DTN Midday Comments on Livestock

Cattle Futures Post Light Gains

Very little aggressive price shifts have been seen in the livestock market Tuesday. The strength in outside markets is building buyer support which eroded on Monday.
By Rick Kment DTN Analyst
GENERAL COMMENTS:
Livestock futures have replaced early losses in the cattle complex with moderate gains. The outside market support is drawing most of the support levels seen Tuesday. Corn futures are trading higher in moderate trade at midday. May corn futures are holding 9 cent gains at midday. Stock markets are higher in active trade. The Dow Jones is 155 points higher while Nasdaq is up 49 points.
LIVE CATTLE:
Moderate gains are seen through the live cattle futures market as traders focus on outside market strength. Trade volume may remain sluggish through much of the rest of the session. Cash cattle trade posted light activity in the South Monday at $125 per cwt. This is $2 per cwt lower, but unable to get additional business done Tuesday with the same bids. Trade may slow until midweek given the light support in futures markets. Beef cut-outs at midday are mixed, $0.20 per cwt lower (select) and up $0.29 per cwt (choice) with light movement of 88 total loads reported (54 loads of choice cuts, 26 loads of select cuts, zero loads of trimmings, eight loads of ground beef).

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The risk of loss in trading futures and options can be substantial, therefore only genuine "risk" funds should be used in such trading. Futures and options may not be a suitable investment for all individuals and individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. Information herein has been obtained and prepared from sources believed to be reliable; however no guarantee to its accuracy is made. Comments contained in these materials are not intended to be a solicitation to buy or sell any of the commodities mentioned. Past performance is not indicative of future performance results. Opinions expressed herein are the opinions of the author only and not the opinion of any firm the author may be affiliated or associated with.
 

DTN MIdday Comments on Grains

Published on 04-16-2013

Grains All Higher at Midday

Grains are mostly higher at midday off rebounding outside markets and cool wet planting weather.
By David Fiala DTN Contributing Analyst

General Comments
The U.S. stock markets are higher with the DOW futures up 90. The interest rate products are higher. The dollar index is 34 lower. Energies are lower with crude down $0.80. Livestock trade is mixed. Precious metals are higher with gold up $28 after yesterday’s violent selling.
CORN
Corn trade 6 to 9 higher on old crop and 2 to 4 higher on new at midday with commercial buying noted. Weather looks to keep everyone out of the field in the near term with hints at a pattern change at the end of the month. Planting progress was reported at 2% complete, below expectations of 4-5% and 6-7% normally. Ethanol margins have compressed with the slide in the energy complex but should still be positive in the near term. Corn has nearby support at $6.43 and has been able to hold it so far. The spreads have remained very firm as well.

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The risk of loss in trading futures and options can be substantial, therefore only genuine "risk" funds should be used in such trading. Futures and options may not be a suitable investment for all individuals and individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. Information herein has been obtained and prepared from sources believed to be reliable; however no guarantee to its accuracy is made. Comments contained in these materials are not intended to be a solicitation to buy or sell any of the commodities mentioned. Past performance is not indicative of future performance results. Opinions expressed herein are the opinions of the author only and not the opinion of any firm the author may be affiliated or associated with.
 

Market Update from Mike Kuta Part 1

Published on 04-16-2013

April 12, 2013
April consumer sentiment hits nine-month low.
Consumer sentiment tumbled to a nine-month low in April, with Americans especially gloomy about the long-term health of the economy, a survey released today showed. The Thomson Reuters/University of Michigan’s preliminary reading on the overall index of consumer sentiment fell to 72.3 in April, a level last seen in July, 2012, and below economists’ forecasts of 78.5. The index stood at 78.6 last month. The barometer of current economic conditions fell to 84.8 this month from 90.7, while the gauge of consumer expectations hit 64.2, down from 70.8. Americans’ long-term outlook was even more gloomy, with many anticipating a higher unemployment rate and lower after-tax income in the year ahead, Richard Curtin, the survey’s director, said in a statement. But more immediate plans for buying homes and vehicles were positive, Curtin said, while rising home and stock values were expected to support spending this year. Economists have worried that higher payroll taxes and government belt-tightening could cause consumers to keep a closer watch on their wallets as the year goes on. Consumer pessimism this month did suppress inflation expectations, with the one-year outlook dipping to 3 percent, the lowest in the past year, from 3.2 percent in March. The survey’s five-to-10-year inflation outlook held at 2.8 percent. The Federal Reserve has repeatedly pointed to tame inflation expectations and a still fragile labor market as reason to press ahead with its aggressive monetary stimulus.

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The risk of loss in trading futures and options can be substantial, therefore only genuine "risk" funds should be used in such trading. Futures and options may not be a suitable investment for all individuals and individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. Information herein has been obtained and prepared from sources believed to be reliable; however no guarantee to its accuracy is made. Comments contained in these materials are not intended to be a solicitation to buy or sell any of the commodities mentioned. Past performance is not indicative of future performance results. Opinions expressed herein are the opinions of the author only and not the opinion of any firm the author may be affiliated or associated with.

Market Update from Mike Kuta Part 2

April 11, 2013
Current fiscal policy harms U.S. competitiveness.

We're focusing too much on the present, and too little on the future. Political dysfunction in D.C. has led to the American public being barraged by continuous media reports about the fiscal cliff, the debt ceiling and the sequester. But the political skirmishes and impasses around these short-term events are distracting us from the real danger ahead: Our reckless fiscal trajectory that threatens America's competitiveness. For the nation to prosper, we must remain an attractive location for companies to pay competitive wages consistent with high and rising living standards. This requires targeted investments by the government, especially in physical and informational infrastructure, education and training, and scientific research. But the bad measurements used by the government are keeping the public in the dark about how needed investments for the future are being crowded out by the government's enormous debt and other obligations.

The nation's reported debt has almost tripled— to over $16.6 trillion—just since 2000, and the interest on this debt will be paid every year into the future. This obligation, however, is not the real problem. The U.S. actually is in a much deeper financial hole, and one that is not evident on the federal balance sheet. The nation's off-balance sheet obligations include our country's promises for future Medicare and Social Security payments which, as of fiscal 2012, totaled nearly $50 trillion. These off-balance sheet obligations also include other promises, such as the unfunded pension and retiree health benefits for civilian and military personnel, and for various contingent commitments like guarantees for student loans, home mortgages and corporate pension benefits.

Adding up all these governmental obligations brings total debt and unfunded obligations to about $70 trillion, more than four times our current GDP, and up from about $20 trillion at the end of fiscal 2000. And, lacking any current action this number grows by $350 billion every month. Bill Clinton observed in 1992 that the government is "spending more on the present and the past, and building less for the future." Yet during the past 20 years this problem has gotten far worse. Paying for interest on the public debt and meeting our unfunded obligations and promises will drive mandatory governmental spending to unsustainable levels. The mandatory spending in the federal budget – which includes social insurance programs, federal employee retirement benefits and interest on the national debt - was 49% of the budget in 1972, 64% of the budget in 2012, and projected by the Congressional Budget Office to become 76% in 2023. As mandatory spending increases, fewer funds are available for discretionary governmental spending, especially on the critical investments that ensure and increase America's competitiveness.

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The risk of loss in trading futures and options can be substantial, therefore only genuine "risk" funds should be used in such trading. Futures and options may not be a suitable investment for all individuals and individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. Information herein has been obtained and prepared from sources believed to be reliable; however no guarantee to its accuracy is made. Comments contained in these materials are not intended to be a solicitation to buy or sell any of the commodities mentioned. Past performance is not indicative of future performance results. Opinions expressed herein are the opinions of the author only and not the opinion of any firm the author may be affiliated or associated with.

Market Update from Mike Kuta " The Squawk Trader"

April 11, 2013
Plosser pitches his plan for a post-crisis Fed.
A top Federal Reserve official took an early stab at how the central bank should reduce its swelled balance sheet to a more normal size in the years ahead, arguing the current plan may need some adjusting. In a detailed speech to a Hong Kong audience, Philadelphia Fed President Charles Plosser urged a return to pre-crisis monetary policy as soon as possible and warned of a possibly quicker-than-previously-envisioned selloff of assets. The Fed’s unprecedented bond-buying stimulus has boosted its balance sheet to some $3.2 trillion in longer-term securities, raising concerns over how it will return to a more normal level of about $1 trillion without disrupting markets or racking up losses later this decade. Plosser, an outspoken policy hawk and longtime critic of the bond-buying, said the Fed would be wise to begin swapping maturing longer-term assets with shorter-term ones, aiming to hold only Treasury bonds and not the mortgage bonds it is now buying.
The ultimate goal, he said, should be to reduce the balance sheet so that the key “federal funds” interest rate again becomes the central bank’s main policy instrument. The federal funds rate has been near zero since late 2008 to help drag the U.S. economy out of recession. “The complexity of shrinking the balance sheet is nuanced,” Plosser, who is often in the minority of Fed opinion and does not have a vote this year on monetary policy, told the Market News International Seminar. “We are in uncharted territory in this regard and should be appropriately cautious in specifying too detailed a path that we may not be able to follow,” he said, according to prepared remarks. The Fed published its so-called “exit strategy” from the extraordinary policies back in mid-2011; Fed Chairman Ben Bernanke recently said it needs a rethink. The balance sheet could rise to $4 trillion by year end if the Fed continues buying $85 billion in monthly Treasuries and mortgage-backed securities. While the central bank is transferring large profits to the U.S. Treasury now, it may run into the red if it sells these assets when longer-term rates eventually rise.
At its March policy meeting, Fed policymakers began discussing whether it would be best not to sell the assets and simply let them mature, a decision that could stabilize markets and curb any politically-sensitive losses. Shedding further light on where this debate may head, Plosser warned that excess bank reserves now total $1.8 trillion and could grow to $2.25 trillion if the ultra easy policies continue apace. “That may require the Fed to sell assets at a somewhat faster pace than contemplated in the principles adopted in 2011,” he said. “This action would heighten the risk that the Fed would be selling longer-term assets at a loss, which would affect the Fed’s remittances to the Treasury,” he added. “There might even be negative remittances (losses).” Getting down into the weeds of monetary policy, Plosser said he didn’t want the outsized balance sheet to dissuade the Fed from its traditional “corridor” system in which the federal funds rate floats between a lower rate paid on the bank reserves, and a higher discount rate at which banks can get emergency funds. He also urged the Fed to increase the discount rate from the current 0.75 percent to “more normal, or non-crisis, levels.”
U.S. revives probe of media’s handling of economic data.
U.S. law enforcement officials have reversed a decision to wind down an investigation into how news agencies handle the release of economic data to investors, concerned some sensitive information may have leaked into financial markets, a person familiar with the probe said today. The Wall Street Journal reported earlier on Wednesday that Thomson Reuters Corp, the parent of Reuters News, Bloomberg LP and Dow Jones & Co., a unit of News Corp, were among the media companies under investigation. The source who spoke to Reuters declined to provide details. Reuters and the Wall Street Journal reported in January that law enforcement authorities had conducted an investigation into whether media companies facilitated insider trading by prematurely releasing market-sensitive data, but decided not to bring charges. Media organizations are provided sensitive economic data during “lockups” in which they are not supposed to transmit any information until a set embargo time has lifted. The Wall Street Journal reported on Wednesday that the FBI had been frustrated the Commodity Futures Trading Commission had not provided data sought by investigators. Citing officials familiar with the probe, it said the CFTC had since agreed to provide trading data and analysis to help the investigation. “We are not aware of a current investigation nor any embargo violations,” said Ty Trippet, a spokesman for Bloomberg LP. A spokeswoman for Dow Jones, Paul Keve, said the government had not contacted Dow Jones about any criminal investigation. Thomson Reuters spokesman David Girardin declined to comment. The FBI and CFTC did not immediately respond to requests for comment, while the SEC declined to comment.

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The risk of loss in trading futures and options can be substantial, therefore only genuine "risk" funds should be used in such trading. Futures and options may not be a suitable investment for all individuals and individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. Information herein has been obtained and prepared from sources believed to be reliable; however no guarantee to its accuracy is made. Comments contained in these materials are not intended to be a solicitation to buy or sell any of the commodities mentioned. Past performance is not indicative of future performance results. Opinions expressed herein are the opinions of the author only and not the opinion of any firm the author may be affiliated or associated with.

DTN Early Word Comments on Cotton

Cotton Trades Modestly Ahead

Net U.S. all-cotton weekly export sales for shipment this season slowed to 152,700 running bales and shipments dropped to 295,800 bales. Cash trading slowed on The Seam.
By Duane Howell DTN Cotton Correspondent

Cotton futures traded with modest gains Thursday after USDA reported slower U.S. weekly export sales and shipments.
Most-active May hovered up 47 points to 85.84 cents at 8:16 a.m. CDT, trading within a 90-point range from 85.37 to 86.27 cents on a contract volume of 2,382 lots. May options expiry is Friday.
July traded up 48 points to 87.96 cents on a turnover of 2,083 lots and December gained 44 points to 87.01 cents on a volume of 154 lots.
Net U.S. all-cotton export sales for delivery this season slipped to 152,700 running bales during the week ended April 4 from 168,100 bales the previous week.
Upland net sales of 147,100 bales were down 1% from the previous week and the prior four-week average. Gross upland sales were 170,900 bales and cancellations were 23,800 bales. China was the top upland buyer, purchasing 99,200 bales or 67%.
All-cotton shipments fell to 295,800 running bales from the previous week’s 384,100 bales. Upland shipments of 271,800 dropped 25% from the previous week and 18% from the prior four-week average.
New-crop sales for delivery in 2013-14 fell to 17,300 bales of all cotton from 64,200 bales the previous week. This brought sales for both crop years to 170,000 bales, down from 232,300 bales the week before.
In outside markets, U.S. stock index futures traded about flat, up 4 points in Dow Jones futures and down 0.25 in S&P futures, while dollar index futures fell 0.274 to 82.360, crude oil dropped 31 cents to $94.33, Brent crude dipped 25 cents to $105.54 and June gold gained $1.20 to $1,560. Grains and soybeans were mixed.

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The risk of loss in trading futures and options can be substantial, therefore only genuine "risk" funds should be used in such trading. Futures and options may not be a suitable investment for all individuals and individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. Information herein has been obtained and prepared from sources believed to be reliable; however no guarantee to its accuracy is made. Comments contained in these materials are not intended to be a solicitation to buy or sell any of the commodities mentioned. Past performance is not indicative of future performance results. Opinions expressed herein are the opinions of the author only and not the opinion of any firm the author may be affiliated or associated with.

DTN Early Word Comments on Livestock

   Livestock Futures Ready for Mixed Opening

 The cattle complex is likely to open with uneven price actions thanks to residual selling and short covering. Hog futures should also start out on a mixed basis tied in part to light bull speading.
 By John Harrington DTN Livestock Analyst
Light to moderate cattle trading surfaced in Kansas and Texas yesterday with most deals marked at $127, $1 lower than last. While it’s possible that Southern business may be essentially done for the week, trade volume in the North is still waiting to get off the dime. Showlists are prices around $128-plus in the South and $205-plus in the North. Look for live and feeder contracts to open mixed with the latter losing more ground on the former. Anticipate another round of steady/firm bids as relatively short bought hog buyers work to complete last week kill needs and put more starters into next week. The Saturday slaughter will now be somewhat larger, possibly as much as 50,000-60,000 head, in order to make-up for Wednesday weather-slowed kill. Lean futures are set to begin with uneven price action.
Cattle: Cash Steady-$1 LR Futures: mixed Live Equiv $133.35 -0.60* Hogs: Cash Steady-0.50 HR  Futures: mixed Lean Equiv $ 89.60 +0.65**

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The risk of loss in trading futures and options can be substantial, therefore only genuine "risk" funds should be used in such trading. Futures and options may not be a suitable investment for all individuals and individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. Information herein has been obtained and prepared from sources believed to be reliable; however no guarantee to its accuracy is made. Comments contained in these materials are not intended to be a solicitation to buy or sell any of the commodities mentioned. Past performance is not indicative of future performance results. Opinions expressed herein are the opinions of the author only and not the opinion of any firm the author may be affiliated or associated with.