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| I believe the new crop wheat market will tell us whether or not it can retain it’s legs in a matter of days. Am building a negative bias here until proven wrong, but more on that later.
While seldom does anything newsworthy affecting markets emerge from the annual USDA Outlook meetings the program indicates several discussions this afternoon in regard to bio-fuels & the various crop outlooks will be presented tomorrow.
Livestock, from my view, holds a lot of the bricks in our usage foundation the next two years. Only in the past few days is the market seeing a few extra cows & while there is talk of breeding herd liquidation in the hog arena, the kill rate on sows remains within a normal range.
The questions here: have the premiums built in to the deferred futures keep livestock producers optimistic? Will be see sows culled more aggressively as we enter spring &/or will we see more aggressive cow culling as we get into summer?
If not, in view of the meat export outlook, the usage of feed grains will stabilize & the meats will eventually make new highs. It is yet too early for any determination, but I think the deferred cattle are acting pretty well and see no reason yet to throw in the towel.
Overall, the price line for oilseeds & feed grains still creeps higher…the equity for the bulls keeps growing & while reactions in price can occur any time, it still appears the route of least resistance is higher; there are a lot of concerns…too many bulls..economy…& inflation…the maturity of the uptrend….yet the market seems to easily shrug off those knowns & is typical of a strong bull trend.
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