Aug 20, 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.
 

Watch the Dollar Index And Headlines

Aug 20, 2014

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

Grain futures are mixed with corn and soybeans lower wheat higher.

Traders Focus Today: More tour information and technical support and resistance. Old crop tight supplies in soybeans will be watched closely.

Allendale 25th Annual Yield Surveyis underway. We will be taking producer information through August 29th and will release the finds on September 3rd.

Weather forecasts are beneficial to final stages of crop development. No warning’s of frost in long range forecasts.

Update - Morning Coffee Commentary:

Midwest crop tour projects the Nebraska corn yield at 163.77 nearly 20 bushels above 3 year average. Soybean pods are less than a year ago and the 3 year average in Nebraska.

Indiana corn crop is a record yield at 185.03 which is approximately 17 bushel above last year and 44 bushel above the 3 year average. Soybean pod counts are greater than last year.

Traders have been following social media and continue to tally the list of problems and diseases the tour is finding intraday. Some attribute any rallies in row crops to algo traders keying on the friendly spin from this chatter.

Gulf corn and SRW wheat basis offers are steady but Texas Gulf hard red wheat basis slipped again due to quiet export interest. Soybean basis is steady firm due to tight supplies at the gulf.

Midwest soybean and corn basis is higher for immediate delivery due to tight supplies of old crop beans and lack of farmer selling in corn.

Grain buyers are reporting high levels of vomitoxin found in freshly harvested wheat in North Dakota and northward into Canada.

Wheat futures are finding support on news that the Ukrainian wheat millers are asking the government to slow or halt milling wheat exports until they know how much quality wheat they have as harvest continues.  Bread prices are up in Ukraine as milling wheat is quickly moving to the export market as farmers sell their production on fears that interest rates may be rising quickly.

Economic calendar for today: the EIA will release ethanol data and the July 29-30 FOMC minutes will be released.

The technical breakout in the September Dollar Index is worth watching. A strong dollar will increase export values of US grains and livestock against world competitors.

The hog futures are very sensitive to what is happening with the dollar. Pressure in futures is coming from liquidation of longs amid week cash values. Pork cutout values are down 1.36. The October futures contract is still about $20 under the cash index which a normal comparison would be around $12.

Consumer demand for primal cutouts of beef has been stifled. I went to the grocery store meat counter over the weekend and watched what consumers were picking up. They would pick up and look at the beef steaks and then lay it down and take chicken home with them. This is certainly a reason why beef values are sliding going into the last big cookout weekend of the season. Beef cutout values are lower with choice down 2.19 and select down 2.66. The CME feeder Index is 220.11.

Markets as of 5:30 AM CDT
Dec Corn    -1 3/4
Nov Beans   -3
Sep Wheat   + 1/2
Oct Cattle-1.02
Oct Hogs-.35
Sep Dlr     +.22
Sep S&P     -2.25
Sep Crude   +1.32
Oct Gold    -3.40
 
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

Markets Drift Lower Overnight

Aug 19, 2014

Good Morning! Paul Georgy with the early morning commentary at 4:45 am.

Grain futures are lower as traders can’t seem to find supportive news. Weather forecasts remain beneficial for finishing out a record production.

Traders Focus Today: Crop tours by news media and industry participants. Trade is waiting for final numbers on Friday.

Allendale’s 25th Annual Yield Survey is underway. We will be taking producer information through August 29th and will release the findings on September 3rd.

ProFarmer Midwest crop tour projects Ohio corn yield at 182.11 bushels per acre, up from tour estimate of 171.64 bpa last year and three-year tour average of 146.13. The South Dakota corn crop was estimated to be smaller than last year but above the 5 year average.

Update - Morning Coffee Commentary:

The Midwest crop tour projects Ohio average soybean pod count at 1,342.42 pods in 3-foot area, up from 1,283.61 last year and three-year tour average of 1,190.18 pods. South Dakota soybeans had more pods than last year.

Not everyone is having a bumper crop this year. A customer of Allendale sent pictures of his cornfields in south central MN where he is expecting yields less than in 1988 because of no rain since mid-June.

Corn crop conditions dropped 1 point to 72% good/excellent according to the USDA. Corn in the dough stage is at 70% verses the 5-year average of 63%, and corn dented estimated at 22% vs. 5-year average of 27%.

Soybean crop conditions improve by 1 point to 71% good/excellent. Pod setting is 83% vs. the 5-year of 79%, and blooming was 95% which was right at the 5-year average.

Weekly crop progress showed spring wheat is 17% harvested vs. the 5-year average of 33%. The un-harvested crop was 68% good/excellent conditions, down 2 points from last week.

Weekly corn export inspections were 970.8 TMT above expectations of 775 to 925 TMT. Soybean export inspections were in line with expectations of 56.2 TMT. Wheat export inspections are running 30.4% behind a year ago.

Stats Canada will release their production numbers on Thursday.

The German Farmers Association is estimating the German wheat crop at 26.2 MMT up from 24.6 MMT in 2013.

Pork cutout values continue their slide on Monday by being down .78 to 111.02. Lean Hog futures traders are looking for a short covering bounce as technical indicators are oversold.

Market ready cattle supplies are tight but weights are growing. Futures prices are at a discount which should provide some support. Beef prices remain weak with choice down .44 and select down 1.81. The CME Feeder Index is 220.75.

Markets as of 4:45 AM CDT

Dec Corn    -4 1/2
Nov Beans   -8
Sep Wheat   -4 1/2
Oct Cattle+.17
Oct Hogs+.57
Sep Dlr     +.10
Sep S&P     +3.25
Sep Crude   +.26
Oct Gold    +2.10
 
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

Headlines Will Add Excitement This Week

Aug 18, 2014

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

Grain futures are mixed with row crops higher and wheat lower.

Traders Focus Today: Crop tour by news media and industry participants.

ProFarmer will be starting their annual Midwest crop tour today and give the final results on Friday. The tour will be covered on social media and by newswire reporters. Expect trade to have volatility based on their pictures and findings.

Allendale 25th Annual Yield Survey starts today. We gather your farms information over the next 2 weeks and release the findings on September 4th.

Update - Morning Coffee Commentary:

 

Weather forecasts will be watched closely as long-term forecast reach into early frost date potential.

Weather forecasts start the week with near normal temps for the next 10 days (except for Dakotas/NW MN), the 80% Midwest coverage of precipitation over the next 5 days will keep the production outlook for a record crop.

Stay updated on weather by reading and/or listening to Allendale’s Meteorologist Ryan Martin.

Crop conditions this afternoon are expected to be steady with last week.

Stats Canada will update their 2014 production on Thursday.

Friday’s higher than expected NOPA crush for July suggests USDA may be understating 2013/14 US total soybean crush by 10 million bushel which may be the reason for the sharp increase in immediate delivery soybeans.

Ukraine and South American corn is priced at a discount to US due to last week’s price rally.

The situation in Ukraine intensifies after Ukraine said it destroyed Russian military vehicles that crossed the border into Ukraine.

Economic calendar has housing starts on Tuesday and existing home sales on Thursday.  Traders will be watching for any change in Fed policy when Fed Chairman Janet Yellen speaks this Friday at the Kansas City Fed’s annual conference in Jackson Hole.

The near-term technical picture for cattle appears to be suggesting a top is in place. However, the long-term continuous chart still shows live cattle in a bullish up-trend. Beef values were lower on Friday with choice down 1.20 and select down .19. It would appear cash cattle this week would be steady to lower. The CME Feeder Index is 222.21.

Lean hog futures as well as cash markets are being pressured due to supply impact from heavy weight hogs, high prices at the retail counter and competition from poultry. Pork cutout values were down 4.39 on Friday.

Markets as of 5:30 AM CDT

Dec Corn    +3 3/4
Nov Beans   +2 1/2
Sep Wheat   -4 1/4
Oct CattleSteady-Lower
Oct HogsSteady-Lower
Sep Dlr     +.01
Sep S&P     +9.00
Sep Crude   -1.07
Oct Gold    -2.70
 
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

Can Corn Closeout Week With Largest Gain In 4 Weeks?

Aug 15, 2014

 Good Morning! Paul Georgy with the early morning commentary for August 15, 2014 at 5:30 am.

Grain futures are mixed with corn and wheat higher soybeans lower. A strong close today in Dec corn could be the best weekly performance in a month.

Traders Focus Today: NOPA crush, Russian actions on Ukraine border and weather forecasts.

Stay updated on weather by reading or listening to Allendale’s Meteorologist Ryan Martin.

NOPA crush for July will be released today at 11:00 am. Trade estimate is 115.82 million bushels of soybeans used for domestic crush during July 2014 and oil stocks at 1.628.

Old crop soybean supplies are very tight and processors are scrambling to get enough inventories until new crop beans can be harvested. This is providing support to the entire complex. However, when harvest begins it will be a completely different story. The last time we had ending stock at 430 in soybeans was 2004/05 and November soybeans had a low with an 8 in front of it.

Update - Morning Coffee Commentary:

 

(AP) – In a diplomatic game of chicken, a large Russian aid convoy rolled toward the Ukrainian border on Thursday – but it was heading toward a crossing controlled by pro-Russian rebels instead of a government post as Ukraine had demanded.

Next week the ProFarmer crop tour begins and will create volatility in the futures market as reporters on the tour use social media to release field data.

Allendale’s 25th Annual Yield Survey starts on Monday call us or go to our website and fill out the survey on line. You know your fields better than anyone. Thanks for your input in advance.

December corn has major technical resistance at the chart gap starting at 3.77 ½. A close above this level could trigger some short covering and could push prices to next resistance near 3.90.

November soybean futures remain in a down trending channel trading range with support at 1040 and resistance at 1090.

December wheat has support at 5.42 with a close below that level pointing to a downside target of 5.00.

The Eco calendar has Industrial Production and Capacity Utilization out later this morning.

Can lean hogs hold overnight strength? Lean hog futures are struggling with weak fundamental news such as: increasing weights, possible vaccine for PEDv and Russian ban of poultry which increases competition at the retail counter. Lean hog futures have been under heavy liquidation pressure in recent sessions. The large historical discount of Oct futures to cash is not enough to provide support. Pork cutout values have finally traded higher as cutout values are up 1.71.

Cattle futures would like to rally but weak pork futures and lower cash prices this week has weighed on futures. Cash cattle have traded at 155 which is $5.00 lower than last week. Cattle supply fundamentals are still very positive but the beef consumers are shell shocked by beef prices as the last big cookout weekend approaches. Beef values are weaker with choice down .14 and select down .98. The CME Feeder price is 222.78.

Markets as of 5:30 AM CDT

Dec Corn    – 1/4

Nov Beans   -5

Sep Wheat   +1 3/4

Oct Cattle+.05

Oct Hogs+.37

Sep Dlr     -.04

Sep S&P     +4.50

Sep Crude   +.01

Oct Gold    +2.10

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

Markets Quiet Overnight

Aug 14, 2014

Good Morning! Paul Georgy with the early morning commentary for August 14, 2014 at 5:30 am.

Grain futures are lower as weather forecast increase chances of rain.

Traders Focus Today: USDA yield estimates too low for corn and soybeans, large world wheat supplies and weather forecasts seen as more of the same.

Stay updated on weather by reading or listening to Allendale’s Meteorologist Ryan Martin.

Rich Nelson, Allendale’s Chief Strategist, studied other record production years for corn, and suggests we have a larger increase on the horizon. The small increase of 1.3% from July to August set the stage for a 5.2% increase by January which equates to a final yield of 176.

NOPA crush for July will be released on Friday at 11:00 am. Trade estimate is 115.82 million bushel domestic crush for July 2014.

Trade estimates for weekly exports range from 100,000 to 200,000 tonnes of old crop and 500,000 to 700,000 tonnes of new crop. In soybeans estimates for old crop sales to be 0 to 100,000 tonnes and new crop sales of 850,000 to 1,050,000 tonnes. Wheat sales are estimated at 450,000 to 650,000.

Get the export sales results in our Morning Coffee update:

China’s import of soybeans during 2013/14 is likely to be over 70 mmt which would be a year over year 17% increase.

USDA increased its old crop corn for ethanol estimate from 5.075 to 5.120 billion bushels. This is a year over year increase of 10.2%. Year to date production is 9.8% higher. Cheap corn prices and profitable ethanol crush margins are keeping processors at full capacity.

Transportation bottlenecks are creating major problems for elevators and ultimately the farmer. The wide basis in the northwestern cornbelt has cash prices in some location at $2.50 per bushel. Midwest elevators are concerned about getting old crop corn moved before new crop harvest starts. The bumper harvest will not be easily captured.

Allendale’s 25th Annual Yield Survey starts on Monday call us or go to our website and fill out the survey on line. You know your fields better than anyone. Thanks for your input in advance.

The changing of political policy can change meat supplies by a stroke of pen. When Russia banned US poultry it was like increasing pork supplies by 2.4%. When you add in the heavier weights and a backlog of market ready hogs it helps to understand the weakness in hog prices.

Last trading day for August Lean Hog Futures and Options is today. Pork cutout value is down 2.54.

Beef values are weak with choice down 1.27 and select down 3.58. CME Feeder Index is 222.97.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   -1 3/4    
  • Nov Beans   -3
  • Sep Wheat   + 3/4
  • Oct Cattle  -.05
  • Oct Hogs    -1.82
  • Sep Dlr     -.07
  • Sep S&P     +3.00
  • Sep Crude   -.12
  • Oct Gold   +1.50

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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