Aug 29, 2014
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The Allendale Wake-Up Call

RSS By: Paul Georgy, AgWeb.com

Paul Georgy serves as president/CEO of Allendale, Inc., a worldwide agricultural advisory and research firm that provides agricultural commodity price research and risk management alternatives for producers, major food companies, international corporations, foreign governments, and major news vendors.
 

Low Prices Wake-Up World Buyers

Aug 28, 2014

Good Morning! Paul Georgy with the early morning commentary at 5:30 am.

Grain futures are higher on short covering. Lower prices are encouraging some export interest. The dollar and metals futures are higher.

Traders Focus Today: Export Sales report, early yield results and outside market action.

You have only a few days left to get your farms yields counted in the Allendale 25th Annual Yield SurveyThe results of the survey will be released on September 3rd at 7:30 am.

Ethanol production averaged 913,000 barrels per day compared to last week of 937,000 barrels per day. This was a bit of a surprise as traders were expecting higher production due to excellent profit margins. However, we have to remember some plants shut down for maintenance this time of year.

Update - Morning Coffee Commentary:

 

The USDA will release the Weekly export sales at 7:30 AM.

(Reuters)      

         Trade estimates for     Trade estimates for

                     2013-14                 2014-15

Wheat                    N/A         300,000-500,000

Corn       -100,000-+100,000         450,000-750,000

Soybeans          -150,000-0       750,000-1,100,000

Soymeal       25,000-100,000         100,000-200,000

Soyoil              0-20,000           10,000-20,000

CBOT September contract first notice day is Friday. Trade is expecting no deliveries in meal, soybeans and corn. There could be light deliveries in wheat.

South Korea MFG is tendering for 280,000 of optional origin corn.

Net farm income is forecast to be $113.2 billion in 2014, down about 14 percent from 2013’s forecast of $131.3 billion by USDA/ERS. The 2014 forecast would be the lowest since 2010, but would remain $25 billion above the previous 10-year average. Lower cash receipts for crops and, to a lesser degree, higher production expenses and reduced government farm payments, drive the expected drop in net farm income.

Russia has not supplied grain to Brazil due to its unfavorable duties, which it agreed to decrease if Brazil raised meat supplies to Russia. Now the meat supplies have already grown due to the western sanctions, and Zlochevky thinks Brazil will reciprocate by easing conditions for the Russian grain.

China's grain cupboard is overflowing. As this year’s harvest looms, the country is on track for an 11th year of bumper grain production. But this years crop production may be too much with warehouses bursting at the seams and posing a dilemma for policy makers.

Agriculture market’s day session will be closed on Monday but grains will reopen at 7:00 pm central time.

On a lighter note we saw a report today announcing that scientists have modeled how sheepdogs herd their livestock. Apparently the dogs focus more on the gaps within a group. When they run back and forth in a particular spot they are encouraging the animals near there to close the gap. Read more in Rich Nelson’s cattle commentary from last night.

Beef values are under pressure again with choice down 1.07 and select down .88. The CME Feeder Index is 217.35. Packer bids have firmed up to 151 which could lead to a steady trade for the week.

Pork cutout values are down 2.98. Retailers are reluctant to have excess inventory after the Labor Day Holiday.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   + 3/4     
  • Nov Beans   +3 1/2
  • Sep Wheat   +6 1/4
  • Oct Cattle  -.22
  • Oct Hogs    -1.20
  • Sep Dlr     +.10
  • Sep S&P     -7.50
  • Oct Crude   -.19
  • Oct Gold   +8.80

Chart of the Day

daily chart

If you have any questions on any of our material, give us a call at 800-262-7538 or email us at service@allendale-inc.com

Harvest Yields Start To Roll In

Aug 27, 2014

Good Morning! Paul Georgy with the early morning commentary at 5:30 am.

Grain futures are quiet with corn and wheat slightly lower and soybeans higher.

Traders Focus Today: Weather for finishing growing crops, technically oversold conditions going into a long weekend, and end of month position squaring. Traders will be watching for more news of Russian troop movement.

You have only a few days left to get your farms yields counted in the Allendale 25th Annual Yield SurveyThe results of the survey will be released on September 3rd at 7:30 am.

Traders are crediting the sell-off in the September soybean and meal contracts to large trader position limit adjusting going into first notice day. Large trader’s net positions must be 600 contracts or less by the close on Thursday.

Cash bean basis had a wide range of changes yesterday with a central IL processor dropping its bids from 3.75 over the Nov to 2.00 over the Nov. An IN processor raised its bids by .85 to 3.75 over the Nov.

Update - Morning Coffee Commentary:

Harvest reports coming in from the delta with Mississippi finding soybean yields 75 to 90 bu. /acre and Louisiana 65 to 100 bu. /acre. Corn yields are coming in at 170 to 190. Some very early yield results on small acreage in Kansas and Missouri are reported as 50 to 60 bushel above 5 year average.

The CME Group will leave the maximum storage rate for deliverable Chicago Board of Trade wheat unchanged next month at roughly 8 cents a bushel per month, the exchange said in a statement on Monday.

Algeria’s grain agency says they will reject wheat containing different origins after France announced it was importing high quality wheat from other countries to blend and make milling grade.

Russian Ag Ministry continues to raise its grain export goals this year because of a big harvest. This news continues to weigh on world wheat values.

Morning Weather: Scattered showers and thunderstorms are building in nicely again over the western corn belt, and this morning there really is nothing that shows any change in the forecasted pattern through the rest of this week and weekend. The cold front that was working...read more of today's weather.

August live cattle contract expires at noon on Friday. Cash trade this week is expected to be 1 to 2.00 lower than last week. However the strength in futures is providing some support to feedlot manager’s bias. Retail demand for this last holiday weekend of the cookout season will be important to how we start out the month of September. Beef values are weak with choice down 1.21 and select down .59. The CME Feeder Index is 217.68.

The Chinese Ministry of Agriculture reported recently that the June hog herd totaled 428.18 million head. This is 4.8% lower than last year at the same time. The trade’s focus is on the sow herd at 45.39 million head, it is now 9.1% lower than last year. Pork futures are relieving some of the oversold condition after the sharp sell-off. Pork cutout values are up .48.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   -1 1/4    
  • Nov Beans   +4 1/2
  • Sep Wheat   - 1/4
  • Oct Cattle  +.22
  • Oct Hogs    +.87
  • Sep Dlr     -.13
  • Sep S&P     +1.00
  • Oct Crude   +.27
  • Oct Gold   +1.80

Chart of the Day

daily chart

If you have any questions on any of our material, give us a call at 800-262-7538 or email us at service@allendale-inc.com

Crop Conditions Remain Near All-Time Highs

Aug 26, 2014

Good Morning! Paul Georgy with the early morning commentary at 4:30 am.

Grain futures are quiet with corn and wheat up slightly and soybeans down a bit.

Traders Focus Today: Weather forecast, technical support and resistance, position adjusting ahead of first notice day and Black Sea tensions.

Allendale's 25th Annual Yield Survey has only a few days left to gather data. We will be releasing the results on September 3rd at 7:30 am.

Here is a peek at early data from the Allendale Farmer Yield Survey after the first week. From the raw data the average of producer yields in Illinois is 193 bu. /acre compared to Pro Farmer of 197 and USDA of 188. Iowa’s early data after one week of survey is 195 bu. /acre compared to Pro Farmer’s yield of 179 and USDA’s 185. Nebraska’s early average yield is 180 bu. /acre verses Pro Farmer’s 164 and USDA’s 173.

After the data collection is closed on Friday, Rich Nelson will review the data and make his normal adjustments. We will release final numbers on Wednesday, September 3 at 7:30 am.

Update - Morning Coffee Commentary:

 

The weekly crop conditions showed 73% of the crop rated G/E which was an improvement of 1% from last week and a counter seasonal move as the tendency is for lower ratings at this time of year. The corn crop is maturing with 83% in dough stage verses 5 year average of 78%.

The USDA lowered soybean conditions by 1% to 70% G/E. Despite this reduction it is the best crop rating since 1994.

Spring wheat conditions declined by 2% to 66% G/E. Harvest is running behind with only 27% complete verses the 5 year average of 49%.

Long range weather forecasts have no frost, little warmer temps and plenty of moisture to finish out the row crops.

Watch the direction of the US Dollar index as a clue to trader’s bias in grains and livestock.

Export demand seems to have moved to a "hand to mouth" approach by buyers as they are aware of a big US crops and competition from feed quality wheat around the world.

A take away from Friday’s Cattle-on-Feed report is that even with record closeout profitability feeder cattle were not placed in feedlots. We believe there are 3 major reasons: pasture conditions are excellent, heifers are being held out to build breeding herds and there is just not enough supply of feeders to fill demand. Beef values are weak with choice down .08 and select down .59. The CME Feeder Index is 217.64. Cash cattle are expected to trade steady lower this week at 151 to 152.

October 2014 futures contract has now fallen to nearly the same price we were a year ago in the October 2013 contract with 5 to 6% less hogs. Larger weight and a demand shift have to be key reason for the current weakness. Pork cutout values are down .92.

Markets as of 4:30 AM CDT                                                                    

  • Dec Corn   + 1/4     
  • Nov Beans   -3 1/2
  • Sep Wheat   + 1/4
  • Oct Cattle  -.05
  • Oct Hogs    -.25
  • Sep Dlr     -.04
  • Sep S&P     -.75
  • Oct Crude   +.18
  • Oct Gold   +9.70

Chart of the Day

daily chart

If you have any questions on any of our material, give us a call at 800-262-7538 or email us at service@allendale-inc.com

Demand For Old Crop Soybeans Provides Support

Aug 25, 2014

 Good Morning! Paul Georgy with the early morning commentary at 5:30 am.

Grain futures are mostly lower except for the September contract of soybeans.

Traders Focus Today: Demand for old crop soybeans and meal, good crop development weather and "frost watch" is on the agenda.

Allendale's 25th Annual Yield Survey is underway - only 5 more days of collecting data.

Your help will make a difference. You can add your farms information by going to www.allendale-inc.com. We will be releasing the results of the survey on September 3rd at 7:30 am.

The CME had order routing problems which delayed the opening in grain markets until 9 pm.

Cash soybean and meal demand is strong. Soybean basis at processors in central IL went from 3.10 to 3.25 over the November contract.

Update - Morning Coffee Commentary:

 

ProFarmer released their survey estimate on Friday afternoon. They put the corn yield at 169.3 verses USDA last month’s estimate of 167.4 bushels per acre. Total corn production was set at 14.093 billion bushel compared with USDA’s 14.032 billion bushel.

Their soybean yield was estimated at 45.35 which was close to USDA’s estimate of 45.4 bushels per acre. ProFarmers estimate for total production was 3.812 billion bushel compared to USDA’s 3.816.

This weekend saw heavy rains across Nebraska, Iowa, Illinois and Indiana with more to come this week. Traders will be watching for any chance of early frost. There is nothing in the 15 day forecast suggesting a frost concern, however.

The wheat market will be concerned about the rains in North Dakota and Canada, the Russian/Ukraine situation and the technical posture of the charts.

Grain traders will be concerned about first notice day for the September contracts, end of month and Labor Day weekend ahead of us.

The US dollar Index is continuing to rally which increases price competition for US exports.

Cattle on Feed report showed July Marketings at 90.7% of a year ago. That was smaller than the average guess of 92.5% and Allendale’s 92.4%. This was the smallest July Marketing since the data series started in 1996. At 92.6% of a year ago, placements were the smallest of all previous Julys since 1996.

Cold storage numbers released by USDA on Friday showed larger than expected supplies of beef and pork in storage August 1.

Beef cutout values were weak on Friday with choice down .69 and select down 1.16. Cash cattle are expect to trade steady-lower this week. The CME Feeder Index is 218.18. Pork cutout values are down 2.58. Early calls for the CME opening would be steady to lower.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   -2 1/4    
  • Nov Beans   -6 3/4
  • Sep Wheat   - 1/2
  • Oct Cattle  Steady-Lower
  • Oct Hogs    Steady-Lower
  • Sep Dlr     +.15
  • Sep S&P     +6.00
  • Oct Crude   +.18
  • Oct Gold   -2.20

 

Chart of the Day

daily chart

If you have any questions on any of our material, give us a call at 800-262-7538 or email us at service@allendale-inc.com

Can Grains Rally as Tour Week Comes to a Close?

Aug 22, 2014

Good Morning! Paul Georgy with the early morning commentary at 5:30 am.

Grain futures are higher in a quiet overnight session. Tight old crop soybean supplies are providing buying incentive in the September futures. Corn and wheat are finding more prices adjusting in their established trading ranges.

Traders Focus Today: September option expiration, technical support and resistance, no weather forecast includes frost but the 10 to 15 runs suggest below normal temps.

Allendale 25th Annual Yield Survey is underway. We will be collecting data from you for 1 more week. You can add your farms information by going towww.allendale-inc.com. We will be releasing the results of the survey on September 3rd at 7:30 am.

Morning Coffee Commentary:

 

Technical support and resistance becomes important in corn because of the trading range that has been established. One has to assume stops are building just above resistance and just below support. Soybeans are drifting lower and notching new contract lows as rain falls across the Midwest. Old crop soybeans continue to get support from nearby demand.

Commercial buying in wheat against recent lows is providing support. However wheat has been the follower and any directional move in corn will likely drag it along.

ProFarmers Midwest crop Tour will be releasing their final survey estimates at 1:30 today. The tour results for Iowa were 178.75 compared to 171.94 bushels per acre last year. The Minnesota corn crop was projected at 170.76 down from last year’s 181.09 bushels per acre.

Canadian wheat production was below trade expectation. The 2014 production is 27.70 mmt verses last year’s 37.73 mmt. Canola output was down 22.6% from last year at 13.91 mmt.

Brazil’s largest co-operative released their plans to plant 8% more soybeans this year and reduce corn plantings by 151,000 hectares or about 9%.

Russia will allow imports from neighboring Belarus and Kazakhstan of food processed from Western raw materials as Moscow seeks to keep domestic food prices from rising after it had ban food imports from the West. This news has stirred some interest in lean hog futures buyers. The October contract had an outside day yesterday and a close above yesterday’s highs today could trigger more buying. Pork cutout values were down 1.07.

Cash cattle traded this week at 152 to 153. Futures are struggling with liquidation, technical selling and week beef demand going into the Labor Day holiday. Beef values are weak with choice down 1.09 and select down 2.25. The USDA cattle on feed report will be out this afternoon. The trade is looking for 97.4% on feed, 90.9% placed and 92.5% marketed. The CME Feeder Index is 218.27.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   + 1/4     
  • Nov Beans   +5
  • Sep Wheat   +3
  • Oct Cattle  +.12
  • Oct Hogs    +.85
  • Sep Dlr     +.04
  • Sep S&P     -4.25
  • Oct Crude   -.44
  • Oct Gold   +7.70

Chart of the Day

daily chart

If you have any questions on any of our material, give us a call at 800-262-7538 or email us at service@allendale-inc.com

 

 

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