation. Sweet Futures 1 does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71. This website contains information obtained from sources believed to be reliable, but its accuracy is not guaranteed by Sweet Futures 1. Past performance is not necessarily indicative of future results.

Market Update from Mike Kuta " The Squawk Trader"

July 31, 2013
Germany Boosts Energy Research Funding to $938 Million.
Germany increased spending on energy research 77 percent in the past seven years, benefiting mainly efficiency and renewable energy research projects as the country shuts its nuclear reactors. Germany’s government spent 708 million euros ($938 million) on research and development of energy technologies last year, up from 399 million euros in 2006, the Economy Ministry said today in an e-mailed statement, citing its new study. Projects included reducing noise of wind-power units, making buildings more energy-efficient and advancing electro-chemical storage units, the study shows. “Research and development of modern energy technologies are an important condition for the success of the energy switch,” Economy Minister Philipp Roesler said in the statement. Energy efficiency and renewable projects accounted for about 500 million euros of the funding last year, the ministry said. German Chancellor Angela Merkel is attempting to lead the biggest transition to renewables of any developed country in history, seeking to more than triple the share of renewable power by 2050 to 80 percent of the nation’s consumption. The renewables are to help replace nuclear reactors to be shuttered by 2022.
Investors on edge as central bank decisions, data loom.
Caution before potentially game-changing central bank policy decisions and data undermined stock and oil prices today, overshadowing figures that offered hope Europe’s economy might pick up soon. A U.S. Federal Reserve statement today will be scoured for clues on when it will curb its bond-buying stimulus program that has supported global markets. On Thursday, attention will switch to European Central Bank and Bank of England policy meetings and data on global manufacturing activity, followed by the always keenly awaited U.S. employment report on Friday. Signs the developed world’s central banks will keep monetary policy loose for a long time to support a tentative economic recovery have put many equity and commodities markets on course for their best month of the year in July.
But strategists say the gains, which could see the MSCI World Equity index post its best monthly rise since February 2012, have increased the risk that investors could find reasons over the next few days to cash out. “At the least what we expect is a lot more volatility and we think the volatility comes with a bit more downside risk than upside potential,” said Wouter Sturkenboom, investment strategist at Russell Investments. Any hints of imminent “tapering” of Fed bond buying could hit stocks and gold but push the dollar higher, but few expect a clear-cut signal. Before the Fed decision the focus will be on U.S. second quarter growth figures at 1230 GMT and a private sector employment report, that could give hints on the strength of the economic recovery.
In Europe, modest stock market gains were underpinned by data showing the number of people out of a job in the euro zone fell for the first time in more than two years in June. Europe’s broad FTSEurofirst 300 index, set to make July its best month in over a year, rose 0.1 percent today. Caution before the Fed statement left the dollar trading flat against a basket of major currencies, though not far from a five-week low of hit on Monday. The dollar has lost ground in recent weeks as the Fed sought to reassure markets that interest rates would stay low. “If there’s any suggestion the Fed is going to taper the current bond buying program as soon as September, then that’s U.S. dollar positive,” said Ben Le Brun, an analyst at OptionsXpress.
CHINA FEARS:
Earlier in Asian trading, MSCI’s Asia-Pacific ex-Japan share index <.miapj0000pus> slipped 0.6 percent taking its losses so far this year to 5 percent as the region’s markets suffer from fears that China’s giant economy is slowing rapidly. A reading on manufacturing activity in the world’s second-largest economy due on Thursday is expected to add to those fears by showing a contraction in July for the first time in 10 months, according to a Reuters poll. A recent run of weak Chinese data, which prompted a pledge from Beijing on Wednesday to keep growth stable in the second half of 2013, has also undermined commodities though many of these are set for a strong July thanks to the weaker dollar. Brent crude prices eased 0.6 percent to around $106.20 a barrel, extending a 0.6 percent decline on Tuesday, but remain up 4.5 percent this month and on course for their best monthly gain since August last year. Gold gained 0.5 percent at $1,332.86 an ounce. It is up 8.2 percent so far this month, on track to snap a three-month losing run and mark its biggest monthly rise since January 2012, though it is down 20 percent since the beginning of 2013.
Companies in U.S. Added More Workers in July Than Forecast.
Companies in the U.S. boosted payrolls in July by the most this year as employers grew more optimistic demand will pick up in the second half of the year. The 200,000 increase in employment was more than projected and followed a revised 198,000 gain in June that was higher than initially estimated, according to data today from the ADP Research Institute in Roseland, New Jersey. The median forecast of 40 economists surveyed by Bloomberg called for a July advance of 180,000. Job gains, higher stock prices and rising home values are shoring up Americans’ confidence, helping counter the effects of this year’s government spending cuts and giving a boost to U.S. growth. Federal Reserve policy makers, wrapping up a two-day meeting today, are evaluating progress on growth and employment as they consider whether to trim their record monetary stimulus. “The job market has admirably weathered the fiscal headwinds, tax increases and government spending cuts,” Mark Zandi, chief economist at Moody’s Analytics Inc., in West Chester, Pennsylvania, said in a statement. Moody’s produces the figures with ADP. “This bodes well for the next year when those headwinds are set to fade.” Stock-index futures fluctuated as investors awaited the Fed’s policy announcement. Estimates in the Bloomberg survey ranged from gains of 140,000 to 215,000. June’s figure was revised from a previously reported increase of 188,000. 

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The risk of trading futures and options can be substantial. Trading foreign exchange carries a high degree of risk, and may not be suitable for all investors. All information, publications, and reports, including this specific material, used and distributed by Sweet Futures 1, LLC shall be construed as a solicitation. Sweet Futures 1 does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71. This website contains information obtained from sources believed to be reliable, but its accuracy is not guaranteed by Sweet Futures 1. Past performance is not necessarily indicative of future results.