The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.

The Allendale Wake-Up Call

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By: Paul Georgy

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.
 

 

Month-End Consolidation Could Drive Trade Today

Jul 31, 2015

Good Morning! It's Friday, July 31st at 5:30 AM.

Grain markets are higher as we head into the last trading day of the month. Weather maps and end of month positioning will be the likely drivers of trade today as traders wrap-up July and look forward to the August USDA report.

Weekly export sales offered a bit of a surprise yesterday as sales were better than expected across the board. 2014/15 corn crop sales were reported at 364,900 tonnes (200,000 to 400,000 expected), and soybeans 416,700 tonnes (100,000-200,000 expected).

2015/16 corn crop sales were reported at 443,300 tonnes (150,000-400,000 expected), soybeans 899,100 tonnes (700,00-900,000 expected), and wheat 699,400 tonnes (150,000-400,000 expected).

Export demand has prompted steady to increased cash-grain basis bids for corn at river terminals around the Midwest.

Whispers of a "flash drought" entered the trade yesterday as some were pointing to areas throughout the corn belt that are starting to dry out. Allendale's Ryan Martin pointed out, however, that while some areas are starting to dry, there still remains no significant heat in the forecast, and in fact we look to cool down next week.

Rains this weekend and into Monday should provide about 60% coverage throughout the corn belt as well. He will be keeping a close eye on this next rain event this weekend, read more of Ryan's comments here, and get the Wake-Up Call each weekday morning in your email inbox free. Signup here.

The Buenos Aires grains exchange increased its estimate of Argentina's commercial use 2014/15 corn production from 25 million tonnes to 26 million tonnes on better yields than first thought.

In a conference call yesterday, Pacific Ethanol's CEO was upbeat on their earning potential for the remainder of the year as U.S. demand for gasoline and good exports of ethanol helped to boost its bottomline.  Wednesday's EIA ethanol production report continued to show production ahead of last years pace.

Corn chart watchers will have their eye on the 3.77 3/4 mark today for further trade direction.

The Soyfoods Association of North America stated yesterday that food manufactures may turn to soy-based products to replace eggs in response to the price increase associated with the Bird Flu outbreak earlier this year.

Today is first notice day for the August contracts. No deliveries are expected in the soybean or soymeal contracts.

The Energy Information Administration will release its Biodiesel Production Report today with data through May 2015.

The CME responded to concerns that soybean processors will have issues entering crush spreads now that the open outcry pits are closed by demonstrating the ability of its electronic matching software and explaining its possibilities to users.

Funds were estimated buyers of 8,000 corn, 1,000 soybeans, 1,000 wheat, 2,000 soymeal, and 1,000 soyoil contracts yesterday.

The economic calendar today has Employment Cost Index at 7:30 AM CST, Chicago PMI at 8:45 AM CST, and Michigan Sentiment at 9:00 AM CST. Reports that Russia's central bank has cut its interest rate from 11.5% to 11% will also be watched today.

A 60,000 head pig farm in near Kyiv, Ukraine was found to contain a strain of the African Swine Flu which will require all pigs on the farm to be culled.

Yesterday boxed beef traded higher with Choice trading $1.07 higher and Select trading $0.23 higher.

Have a great weekend, and feel free to call us with questions at 800-262-7538 or service@allendale-inc.com.

Weather Supports Improving Crop Conditions

Jul 30, 2015

Good Morning! Paul Georgy with the early morning commentary for July 30, 2015 at 3:45 am. The report is a bit early today as we are traveling.

Grain markets are higher as we approach the weekly sales report. Soybeans lead the rally due to uncertainty of weather during the most critical period of yield determination. The US Dollar strength is providing headwinds as world buyers find bargains in other places.

The weather forecast has scattered showers across the Midwest grain growing areas over the next 10 days and no threat of excess heat.

Update - Midday Weather:

Wheat futures continue to be pressured by the news from the wheat tour of better than average yield and world values well under US prices.

Corn and soybean basis bids improve across the eastern cornbelt as end-users worry about supply being reduced because of yield loss.

Technically the grain and soy complex is oversold, however volatility from outside influences continues to weigh on prices.

Funds were estimated to have been net sellers of 12,000 corn contracts and 8,000 wheat contracts on Wednesday. They were seen as even in soybeans and bought 2,000 soymeal while selling 5,000 soyoil contracts.

EIA ethanol production was a bit lower than last week at 965,000 barrels vs 973,000. Ethanol stocks were nearly unchanged.

The USDA weekly export sales report will be released at 7:30 am. Trade estimate are: old crop corn 200,000 to 400,000 tonnes, new crop 150,000 to 400,000 tonnes. Soybeans 100,000 to 200,000 tonnes, new crop 700,000 to 900,000 tonnes. Wheat 400,000 to 600,000 tonnes.

The recent pattern would suggest strength in soybeans going into this morning’s report.

Friday is the first notice day for delivery against the August grain contracts at the CME. Trade is expecting 500 to 1,000 contracts for soyoil and no soybeans or meal.

Argentina soybean crushing plants were busy the first half of the year using 18.5 million tonnes which was 0.9% more than same period last year. Soyoil production was up 3.5% compared to last year and soymeal output was 0.4% more than a year ago.

EIA will release updated biodiesel production data for May on Friday and then the USDA’s new Fats and Oils report will be out on Monday, both will be important to bean oil.

Macro traders will be watching the initial unemployment claims expected to reverse part of last week’s decline to 42-year low and Q2 GDP expected to improve to 2.5% from Q1’s negative level.

With rally in beef values this week there is a very good chance that the beef market has made its low for the rest of the year. Combined Choice/Select cutout value has dropped more than $29 per cwt since its May 19 peak.

China has become the principal destination for Argentina's meat exports, taking 35 percent of the total, according to Argentina's Ministry of Agriculture, Livestock and Fisheries.

Hog weights continue to decline as producers pull supplies forward before the August contract goes off the board.

Dressed beef values were higher with choice up .47 and select up .20. The CME Feeder Index is 214.89. Pork cutout values are down .24.

Call us with questions at 800-262-7538 or service@allendale-inc.com.

Risk Off Attitude Keeps The Pressure On

Jul 29, 2015

Good Morning! Paul Georgy with the early morning commentary for July 29, 2015 at 5:15 am.

Grain markets are lower as traders return focus to possible larger harvest in corn, soybeans and wheat. Demand for US grain is sluggish due to currency exchange rates. The US Dollar and crude oil are slightly lower.

Weather maps are suggesting a little drier conditions in the 6 to 10 day forecasts. This has the bulls hoping for a rebound rally, which could be possible as August is an important month in determining the production of soybeans. The weight over the market is the large fund long positions which could become sellers at any time. Stay in touch with your Allendale Representative for pricing strategies.

Funds were estimated to be net buyers on Tuesday of 7,000 soybeans contracts, 5,000 wheat, 3,000 corn, 3,000 soyoil and 2,000 soymeal contracts.

Update - Morning Coffee Commentary:

Since Russian export tariffs have gone into place on July 1st their exports are down 34% from a year ago to 1.3 mmt.

The Wheat Quality Council tour has calculated the yield of 51.1 bushels per acre after the first day. This compares to last year of 48.3 bushels per acre and the highest average yield since 2007 for the first day tour results.

China, the world largest buyer of soybeans may have a reason for it being so far behind on new crop bean purchases. Trade is talking about the Letter of Credit problems on several cargoes of soybeans due to China’s economic problems.

U.S. crop acres under USDA certified organic systems have grown since the National Organic Program was implemented in 2002. Organic crop acres increased from about 1.3 million in 2002 to almost 3.1 million in 2011, and part of this growth was in major field crops: corn, soybeans, and wheat.

The Conference Board, said that its index of consumer confidence plunged to 90.9 in July from a revised 99.8 in June, which earlier was reported as 101.4. The index stands at its lowest level since September 2014. Economists surveyed by the WSJ were expecting a drop but only to 100.0.

Russia has harvested 34.5 million tonnes of grain from 21 percent of the area with an average yield of 3.51 tonnes per hectare. They are behind on harvest progress however yields are higher than last year.

U.S. crude-oil stocks are expected to show an increase in data due out today from the Department of Energy, while gasoline stockpiles are also expected to be unchanged. Grain traders will be keeping an eye out for ethanol production last week.

Macro traders will be waiting for the results of the FOMC meeting today and the US pending home sales this morning.

Yesterday’s strength in the live cattle futures came because of several reasons. This market was oversold, cutout values showed signs of bottoming and traders continue to talk about the seasonally for a bottom. Expect volatility as larger supplies of market ready cattle on the horizon battle fund buying.

Lean hog futures are getting support from an improving product market as retailers prepare for the last big cookout holiday, Labor Day.

Dressed beef values were lower with choice down .12 and select down .01. The CME Feeder Index is 214.83. Pork cutout values are up 1.35.

Call us with questions at 800-262-7538 or service@allendale-inc.com.

Warm Weather Improves Corn Crop

Jul 28, 2015

Good Morning! Paul Georgy with the early morning commentary for July 28, 2015 at 5:15 am.

Grain markets are trying to rebound from Monday’s slide as soybeans and wheat are higher and corn is unchanged. The US Dollar is higher while crude oil sets new contract lows.

Weather patterns remain the same with chance of showers and no ridge building.

The question traders are asking “will the funds be back selling today?” The large fund positions reported on the Commitment of Traders report is concerning as all longs added after the June 30th USDA report are now under water.

Corn good/excellent conditions improve by 1% over last week to 70% while the crop matures at normal pace. Corn silking is estimated at 78% verses average of 77% and 75% last year.

Update - Midday Weather:

Soybean conditions remained the same at 62% good/excellent while plants blooming were 71% versus 72% average and 74% last year. Soybean plants setting pods were estimated at 34% compared to 31% average.

Funds were net sellers of 30,000 corn contracts on Monday. They also are estimated to have sold a net of 14,000 soybeans and 4,000 wheat contracts.

Corn and soybean spot basis bids were steady to higher as futures prices plunged and farmer selling remained quiet.

The European Union's crop monitoring service cut its yield forecasts for 2015 EU grain maize harvest estimate by 7 percent after the dry and hot weather hit top producing countries.

(Reuters) - Syngenta has said a $2 billion break-up fee that unwanted U.S. suitor Monsanto has pledged to pay if its proposed $45 billion merger failed would only apply in limited cases, leaving its shareholders exposed to the bulk of regulatory risks.

Macro traders are discounting a near-zero chance for the Fed to announce a surprise rate hike at its 2-day meeting that begins today.

The market is expecting today’s July U.S. consumer confidence index from the Conference Board to show a drop of 1.4 point to 100.0, giving back part of June’s sharp increase of 6.8 points to 101.4.

Brazil continues to open doors to its meat export market adding Japan to a list of countries that also includes China and the US.

Cattle and hog futures are struggling to find support as cash markets continue to slide. Spreaders are a major mover in futures as nearby contracts find support on hopes for better demand and the deferred contracts remain weak on more supply down the road.

Dressed beef values were higher with choice up 1.57 and select up .65. The CME Feeder Index is 215.70. Pork cutout values are up .20.

Call us with questions at 800-262-7538 or service@allendale-inc.com.v

Funds Holding Large Long Positions

Jul 27, 2015

Good Morning! Paul Georgy with the early morning commentary for July 27, 2015 at 5:15 am.

Grain markets are lower as weekend rains spread across the western cornbelt and no heat is in the forecast. The large increase of funds positions in corn and soybeans also concerns traders. The US Dollar and crude oil are lower.

Another successful Allendale Conference Series was had last week. If you were unable to listen to the live presentation you can listen to the recorded version. More details: Click Here.

The latest CFTC Commitment of traders report showed managed money funds were defending their position by adding to net longs in corn. As of last Tuesday funds added another 76,918 net long corn positions and increased their net long soybean positions by 5,115 contracts. They were net sellers of 11,816 contracts of wheat.

Update - Morning Coffee Commentary:

Trade is expecting corn and soybean ratings this afternoon to improve from the 69% and 62% last week.

Weekend rains for the western cornbelt came at an excellent time. Many producers in that area are calling it the “million dollar rain”. The extended forecast is suggesting periodic rains and cooler temps which should be helpful to the soybean crop.

Abiove, Brazil’s crushing industry group expects Brazil to export 50.3 million tonnes of 2014/15 soybeans compared to 48.7 million tonnes seen in June. The industry group also raised its output forecast for the record crop to 94.4 million tonnes from 93.7 million tonnes seen last month. Exports of soybeans, soymeal and soy oil should total $25.5 billion in 2015, Abiove said.

CWB crop tour pegs Western Canada’s 2015 average spring wheat yield 38.9 bushels per acre, vs 45.7 bushels in 2014.

Wheat harvest picks up across the European Union and analysts are expecting France to produce 37.5 to 38.0 million tonnes compared to 37.5 million tonnes last year.

Russia’s Ag Minister says they are on track to harvest nothing less than 100 million tonnes of grain in 2015.

The Macro markets will focus this week on the FOMC meeting which could provide an indication of the Feds thoughts on raising interest rates as soon as September and the Chinese stock market and the extent of the slowing Chinese economy after last Friday’s China manufacturing PMI fell to a 15-month low.

Managed Money funds have reduced their net long positions in cattle to the lowest level in nearly 2 years.

Cattle inventory report and cattle-on-feed report showed high price and beef production profitability has enticed expansion. The reports in general were in line with trade expectations. Due to oversold conditions and seasonality of cattle bottoming some time during the last 2 weeks of July it may be wise to not press the downside at current levels.

Technical analysts are pointing out the developing head-and-shoulders bottom for which a close above 66.50 in October Lean Hog Futures is needed for a confirmation.

Dressed beef values were mixed with choice down 1.89 and select up .27. The CME Feeder Index is 216.09. Pork cutout values are down .09.

Markets as of 5:15 AM CDT

  • Dec Corn   -10
  • Nov Beans -12 3/4
  • Sep Wheat   -3 3/4
  • Sep Soymeal -3.40
  • Sep Dlr     -.61
  • Sep S&P   -6.25
  • Sep Crude   -.64
  • Aug Gold    11.10

Technical Chart of the Day

daily chart

Call us with questions at 800-262-7538 or service@allendale-inc.com.

Grains Hold Key Support

Jul 23, 2015

Good Morning! Paul Georgy with the early morning commentary for July 23, 2015 at 5:15 am.

Grain markets are higher on short covering and setback in the US Dollar rally. The Greece Parliament passes reforms and makes way for a bailout deal.

Coming up today at the Allendale Conference Series we will drill into the livestock industry and address the big fundamental questions that the livestock markets are currently facing. As with grains, we’ll include an update to our price projections for cattle and hogs. More details: Click Here.

A takeaway from Rich Nelson’s corn presentation: “Don’t rule out an above trend yield corn production in 2015”. Rich explains the implication of the heavy rain across the Midwest and the cooler than average temperatures during July. Yearly Export Demand for US corn is going to be influenced by world competition, currently US corn $28 higher than Brazilian corn.

If you were unable to listen to the Allendale Conference Series live you can listen at your leisure because it is recorded. For more details: Click Here.

Update - Morning Coffee Commentary:

The weakness in corn is due to warmer dryer weather and the trade changing their emotional buying mindset. Demand for US grains and oilseeds is running into headwinds as the US Dollar remains strong compared to other currencies. A major concern to traders is; where will the previous aggressive fund buying turn to selling? Chart support in the Dec corn remains at 4.09 to 4.10. November soybeans have important support at 9.90. Stay in contact with your Allendale Representative.

Today USDA will release the weekly export sales data. Trade estimates as surveyed by Reuters. Old crop estimates: corn 250,000 to 450,000 tonnes, soybeans 0 to 150,000 tonnes, soymeal 25,000 to 125,000 tonnes and soyoil 0 to 10,000 tonnes. New crop estimates: corn 300,000 to 500,000 tonnes, soybeans 300,000 to 550,000 tonnes, soymeal 50,000 to 125,000 tonnes, soyoil 0 to 5,000 tonnes and wheat 200,000 to 400,000 tonnes.

Ethanol production last week was 973,000 bpd last week compared to 984,000 the prior week. Ethanol inventories down slightly to 19.6 million barrels vs 19.7 million barrels last week.

The broad weakness in commodities is reducing US inflation expectations. The weakness in oil and other commodities this month potentially complicates the Fed's tightening plan. Yellen has shrugged the energy weakness as temporary in holding down inflation and expect inflation to rise to the Fed's 2% target in the medium term.

Iran has imposed import duties on wheat and barley by $45 to $50 per tonne hurting hopes for more trade after the country's nuclear deal with Western powers.

McDonald’s announcement that they are offering a 24 hour per day breakfast menu ignited buying in the lean hog futures on Wednesday. This menu change could happen as early as October. It is expected that pork demand will improve at a time when the industry is carrying a burdensome supply.

Cattle futures are struggling with the potential of lower cash markets this week and the reluctance of product value to rally. Historically this week is a potential low in the beef trade. “Time will tell”.

Dressed beef values were lower with choice down .40 and select down 1.66. The CME Feeder Index is 217.14. Pork cutout values are down 1.08.

Call us with questions at 800-262-7538 or service@allendale-inc.com.

Prices Drift On Stale News

Jul 22, 2015

Good Morning! Paul Georgy with the early morning commentary for July 22, 2015 at 5:15 am.

Grain markets are lower as news is getting stale and Midwest weather supports crop improvement. Outside markets are lower as risk-off attitude prevails across all commodities.

The Allendale Conference Series started yesterday with our lead-off speaker, Allendale Meteorologist, Ryan Martin. If you weren't able to attend,  you can listen at your leisure to the recording, Here.

The Conference Series today will feature a group of speakers who will give in-depth fundamental and technical outlooks, with price projections and trade strategies for corn, soybeans, and wheat. Updates will also include important technical indicators to watch as summer heats up and we head towards harvest. More details: Click Here.

Midwest weather has stabilized and row crops are likely to improve as we approach August. Without the heat to fuel a rally the managed money funds that were large buyers in early July will have to decide on whether to hold on or bail. This could create some very volatile trade during the next few weeks.

Update - Morning Coffee Commentary:

Soybean processors have raised bids due to lack of farmer selling. Corn bids were firmer due to lack of movement.

The recent wheat sales to GASC were done at $205.00 per tonne. US wheat prices are currently about $225.00 per tonne.

Canadian Wheat Board crop tour is going on this week where early results for wheat and canola have seen the effect of the dry conditions.

September wheat futures are oversold but continuing to break key moving average support. Corn and soybeans which have been consolidating are testing key support areas this morning. Chart support is 4.09 in Dec corn and 9.90 in the November soybeans.

The economic calendar has the release of the Existing Home Sales and the Weekly EIA report. Traders are also waiting for the final vote from the Greek Parliament on the bailout concessions.

Australia’s agriculture minister agreed to the rules set for a potential export of Australian cattle to China. This comes after last week’s decision by Indonesia to reduce Q3 cattle imports from Australia to only 50,000 head, down from 250,000 last year. Indonesia cut the imports in retaliation for Australia’s strong stance against illegal immigration. The Australian navy has been escorting immigrant boats right back to their native lands.

Cattle on Feed report will be released Friday afternoon at 2:00. Trade average guesses are On Feed 101.4%, Placed 99.6% and Marketings 95.1% of a year ago.

Traders are still talking about a seasonal low in cash and futures this week in cattle.

Dressed beef values were lower with choice down .51 and select down .21. The CME Feeder Index is 217.62. Pork cutout values are up 2.10.

Call us with questions at 800-262-7538 or service@allendale-inc.com.

Crop Conditions Stabilize Weather Risk

Jul 21, 2015

Good Morning! Paul Georgy with the early morning commentary for July 21, 2015 at 5:15 am.

Grain markets are a bit higher due to short covering on “turn around Tuesday.” Outside markets are quiet with the US Dollar giving back some of the gains from yesterday while crude trades near the $50 mark.

The Allendale Conference Series starts Today July 21st. The lead-off speaker is Allendale Meteorologist, Ryan Martin who will share his forecast for the remainder of this growing season and into harvest. More details: Click Here.

On Wednesday we have a group of speakers who will give in-depth fundamental and technical outlooks, with price projections and trade strategies for corn, soybeans, and wheat. Updates will also include important technical indicators to watch as summer heats up and we head towards harvest. More details: Click Here.

Q&A will be live, but if you have a question now, pre-submit it so we can work it in to the presentation. Get all the details by Clicking Here.

Technical selling is weighing on prices across the grains and oilseed complex. The September wheat contract closed below the key 200 day moving average yesterday. As of Monday's close the corn and soybeans are within site of the prices before the June 30th report which is the date the funds began their aggressive buying spree. The question is will the lows made on June 30 hold or will it be the trigger point for further fund liquidation?

Weekly grain export inspections were well above trade expectation and what is needed to meet USDA’s shipment goals.

The USDA released weekly crop conditions which were unchanged from last week at 69% good/excellent for corn. However there was 2% of the US corn crop moved from the good category to the excellent category.

Soybean conditions also remained at 62% good/excellent. A take-a-way from the data is the states of IN, OH, and MO have either very good soybeans or poor to very poor.

Winter wheat harvest has now surpassed the 5 year average by 1% with 75% completed.

The trade is starting to notice the lack of new crop soybean sales on the books to date. There's a pretty good correlation between new crop sales on the books in July and final export sales and right now the correlation is saying that the USDA is way too high on soybean export projections.

Greek banks reopen but financial markets remain closed through Wednesday. The Parliament will vote Wednesday on the second batch of reforms needed to negotiate the 3 year bailout package.

The hot humid weather is slowing gains on livestock which could provide some support to cash markets. Livestock futures are oversold as managed money funds have leaned on values as they reduce position size. Seasonally the cattle trade bottoms during the 3rd week of July. Keep watch for any confirmation.

Dressed beef values were higher with choice up .53 and select up .83. The CME Feeder Index is 218.86. Pork cutout values are up .55.

Call us with questions at 800-262-7538 or service@allendale-inc.com.

Weekend Weather Weighs On Early Week Trading

Jul 20, 2015

Good Morning! Paul Georgy with the early morning commentary for July 20, 2015 at 5:15 am.

Grain markets are lower as warmer weather is supportive for row crops. The US Dollar remains strong while crude oil this year’s lows.

The Allendale Conference Series starts tomorrow. The lead-off speaker is Allendale Meteorologist, Ryan Martin who will share his forecast for the remainder of this growing season and into harvest. Ryan will cover the major growing areas of the U.S., plus will shed some insight into how the weather will impact South American crops as well. As with all sessions, Q&A will be live, but if you have a question now, pre-submit it so we can work it in to the presentation. Get all the details by Clicking Here.

Update - Morning Coffee Commentary:

Historically the Midwest is entering the hottest week of the year but no sustained heat this year. There are beneficial rains scheduled for the delta, southern plains, NW Midwest, and Northern Plains. Other world weather appears to be a bit negative to prices as we begin the week.

El Niño appears to be intensifying much earlier than usual and may become the strongest on record in the modern era. Weekly sea-surface temperature anomalies had climbed to 1.5 degrees Celsius above average in early July however a three month average is needed to verify the pattern.

The CFTC Commitment of Traders report showed through Tuesday of last week managed money funds were large net buyers of corn adding 29,467 contracts to their already long position. They were net buyers in the soybean complex adding 11,878 in soybeans, 6,028 in soymeal and 8,910 in soyoil. Managed money funds reduced their net long positions in live cattle by nearly 22,000 contracts.

Trade is looking for unchanged to higher corn and soybean ratings this afternoon compared to the prior week 69% and 62% respectively. Last year on this date corn was 76% and soybeans were 73%. Hard Red Spring wheat ratings of 71% will likely improve compared 70% last year for 3rd week of July.

The macro market attention this week will focus on whether the Chinese stock market can hold its modest recovery rally as more stocks reopen from trading suspensions, oil prices could begin a new leg down to new 3-month lows after last week’s Iranian nuclear agreement and the prospects for a steady increase in Iranian oil exports starting in December when sanctions are lifted.

Last week August cattle futures lost $.82 while October was down $1.30. Sharp losses in wholesale beef for the second week in a row with another $3.67 and $4.31 was taken off of choice and select respectively. Live cattle sales last week were mostly at $148 which was $2.00 lower in the south and $3.00 lower in the north.

This year’s oversupply of hogs is a known problem. In the seven weeks since the start of June, hog slaughter has run 12.1% over last year. The June Hogs and Pigs report indicated there should be an increase of 13.4% during that period. The coming weeks should run 11.5% higher than last year.

Dressed beef values were lower with choice down .65 and select down 1.43. The CME Feeder Index is 222.03. Pork cutout values are down .23.

Call us with questions at 800-262-7538 or service@allendale-inc.com.

Fridays Close Could Set The Stage For Sunday Night

Jul 17, 2015

Good Morning! Paul Georgy with the early morning commentary for July 17, 2015 at 5:15 am.

Grain markets are steady to slightly lower as weather patterns shift to a warmer “summer like” period. Macro markets are all a bit lower as well as trade digests the happenings of this past week.

Update - Morning Coffee Commentary:

The Allendale Conference Series starts on Tuesday July 21st. The lead-off speaker is Allendale Meteorologist, Ryan Martin who will share his forecast for the remainder of this growing season and into harvest. Ryan will cover the major growing areas of the U.S., plus will shed some insight into how the weather will impact South American crops as well. As with all sessions, Q&A will be live, but if you have a question now, pre-submit it so we can work it in to the presentation. Get all the details by Clicking Here.

The warm summer like weather for this weekend and in the 6 to 10 and 11 to 15 day forecast has grain traders on edge. The words being used to describe this shift in temps are ridging, and doom which are fueling the bullish flame during pollination. However when talking to our weatherman it would suggest a favorable mix of moisture and heat will supply excellent growing conditions for Midwest crops.

NOAA released their monthly and long-term forecasts which suggests below normal temps for most of Midwest and above normal precipitation for the southern cornbelt.

US corn export sales for the period from July 2 to 9 came to 331,058 metric tonnes for old crop. Sales are now 99% of USDA's whole-year goal, down from the normal 103% sold by this time.

Soybean sales of 45,505 tonnes were noted for old crop. Sales are now 102% of USDA's whole-year goal, down from the 103% normal pace for the 2014/15 crop. New crop soybean sales are 5.5 million tonnes behind a year ago. Soymeal demand is 1.0 million tonnes less than last year at this time.

Consultancy Strategie grains cuts forecast of 2015 EU soft wheat crop by 0.7 million tonnes to 140.9 million tonnes or a 6% decline from last year. They also cut the EU maize production by 0.7 million tonnes to 66.7 million tonnes this would be a 12% decline from last year.

A once-idled ethanol plant in South Bend is producing and shipping the fuel again says Noble Americas who bought the plant two years ago. Noble announced that after an extensive retrofitting process they have been shipping fuel for a few months.

Missouri Governor has written a letter to Ag Secretary Vilsack asking for an extension to USDA/RMA insurance reporting date. On Wednesday the Missouri Attorney General filed a claim and wants a judge to step in and force the USDA to extend reporting date.

The US Dollar continues to remain firm on the testimony of Fed Chairman Yellen in Washington and as the Euro deals with the bailout of Greece.

Macro reports to be released at 7:30 this morning are Housing Starts and Payments and Real Earnings.

The 15-cut average for beef increased to $5.73 a pound from $5.52 last week. It gained versus $5.49 a year earlier, according to the Wall street Journal survey. Grocers listed higher prices for ground beef and ground chuck, as well as some steak cuts, with increases from a week earlier for strip and rib-eye steaks. The five-cut average for pork prices fell to $2.75 per pound from $2.99 last week. Prices were lower than the $3.41 average a year earlier. Chicken prices climbed. The two-cut average increased to $2.03 a pound from $1.85 last week. The average was down from $2.06 per pound a year earlier.

Dressed beef values were lower with choice down .99 and select down 2.89. The CME Feeder Index is 222.92. Pork cutout values are up .10.

Call us with questions at 800-262-7538 or service@allendale-inc.com.

Warmer Wetter Spun As Friendly

Jul 16, 2015

Good Morning! Paul Georgy with the early morning commentary for July 16, 2015 at 5:15 am.

Grain markets are higher as it has been the pattern for firmer prices going into the export sales report. The warmer western cornbelt and little wetter eastern cornbelt has supported corn and soybeans. The US Dollar is providing some headwinds on Fed Chairman talking of interest rate hikes and the Greece vote.

The Allendale Conference Series offers Grain and Livestock producers, and those who follow the markets, an unmatched fundamental analysis for corn, soybeans, wheat, cattle and hogs, along with the important technical indicators and chart patterns that matter to the markets right now. Sign up TODAY! Click Here for all the details.

The GFS weather model has removed some of the moisture bringing it in line with other models. Traders are looking for warmer temps in the 6 to 10 day forecast but keeping the extreme heat confined to the southern plains but heat during pollination is always cause for excitement. The eastern cornbelt is a little wetter but not like the heavy rains we seen last weekend.

Trade estimates for today’s weekly export sales report are: Old crop corn 325,000 to 525,000 tonnes, soybeans (- 50,000) to 150,000 tonnes, soymeal 50,000 to 150,000 tonnes and soyoil 0 to 10,000 tonnes. New crop sales for corn 150,000 to 300,000 tonnes, soybeans 200,000 to 400,000 tonnes, soymeal 75,000 to 150,000 tonnes, soyoil 0 to 5,000 tonnes and wheat 300,000 to 500,000 tonnes.

The actual NOPA crush of 142.473 million bushel beat the analyst estimate of 141.478 million bushel. This is a record for June and 20.0% over last year. We have now crushed 5.2% more soybeans from September – June than last year. To hit USDA’s crush goal of 1.830 billion for the year we only need to crush 9.3% more than last year during July and August. Soybean oil stocks were higher than trade estimates.

This week’s ethanol production ran 4.3% over last year. The year to date production pace is now 4.7% over last year. USDA raised their corn for ethanol estimate for the year by 25 million bushels to now 5.200 billion bushel. At current pace there may be one more adjustment higher by the end of the marketing year.

The Greek parliament passed the austerity measures demanded by European partners as the price for opening talks on a multi-billion euro bailout package needed to keep the near-bankrupt country in the euro zone.

Data from China’s Ministry of Agriculture shows China's sow inventory declined 1.2% month on month in May 2015, the 21th consecutive monthly decline and a reduction of 15.5% year on year to an estimate of 39.23 million sow.

Cash cattle trade is in a stand-off with packers bidding 146 and feedlots are asking 150 to 152. Likely cash will trade at 148 this week which is 2.00 lower than previous week. The question is: will the feedlots risk losing market ready cattle to the heat? Product could remain weak for a while longer as we are in the “dog days of summer.”

Hog futures are toiling with the lower cash hogs in some areas and firmer product values. The August lean hog futures have resistance at 77.00 and current is trading at 5.00 discount to cash index.

Dressed beef values were lower with choice down 11.10 and select down .25. The CME Feeder Index is 224.12. Pork cutout values are up .72.

Call us with questions at 800-262-7538 or service@allendale-inc.com.

Technical Formations May Take Control Over Markets

Jul 15, 2015

Good Morning! Paul Georgy with the early morning commentary for July 15, 2015 at 5:15 am.

Grain markets are quiet as traders assess the effects yesterday’s chart picture. Marco markets are waiting for the results of Greece vote.

Technical reversals in corn and soybeans, after making new highs early Tuesday morning, have traders watching for the follow through. Fund buying subsided on Tuesday and will be watched closely the balance of the week. Tuesday’s high will be a very important resistance level.

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Weather models are still in disagreement with the euro models not as hot and less moisture for the eastern cornbelt in the 6 to 10 day forecast. Without extreme heat during pollination the bulls will have to wait for the August USDA report for more fuel for their fire. However markets will likely find support on corrections as farmer selling will dry up.

NOPA June crush will be released at 11:00 am this morning. The trade average estimate is 141.478 million bushels for June. That would be the second highest June crush ever and would be 19% over last year’s pace. It would bring the to-date NOPA crush to 1.497 billion, or 5% over last year. Using a reasonable pace of 15% over last year for both July and August which would make a whole-year crush of 1.842 billion bushel. USDA last Friday raised their estimate to 1.830 billion bushel. This could mean more adjustments to 2014/15 usage.

Chinese soybean crush margins have made a dramatic improvement over the past month. Traders are watching for a potential buying spree due to the improvement in margins.

China’s National Bureau of Statistics said China’s summer grain production could reach another record of 141.07 million tonnes which is 3.3% higher than last year.

Egypt bought Russian and Romanian wheat as the US prices are well above that of Eastern Europe

Valero Energy Corp, one of the largest U.S. oil refiners, is preparing to sell ethanol for export for the first time, the company said, betting on the $2 billion overseas market.

Macro traders will be waiting for results from Greek Parliament vote. A “no” vote would derail the negotiated bailout plan for the Greece nation.

July lean hog futures will expire today at noon. The lean hog index, the measure of nationwide cash hogs that futures are settled against, was at 80.26. That covers cash hog trading through Monday.

Heat during the summer is an issue that affects both live cattle and feeder cattle. Cattle in feedlots will see loss in weight gains during this period. Another factor is the potential loss of market ready cattle during high heat periods. Will feedlots take a chance and hold out for higher money when heat is on the way?

Dressed beef values were higher with choice up .04 and select up 1.26. The CME Feeder Index is 224.35. Pork cutout values are down .21.

Call us with questions at 800-262-7538 or service@allendale-inc.com.

 
 

Crop Conditions Support Soybeans

Jul 14, 2015

Good Morning! Paul Georgy with the early morning commentary for July 14, 2015 at 5:15 am.

Grain markets are mixed as crop conditions in soybeans provide support. The US Dollar is retracing some of yesterday’s rally, however, crude oil is lower providing some headwinds for corn.

Midday Weather Update:

Traders are talking about the GFS models prediction for a hot temperatures moving into the Midwest while other models are still in disagreement.

Temperatures have a significant impact on corn yield at this time of year as expressed by the USDA in last Friday’s report. They use a “weather adjusted trend model” with a coefficient in the model for July temperature, a variable of -2.28, which means the scenarios of 1-degree cooler and 1-degree hotter raises or lowers expected corn yields by 2.28 per acre. Thus far in 2015 the July temperature has been much cooler than normal.

Corn's condition national average remained the same as last week at 69% due an improvement in the most of the western cornbelt states led by south Dakota which improved by 3%. The eastern cornbelt showed a sizeable decline led by Illinois 5%, Ohio 4% and Indiana 2%.

Soybean conditions in good/excellent fell by 1% on average as the western Midwest improved and the eastern areas deteriorated. Illinois, Indiana and Ohio had the largest declines.

Winter wheat harvest is 65% complete which is 3% of the 68% five year average.

Argentina’s government has authorized an additional 7 million tonnes of corn for export for 2014/15 which is on top of the already authorized 11.5 million tonnes.

NOPA June crush will be released tomorrow at 11:00 am with trade guess at 141.478 million bushels. That would be the second busiest June on record.

Today is the last trading day for the July CBOT grain contracts.

Greece parliament now holds the key to a bailout or an exit. The eco calendar has retail sales and business inventories at 7:30 and the API energy stocks at 3:30 this afternoon.

The limit down move in several lean hog contracts yesterday may have been the “blow-off” bottom pork producers and traders were waiting for. The discount of futures to cash index and the higher close yesterday provide hope.

Cattle futures are being pressured by the weak product and the probability of a lower cash trade this week. The hot weather in the cattle feeding areas will likely entice feedlot managers to move cattle rather than lose any market ready animals due to the heat.

Dressed beef values were lower with choice down .98 and select down 1.29. The CME Feeder Index is 224.51. Pork cutout values are up 1.25.

Call us with questions at 800-262-7538 or service@allendale-inc.com.

Weather and Macros Influence Volatility In the Week Ahead

Jul 13, 2015

Good Morning! Paul Georgy with the early morning commentary for July 13, 2015 at 5:15 am.

Grain markets are mostly lower as weather, large fund positions and macro market concerns give reasons for some profit taking.

With the USDA report behind us the bulls and the bears will be duking it out over the next few weeks. The short term weather forecast is for wet conditions in areas that don’t need it. However the longer term weather models are starting to come into line for a drier period.

Update - Morning Coffee Commentary:

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From a personal point of view during a trip from McHenry Illinois to Cincinnati, Ohio over the weekend, there are a lot of fields in Northern Indiana where drier weather is not going to save the crop, the damage is done. The question is what kind of yield can be salvaged on the balance of the fields that are not drowned out. Soybeans have a better chance of recovery in some areas. We also saw many fields along the way that could produce record yields this year. Corn pollination will be watched closely over the next few weeks.

Cash bids at terminals around the country were mostly steady on Friday as farmer selling was quiet.

The 2015 record crop in South America has prevented US soybean sales. Currently new crop sales are 6.3 million tonnes compared to last year’s 11.7 million tonnes.

The CFTC Commitment of traders report showed Managed Money Funds adding to long position last week. They were net buyers of 102,674 contracts of corn, 5,660 contracts of soybeans and 20,264 contracts of wheat.

Greece and the EU leaders have come to an agreement nine hours after deadline.

National Australia Bank chief economist Alan Oster said "The impact on the global economy of Greece leaving or not leaving is so tiny"… "The more important one is China," Mr. Oster said. "I think the issue is not so much the equity market, but how weak is the fundamental Chinese economy?" China will be releasing gross domestic product data on Wednesday.

Weekly Broiler price of 12 city composite was 98.02, down $6.35 from last week and $13.93 down from last year.

On Friday’s supply and demand report the USDA added 77 million to this year’s production of chicken, beef, pork and turkey but more than offset that with a net export estimate. The amount of all-meat offered to consumers will run 4.2% over last year.

Dressed beef values were lower with choice down 2.74 and select down 2.59. The CME Feeder Index is 221.44. Pork cutout values are down .48.

Call us with questions at 800-262-7538 or service@allendale-inc.com.

July 2015 USDA Supply and Demand Reaction

Jul 10, 2015

For more information on today's report, visit our USDA report page.

Trade Looking For More Feed For The Bulls

Jul 10, 2015

Good Morning! Paul Georgy with the early morning commentary for July 10, 2015 at 5:15 am.

Grain markets are steady to firm as trade gets ready for the USDA report. The US Dollar is lower as hopes of a Greek solution are raised. Stock markets around the world react positively.

Morning Video Update:

Trade is expecting the USDA to reduce acres and yield as outlined below (an ending stocks table with average trade estimates for today's report is here). Corn futures posted new highs for the year and levels not seen since July of last year. Soybeans remain in a trading range with 1050 resistance in the November contract.

The USDA report will be released at 11:00 am this morning. Corn production average estimate is 13.440 billion bushel compared to USDA in June of 13.630 billion bushel. The average yield for corn was 165.39 compared to USDA latest estimate of 166.8.

Soybean average production estimate is 3.776 billion bushel compared to USDA’s June estimate of 3.85. Trade is estimating more than a bushel drop in yield for soybeans from 46.0 bushels by USDA to 44.96 bushels per acre.

Trade will focus in on changes in USDA’s estimates for South American corn and soybean production.

Brazil’s CONAB raises its forecast for total corn production to 81.81 million tonnes from 80.21 million tonnes last month. The gain came from a record safrinha corn crop as it increased by more than 2.0 million tonnes to 51.55. They also raised their soybean production to 96.22 million tonnes.

Egypt's main state wheat buyer, the General Authority for Supply Commodities (GASC), bought 180,000 tonnes of Russian and Ukrainian wheat to extend their strategic reserves.

FranceAgriMer says wheat plantings rose in area to 5.2 million hectares from 5.0 million last year offsetting an expected decrease in average yield to 7.3 tonnes per hectare (t/ha) from 7.5 t/ha in 2014. France’s 2015 soft wheat crop is estimates at 37.9 million tonnes, up 1.1 percent from last year.

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The Greek Prime Minister has proposed a 3 year bailout loan in exchange for a basket of reforms. This last ditch effort will be presented to the Greek Parliament today and the EU will make a decision on Sunday.

The cash cattle news was not that bad but fund selling pressured markets on Thursday.

August lean hog futures has technical support at 71.17 and October support is 61.85.

China hog producers have an estimated hog profitability of $45 to $75 per head and has triggered gilt withholding for expansion, said a private source.

Egg sets up 1% and chicks placed up 3% from last year.

Early Cattle on Feed estimates are: COF: 101.9%, Placed: 103.8%, Marketed: 97.3%.

Cash cattle trade was firm this week however traders are looking ahead to lower money next week. Seasonally we are in the “Dog days of summer” where beef demand is usually the slowest of the year.

Dressed beef values were lower with choice down 2.31 and select down 2.66. The CME Feeder Index is 220.39. Pork cutout values are unchanged.

Call us with questions at 800-262-7538 or service@allendale-inc.com.

Planting Delays Fuel Soybean Rebound

Jul 09, 2015

Good Morning! Paul Georgy with the early morning commentary for July 9, 2015 at 5:15 am.

Grain markets are higher across the board as planting delays fuel the soybean rally. Macro markets are much calmer this morning as China’s stock market rebounds and Greece is working on a proposal to present to EU. Weekly export sales report and tomorrow’s Supply and Demand reports are providing support for grains.

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The weather models do not have any extreme heat in the forecast for the foreseeable future. Historically the temperatures during July determine 90% of the production variance in corn. Traders will be watching the amount of rain that actually falls across the Midwest this weekend as models are not aligned. Listen to Allendale Meteorologist, Ryan Martin’s update.

Weekly ethanol production in the latest week ran a strong 987,000 barrels per day which was 6% over last year. For year to date, production is 4.7% over last year and USDA is projecting in their balance sheet a .08% Y/Y increase.

Trade estimates for the weekly export sales data which will be released at 7:30. Old crop corn 400,000 to 600,000 tonnes, soybeans -40,000 to 200,000 tonnes, soymeal 50,000 to 150,000 tonnes and soyoil 0 to 12,000 tonnes.

New crop sales estimates are: corn 200,000 to 500,000 tonnes, soybeans 100,000 to 300,000 tonnes, soymeal 50,000 to 150,000 tonnes, soyoil 0- to 5,000 tonnes and wheat 300,000 to 500,000 tonnes.

Update - Midday Weather Commentary:

CONAB will be out with updated production numbers this morning with most looking for them to boost Brazil’s corn production.

Reuters releases their survey for Friday’s report which will be released at 11:00 am CDT. Corn production average estimate is 13.440 billion bushel compared to USDA in June of 13.630 billion bushel. The average yield for corn was 165.39 compared to USDA latest estimate of 166.8.

Soybean average production estimate is 3.776 billion bushel compared to USDA’s June estimate of 3.85. Trade is estimating more than a bushel drop in yield for soybeans from 46.0 bushels by USDA to 44.96 bushels per acre.

Shipping data is showing the first of 3 vessels will begin loading Brazilian corn next week. Their destination will be the hog and poultry producers in Southeastern US.

The macro markets are dealing with the Chinese stock situation and the Greece agreement deadline. Eurozone leaders set this Sunday as a deadline for a Greek agreement that would pave the way for at least a bridge loan so that Greece can reopen its banks and get its economy functioning again.

The Goldman roll started yesterday and will continue into next week.

The retailer is taking beef demand concerns very serious as post July 4th consumption of primal cuts shrink. Consumers hit the road for vacations and normally less cookouts. Since June 24 wholesale beef has fallen $14 for choice and $11 for select. The next area of support in August cattle crosses just below the 148 level. Feedlots are holding out for steady to higher prices this week and they may get it as packer bids were increased late yesterday.

Lean hog futures have technical support at yesterday’s lows in the August contract. Look for more trading range activity.

Dressed beef values were lower with choice down 2.64 and select down 1.85. The CME Feeder Index is 220.39. Pork cutout values are down .33.

Call us with questions at 800-262-7538 or service@allendale-inc.com.

Pre-Report Positioning Begins

Jul 08, 2015

Good Morning! Paul Georgy with the early morning commentary for July 8, 2015 at 5:15 am.

Grain markets are lower on China concerns and no extreme heat in the forecast. Corn finds support on potential USDA balance sheet adjustments while wheat is pressured due to harvest progress. The US Dollar and crude oil retrace some of yesterday’s action.

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Morning Update:

China’s major stock indices have fallen 30% or more in the past 3 weeks. This morning’s open was a 7% decline as regulators try to stop the rout. Grain traders are concerned about China’s demand as their purchases of the 2015/16 are only about a third of a year ago pace.

The Euro Leaders gave Greece Prime Minister the deadline of Thursday to present a reform plan. Leaders also set Sunday as the deadline for a decision that could allow Greek banks to reopen.

The weather forecast for the next 10 days is largely unchanged. There's no extreme heat in the forecast into the latter half of July. This should provide excellent conditions for corn pollination and for soybean development. However there is still too much rain for some areas in the western cornbelt and Missouri.

Bloomberg News survey has the average estimate for corn production on Friday’s report at 13.414 billion bushels with an average yield of 165.2 bushels per acre. The USDA last month was using a yield of 166.8 bushels per acre. Soybean production average estimate is 3.781 billion bushel using average yield of 45.1 bushels per acre. USDA has been using 46.0 soybean yield in their balance sheets.

The ending stock report is expected to have some revisions due to the June 30 stock report. For 2014/15 crop trade is looking for 1.814 billion bushel of corn and 287 million bushel for soybeans were the USDA last month was expecting 1.876 for corn and 330 for soybeans.

Malaysia’s palm oil board will release its oil data on Friday. Estimates believe the palm oil stock could have dropped from a month earlier by 2.7%. They are looking for exports to have increased and production to have slipped during the recent month.

Soybean crush margins in Brazil have turned negative due the rally in soybeans over the past few weeks. Crushers are citing poor domestic demand for meal which is driving their decision to cut production.

EIA’s weekly energy stocks report will be released at 9:30 CDT today. The market consensus for today’s report is for unchanged crude oil and gasoline inventories, a 1.0 million billion barrel increase in distillate inventories, and a 0.2 point increase in the refinery utilization rate to 95.2%.

US pork exports were up 1.3% from a year ago in May and down 5.4% year to date. Beef exports were down 14.5% during May compared to a year ago and down 10.1% for the year. Beef imports were up 24.1% for May and up 36.8% compared to last year. Poultry exports were down 15.7% during May mainly due to Avian Flu finding.

China & Hong Kong imports of US pork topped 13,665 tonnes, which was slightly above year ago levels. Cash hog prices in China have now moved higher for the last 14 consecutive weeks to above year-ago levels.

Cash cattle trade is at a standstill with many thinking steady prices with last week. However the product continues to slide and packer margins roll over.

Dressed beef values were lower with choice down 2.98 and select down 2.83. The CME Feeder Index is 220.22. Pork cutout values are down .66.

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

Corn Crop Improves Soybeans Hold Steady

Jul 07, 2015

Good Morning! Paul Georgy with the early morning commentary for July 7, 2015 at 5:15 am.

Grain markets are lower coming from profit taking, weather forecast and simply the old adage “you have to feed a bull everyday”. The outside markets are watching for any news out of the summit between Euro Leaders and for any fallout from the Chinese stock market slide.

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Update - Midday Weather Update:

US corn crop conditions improve by 1% to 69% good/excellent while trade was expecting a 1% decline. Soybean national average conditions remained unchanged at 63%, trade was expecting a 2% decline. Soybean bean planting remained slow with only 96% planted when normally 100% should be done. Missouri has over 25% of their soybeans to plant as of Sunday and the states of IL and KS still have 6% to finish. This relates to approximately 3.4 million acres to plant.

US winter wheat harvest progressed last week by bringing the total to 55% harvested vs. 59% average. Spring wheat conditions slipped by 1% to 40% G/E vs. 31% last year.

The weather forecast for the Midwest over the next 2 weeks would be bearish under normal years. However we are anything but normal in 2015 which will keep the grain markets jumpy to any aberration from ideal weather during corn pollination.

The CFTC Commitment of Traders report showed funds were even larger buyer than trade was expecting. The managed money funds were net buyers of 165,128 contracts to take them from a short position to net long 70,606. They were net buyers of 65,767 in soybeans and 66,822 in wheat leaving them net long in both commodities. This report was gathered as of last Tuesday’s close. The remainder of last week it is expect they added even more long positions.

USDA will release July Supply and Demand on Friday at 11:00 am. Historically the USDA has changed corn yield only 8 times since 1993 and soybeans only 5 times. Talk to your Allendale Representative for ideas on managing risk through the Friday’s report.

Lean hog futures have been higher in recent days as traders are concerned that the rally in grain prices will reduce the finishing weights and further reduce farrowing intentions.

Pasture conditions continue to improve as reported by the USDA. Grass feeding gains should be excellent this year as cost of gains in feedlots have increased sharply in the last 2 weeks. Trading range support is around 148 in August cattle futures.

Dressed beef values were lower with choice down 2.47 and select down 4.13. The CME Feeder Index is 221.81. Pork cutout values are up 1.27.

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

Grains Retreat On Weather and Greece Concerns

Jul 06, 2015

Good Morning! Paul Georgy with the early morning commentary for July 6, 2015 at 5:15 am.

Grain markets are lower as weekend weather systems moved further south than expected. The sharp rally last week is being met with profit taking due to outside influences as the US Dollar is higher and crude oil is down nearly 2.50.

Update - Morning Coffee Commentary:

Traders have several factors to deal with as they return from an excellent weather weekend in the Midwest. Crop ratings will be out this afternoon and trade is expecting a 1 to 2% decline from last week’s 68% in corn and 63% in soybeans.

The “No” vote by the Greece people which will stop the austerity plan imposed on them by the European Community has created sharp moves in the outside markets.

Weather conditions for most of the Midwest was less wet than forecasts were projecting on Thursday when trade closed for the long weekend. From my own travel this weekend the fields with yellow corn color had improved from Thursday to Sunday. And there were other fields where an improvement in color will not re-place the poor stands left after the water subsided.

The CFTC Commitment of traders report will be released this afternoon which normally would have been released on Friday. Traders are looking for huge shifts in Managed Funds positions.

On Friday the USDA will give us their July Supply and Demand estimate. Some in the trade are looking for the change in acres and a change in yield to significantly change the USDA’s ending stock projections. We suggest the USDA may not be that aggressive about moving yield on this report.

Economic traders will be watching China’s stock market after last week’s decline, the Greece situation and the start of Q2 earning season.

(Reuters) JBS USA Pork has entered into an agreement with Cargill to acquire the company's U.S.-based pork business for $1.45 billion (USD). Completion of the acquisition is subject to regulatory review and approval.

On Thursday the August hogs closed above the 20 day moving average for the first time since May 22. Technical resistance crosses at 77.00.

August live cattle contract has resistance at 154 and support at 148.

Dressed beef values were lower with choice down 2.17 and select down 1.21. The CME Feeder Index is 224.82. Pork cutout values are down .48.

Markets as of 5:15 AM CDT

  • Jul Corn   -8 3/4
  • Jul Beans -19 3/4
  • Jul Wheat   -14 3/6
  • Jul Soymeal -3.10
  • Sep Dlr     .37
  • Sep S&P   -12.50
  • Aug Crude   -2.48
  • Aug Gold    .60

Technical 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

Big Week for Grains Ends with Big Weekend

Jul 02, 2015

Good Morning! It’s Thursday, July 2nd at 5:30 AM.

Grain markets are mixed as consolidation and profit taking trade occur after the week’s big run up and ahead of the three day weekend.

Update - Morning Coffee Commentary:

After trading much of the day lower yesterday, big buying on the close allowed corn to close higher and soybeans and wheat to close off their lows. This buying can likely be attributed to managed money positioning which is estimated to have been very large this week. One clue to their activity, the CFTC Commitments of Traders reports, will be delayed until Monday due to the 4th of July holiday this weekend.

CME reported that agricultural products traded record volume on June 30th, further highlighting the volatility the markets have seen this week.

The EIA reported ethanol production down for the week at 968 vs last week’s 994. Stocks were reported down as well at 19.5 this week vs last week’s 19.8.

The USDA will release weekly export sales data today at 7:30 AM CDT. Trade estimates for old crop corn are 300,000 to 600,000 tonnes, and soybeans 100,000 to 200,000 tonnes. New crop estimates have corn at 150,000 to 350,000 tonnes, soybeans at 150,000 to 350,000 tonnes, and wheat at 250,000 to 500,000 tonnes. Stronger than expected demand from exports could further propel the grain markets.

Informa will be out with updates to their grain production estimates later today. A wide range of estimates to both yield and acreage continue to circulate the trade, and with very big ranges, so it is likely that trade will pay attention to these numbers.

Weather models have taken some rain out of the forecast, as Allendale metrologist Ryan Martin noted in his morning commentary. Traders will watch forecasts closely for a change in rains, and this could quickly cause a sharp move in grain trade one way or another. Keep up with the daily ag weather forecasts here.

The Greek debt situation will be watched closely this weekend as Greece will hold a referendum Sunday to decide if they will accept the austerity measures being called for by the IMF and other creditors. Some analysts suggest that a “no” vote will most certainly lead to Greece leaving the euro.

The economic calendar is busy this morning with a slew of employment data out at 7:30 AM CDT (jobless claims, nonfarm payrolls, unemployment rate, etc.). Factory orders are due out at 9:00 AM CDT.

The positive momentum in the hog market may be the fact that production this week has been lower than expected. Estimates were for the holiday shortened week were expecting 430,000 head from Monday through Thursday. Instead they have all been under 430,000. They are only 3.2% over last year.

JBS USA Pork has agreed to purchase Cargills pork business for 1.45 billion dollars. The purchase remains subject to regulatory approval.

The Brazilian Beef Export Association expects to ship beef to the US starting in September with an annual quota of up to 64,000 metric tonnes. They expect up to 100,000 tonnes in the coming years and to eventually supply up to 10% of imports. Up until this point Brazil was only able to ship us cooked/processed beef.

Grain markets will close at 12:00 PM CDT today (mini contracts 12:30), and livestock will close at 12:15 PM. Markets will remain closed Friday and grains will reopen for overnight trade at 7:00 PM CDT Sunday night. Livestock will reopen at it’s usual 9:05 Monday morning time.

Have a safe and happy 4th of July! The Wake-Up Call will return Monday morning.

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

USDA Data Keeps Volatility in Grain Markets

Jul 01, 2015

Good Morning! It's Wednesday, July 1st at 5:30 AM.

Grain markets are mixed on light profit taking following yesterday's sharp USDA report rally. The Greek debt fallout, weather forecasts, and acreage and yield adjustments are all factors which will continue to drive the market.

As of last night, Greece was officially in arrears on the debt payment due to the IMF of 1.6 billion euros. Initially it appeared Greece would not move to accept any of its creditors reform demands, but a letter released overnight indicates they have changed their minds. Greece now claims they are ready to accept the reforms to get more money. Negotiations will still need to take place, and trade will continue to watch the issue closely.

Update - Morning Coffee Commentary:

The big market mover yesterday, and what will be the subject of discussion for days to come, were the USDA Planted Acreage and Grain Stocks reports. The USDA corn acreage number reported was viewed bullish at 88.897 million acres (vs. an 89.292 estimate), soybeans 85.139 (vs. 85.171), and all wheat at 56.079 (vs. 55.867).

More surprises were found on the Grain Stocks report as the USDA reported corn stocks at 4.447 billion bushels (trade was expecting 4.555), soybeans at only .625 (.670 estimate), and wheat at .753 (.718 estimate). More coverage of yesterday's market moving reports is available here.

Managed money funds were estimated to be big buyers yesterday, not only on the USDA report numbers but also end of month, end of quarter rebalancing. Watch volume spikes closely for signs of more fund activity as the new month's trade begins.

Due to the heavy rains throughout much of the nations growing regions, the USDA announced that they will resurvey soybean producers in Arkansas, Kansas, and Missouri to, "ensure accurate final estimates for all crops." Any changes to estimates will not be reported until the August 12th USDA report.

Updated NOAA maps do not suggest any relief for many of the areas to be resurveyed by USDA. NOAA is calling for mostly above normal rains in these regions and below normal temperatures. You can keep up with the daily forecast changes to important agriculture regions in our morning weather blog for indications of possible yield reductions.

Canadian wheat acres are expected to rise 1.3% according to a Statistics Canada report also out yesterday.

The European Union cut its forecast for this year's wheat crop by 1.5 million tonnes to 140.0 tonnes. This compares with last years 148.8 tonne record harvest.

Germany's grain harvest is expected to be smaller than originally thought due to recent dryness in the growing regions according to a German farmers association. An individual breakdown of grains was not provided.

China intends to reduce corn acreage next year in an attempt to reduce its state stockpile of corn.

EIA energy stocks report will be out at 9:30 CDT this morning. Trade will be watching the ethanol production number on that report.

CME raised margin requirements on corn, soybeans and wheat overnight in response to the continued market volatility. The speculative initial margin for corn was raised to $1,375 from $1,100, soybeans $2,530 from $2,200, and wheat $1,925 from $1,650. For hedgers the initial corn margin rate was raised to $1,250 from $1,000, soybeans $2,300 from $2,000, and wheat $1,750 from $1500.

The U.S. and Cuba have agreed to open embassies in each other's capitals, according to a reported deal reached yesterday. This is one step closer to opening Cuba to more U.S. exports.

The economic calendar remains busy today with a few of the more important data releases including ADP employment change at 7:15 CDT, the ISM index, and Construction spending at 9:00 AM CDT. Auto and Truck spending will also be out later in the day, but all will provide clues to the health of the consumer.

The rally in corn prices has an obvious effect on livestock production, and the hog market certainly responded to today's corn move. Typically abrupt increases in feed costs encourage producers to bring hogs in early at lighter weights. We would like to suggest this will ease the tonnage of pork hitting this summer but wonder if a 1% – 1.5% drop in weights can offset the increase in hogs coming into production.

This week the USDA started the first steps for approval of more imported beef from Brazilian and Argentina. In April Brazil was sending us 3.3% of our imports. In February, the last month of actual imports from Argentina, they sent us 0.1% of our total imports. This week's move by the USDA is just one of many steps which would take place before more imports from South America would occur.

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

USDA Grain Stocks & Planted Acreage Report Recap

Jun 30, 2015

For more information visit our report page or give us a call at 800-262-7538.

A Day Filled With Reports

Jun 30, 2015

Good Morning! Paul Georgy with the early morning commentary for June 30, 2015 at 5:15 am.

Grain markets are mixed with corn and wheat higher and soybeans lower as traders make final adjustments on report day. Today we will get the North American projected planting estimate from the USDA and Canada. Quarterly Grain stocks report will also be released at 11:00 am CDT. Eco calendar is loaded to day as well. The Chicago PMI, Consumer Confidence and API stocks are all released today.

Update - Morning Coffee Commentary:

Corn crop conditions drop by 3% to 68 % versus 75% good/excellent last year. Soybean conditions fell 2% to 63% versus 72% a year ago. The drop in conditions was in line with trade expectations. The eastern cornbelt conditions fell sharply with Ohio sliding 19% in G/E for corn and 11% for soybeans.

Planting progress in soybeans increased by 4% to 94% vs a 97% five year average. This was a little faster than the 93% trade was estimating. Of the balance of soybeans left to plant approximately 50% are in the state of Missouri.

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Soft red winter wheat harvest is running well behind normal in Illinois, Indiana and Ohio.

Stats Canada will be releasing their planted acreage estimates for wheat and canola this morning.

The USDA reports will be released at 11:00 am CST this morning. The trade average estimates are as follows:

Survey of analyst by Reuters for US Planted Acreage:

                                Corn     Soy   Wheat

Average trade estimate        89.292  85.171  55.867 

Highest trade estimate        91.742  86.760  57.200  

Lowest trade estimate         88.450  83.760  55.100  

USDA March 31 estimate        89.199  84.635  55.367 

USDA 2014 final               90.597  83.701  56.822 

Quarterly Stocks:

                              Wheat     Corn   Soybeans

Average trade estimate        0.718     4.555     0.670

Highest trade estimate        0.740     4.700     0.707

Lowest trade estimate         0.688     4.419     0.604

USDA March 1, 2015            1.124     7.745     1.334

USDA June 1, 2014             0.590     3.852     0.405

There has been no movement toward compromise following the momentous weekend events when the Greek government broke off talks with the Eurozone and announced a referendum for July 5.

Country-of-Origin-Labeling repeal in the House passed with an overwhelming 300 votes in favor. Failure to repeal COOL in the Senate will certainly result in retaliation in the form of 100% tariffs on numerous commodities exported by Canada and Mexico.

Fed cattle showlist this week is 23,000 head less than last week. Packers will be dealing with a short production week due to the holiday. Product clearance for the July 4th weekend will be critical for product values.

Lean hog futures reacted as expected after the Hog and Pigs report. The discount of futures to cash index could provide some support. Technical indicators are still oversold for the nearby contracts watch for a quick recovery rally.

Dressed beef values were higher with choice up .10 and select up .49. The CME Feeder Index is 229.06. Pork cutout values are up 1.18.

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

Big Week For Grain Markets

Jun 29, 2015

Good Morning! Paul Georgy with the early morning commentary for June 29, 2015 at 5:15 am.

Grain markets are narrowly mixed after a choppy overnight session and ahead of a week filled with government reports. The growing risk of Greece leaving the Euro has increased the volatility in the equity markets.

Update - Morning Coffee Commentary:

Markets are loaded with bearish and bullish news as we start the week. Crop conditions this afternoon will likely be lowing the Good/Excellent by 1 to 3% in row crops. Tuesday’s Planted Acreage and Quarterly Stocks report will shake the markets as USDA will not make adjustments for acres lost to flooding.

Outside markets are volatile as Greece has walked away from negotiations and appears not likely to make debt payment on June 30. China over the weekend has lowered interest rates and cut bank reserve requirements, thus causing sharp reactions in the US Dollar, Eurocurrency, US Bond and the equity markets.

The weather forecast is about the same as last week which has showers across the southern Midwest and eastern cornbelt for the next 10 days. The rain is causing problems for row crops and for soft red winter wheat harvest.

Cash grain movement picked up on Friday with elevators and processors reporting farmer movement of old crop corn and some new crop on the recent rally.

The CFTC Commitment of Traders report showed funds reducing their net short positions in corn and buying soybeans last week to make them net long. They are still heavily short Chicago wheat which could present more short covering as the rain stops a quality wheat harvest.

Tomorrow is first notice day for July CBOT grain contracts.

The economic calendar is filled with concern as the Greece deadline approaches, Iran nuclear negotiations, Q2 earning season begins and Thursday’s US payroll report.

The Hog and Pigs report released on Friday was a bit bearish for the nearby contracts and friendly for the deferred when compared to trade estimates. The weight breakdown showed large supplies of hogs in the 120 to 179 and 180 and over ranges which could continue to pressure the nearby. The Kept for Breeding number combined with farrowing intention should be supportive to the back months. Look for bear spreads to be the featured reaction to the report.

August cattle futures were down 2.15 last week and broke the uptrend on the charts which has been in place since late February. Product was strong up until late last week due to holiday demand and light packer production. Seasonally beef prices work lower into late July.

Dressed beef values were lower with choice down 2.04 and select down 1.98. The CME Feeder Index is 230.18. Pork cutout values are down .91.

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

Expect Volatility Through Month-End

Jun 26, 2015

Good Morning! It's Friday June 26th at 5:30 AM.

Grain markets are higher on follow through buying after yesterday's rally. Funds were big buyers yesterday on short-covering ahead of next week's reports, and continued rains in the forecast. Trade will keep a very close eye on weather maps for changes to expected rain fall.

In his midday weather update yesterday, Allendale meteorologist Ryan Martin, stated the potential for several more rain events to move through corn and soybean areas in the near term forecast. Keep up with the national forecast in Ryan's morning weather commentary, and midday audio updates.

Volatility could continue to creep into the market from several additional sources as well including the Greece debt crisis; today's July grain option expiration; and pre-report, end of month, and end of quarter positioning by funds and traders.

Yesterday, industry Grain Stocks and Planted Acreage estimates were released for the Tuesday June 30th reports. Trade is anticipating corn acreage of 89.292 million acres, 85.171 million soybean acres, and 55.867 million wheat acres.

As Rich Nelson noted in our monthly webinar Tuesday evening, the real market mover next week could come on the Grain Stocks report. Trade average estimates for grains stocks are 4.555 billion bushels of corn, 0.670 billion bushels of soybeans, and 0.718 billion bushels of wheat. If you missed the webinar, you can still get its report coverage in the webinar recording.

Old crop weekly export sales for the week ending June 18th were neutral with reported corn sales of 496.8 (500-700 estimate), soybeans 118.8 (100-200 estimate), wheat 434.3 (200-450 estimate), soymeal 106.3 (50-150 estimate), and soyoil 9.5 (0-10 estimate).

New crop sales had corn at 297.5 (100-200 estimate), soybeans 202.5 (250-500 estimate), soymeal 210.5 (25-125 estimate), and soyoil at 4.5 (0 estimate).

Wheat exports from Russia, Ukraine and Kazakhstan are expected to fall 5 percent in the 2015/16 marketing year as dry autumn weather overshadows the positive influence of weakening local currencies in the conflict-ridden region, suggest a Reuters poll.

Saskatchewan Agriculture Crop Weekly Report says, some areas in the province received rainfall last week, which helped address topsoil moisture conditions; however, significant rain is still needed in many areas to help crops, hay and pasture develop.

Corn chart watchers are keeping an eye on the 100 day moving average of 3.79 1/4 in July, and 3.95 3/4 in December.

The debt crisis in Greece will be watched all weekend long as their next debt payment is due June 30th. Creditors continue to demand significant austerity measures by Greece, however, Greek Leaders insist they will not let that happen. Frank LaPlaca gave an excellent explanation of why this is an important issue to watch in the second half of this months Ag Leaders Monthly Webinar.

The economic calendar has Michigan Sentiment out at 9:00 am CDT. The average guess is for a reading of 94.6.

Cash cattle trade has been light with few sales in the dressed trading at 237 to 240. The strength in corn has the inverse effect on feeder cattle and live cattle. The seasonals suggest weaker product demand after the July 4 holiday weekend.

Traders are waiting for the potentially bearish 2 pm Hogs and Pigs report today. The average trade guess for Jun/August farrowing intentions is down 0.7% from year ago while for Sep/Nov is up 0.4%. The bottom line is the supplies of pork will be large through the first quarter of 2016. Lean Hog futures remain at a sizeable discount and in an oversold technical condition.

Dressed beef values were lower with choice down .96 and select down .26. The CME Feeder Index is 231.30. Pork cutout values are down .91.

Fireworks could come early this 4th of July - the market has a lot of potential volatility .

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

Heavy Rains Affect Yield Potential

Jun 25, 2015

Good Morning! Paul Georgy with the early morning commentary for June 25, 2015 at 5:15 am.

Grain markets are quiet ahead of the export sales report and as more rain moves through the Midwest. Greece and Euro negotiations breakdown as deadline approaches. Outside markets are calm waiting for breaking news.

Update - Morning Coffee Commentary:

Weather conditions continue to provide underlying support for row crops as fields are saturated and the forecast has heavy rains across the Midwest through the weekend. As we look past this weekend rains become lighter and temps remain cool. This should be beneficial to corn pollination. Planting progress for soybeans and crop conditions for corn and soybeans on Monday will likely have an impact on price direction.

University of Illinois economist suggests extremely wet corn fields are becoming a serious concern about yield potential.

Weekly export sales data will be released at 7:30 this morning. Trade estimates are: old crop corn 500,000 to 700,000 tonnes, soybeans 100,000 to 200,000 tonnes, soymeal 50,000 to 100,000 tonnes and soyoil 0 to 10,000 tonnes. New crop corn 100,000 to 200,000 tonnes, soybeans 250,000 to 500,000 tonnes, soymeal 25,000 to 150,000 tonnes and wheat 200,000 to 450,000 tonnes.

Ethanol production pushed to a new record high in the latest week, 994,000 barrels per day. Year to date production is running 4.7% over last year and beating USDA’s hopes for only a 0.8% increase in corn for ethanol. Stocks of ethanol fell last week even with the increased production.

The bottom line is the nation’s gasoline demand has bulged due to lower fuel costs.

Prevented planting estimates from the Farm Service Agency will not be seen until August. The June 30 acreage estimate from USDA will likely be higher than the final harvested acres, as it has been in 15 of the past 20 years reports.

Seasonals suggest a strong tendency that November soybeans gain on August soybeans during July.

July grain options expire on Friday.

(Reuters) - Negotiations to avert a Greek debt default stumbled on Wednesday and euro zone finance ministers accused Athens of refusing to compromise despite a deadline next week that could put it on a path out of the euro zone.

Senate Agriculture Committee will hold a hearing today on country of origin labeling and trade retaliation: What is at stake for America’s farmers, ranchers, businesses and consumers?

Friday USDA will release the Quarterly Hogs and Pigs Report at 2:00 pm. Trade estimates are: All Hogs 108%, Kept for Breeding 102%, and Kept for Market 108.9% of a year ago.

Lean hog futures consolidate ahead of Fridays report. The technical picture suggests an oversold condition, therefore a short covering rally could happen quickly. The headline traders will be looking at the large percentage increases in all categories but remember this year’s inventory is compared to the year ago inventory after PEDv losses.

Combined Choice/Select Beef cutout value should have a seasonal break now to July 25th.

Packer margins have moved to the positive and they are reluctant to give it up. Cash trade is expected steady this week. Trade is concerned the recent price rally in product came from fill in buying by retailers after a period of reduced production.

Dressed beef values were higher with choice up 1.99 and select up 2.40. The CME Feeder Index is 227.88. Pork cutout values are up .68.

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

Allendale Survey Shows Aggressive Corn Planting

Jun 24, 2015

Good Morning! Paul Georgy with the early morning commentary for June 24, 2015 at 5:15 am.

Grain markets are lower on profit taking after a 2 day rally. Dryer weather in the forecast and pre-report adjustments are also giving reason for a bit of a selloff. The US Dollar gives back some of the gains of yesterday.

Update - Midday Weather

Allendale's Planted Acreage Survey results suggest farmers planted 91.742 million acres of corn which is 1.145 million acres more than 2014 and 2.542 million acres more than the March USDA estimate. US farmers say they will plant 85.105 million acres of soybeans which is 1.404 million acres more than last year and 470,000 acres more than the March Planting intention estimate. Get the full explanation of survey results by listening to the June Ag Leaders Webinar recorded yesterday evening. All wheat acres are expected to be down 1.299 million acres from last year.

CME -- Due to a technical revision to its filing with the CFTC, CME Group today (Tuesday) announced that it will delay the closing of its futures pits in Chicago and New York.  Previously scheduled to take place on Thursday, July 2, the last day for most open outcry futures trading is now expected to take place on Monday, July 6, pending expiration of CFTC review periods.  During its review, the CFTC could further delay the closure for up to 90 days.

Kansas wheat associations are reporting newly harvested wheat is coming in with test weights of 55-61 pounds and yields although varied are a bit better than expected.

Canadian wheat areas of stress are expected to grow over the next week from 25% to 33% as warmer dryer weather moves into producing areas.

As of yesterday’s close, July wheat is up 33 cents for the week. Technical resistance crosses at 5.37 and the 50 day moving average crosses at 5.43.

Cash basis bids were sharply lower at many terminal locations due to increased farmer movement. Corn basis was mostly steady as farmers wait for further rally in futures.

Funds were estimated to have bought a net 16,000 corn contracts and 10,000 wheat contracts while staying even in beans, meal and oil.

Trade estimates for U.S. oil inventories are projected to have fallen by 2.3 million barrels this past week, when EIA numbers are released later today.

New home sales rose to a seven year high as the housing market builds momentum. Sales increased by 2.2% in May from a month earlier. This is the highest mark since February of 2008.

The market is expecting today’s Q1 GDP report to be revised up to -0.2% (q/q annualized) from the last estimate of -0.7%. This upward revision is expected due to stronger construction spending and retail sales. Q1 personal consumption is expected to be revised slightly higher to 1.9% from 1.8%.

Friday USDA will release the Quarterly Hogs and Pigs Report at 2:00 pm. Allendale’s estimates are: All Hogs 107.4%, Kept for Breeding 101.9%, Kept for Market 107.9% of a year ago.

The tug-o-war continues in cattle. The bulls point to the tighter showlists and the positive wholesale beef prices helping packers processing margins of over $50 per head. Bears are countering with the recent weeks of low kills has built up some extra market ready numbers that will be offered in early July.

Lean hog futures are dealing with large supplies and competition from poultry at the retail counter. Futures are oversold and fundamentals continue to weigh on prices however one could expect a short covering rally ahead of Friday’s report.

Dressed beef values were mixed with choice up 1.09 and select down .07. The CME Feeder Index is 227.66. Pork cutout values are down 1.83.

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

Crops Suffer From Wet Feet

Jun 23, 2015

Good Morning! Paul Georgy with the early morning commentary for June 23, 2015 at 5:15 am.

Grain markets are higher on follow through buying supported by poorer than expect crop conditions. The US Dollar is sharply higher as the Greece solution remains elusive.

Tune in tonight for the release of Allendale’s Producer Planted Acreage Update Survey results during the June Ag Leaders Webinar. Signup for the webinar by clicking here.

Update - Morning Coffee Commentary:

There will be more trade estimates for next weeks planted acreage report in the next few days. Rich Nelson in our office looked at years that had a wet June and the impact on acreage changes from the March report to the June report. The surprise was a sizeable acreage increase in soybeans. You can listen to his conversation by tuning in to the Weekly Strategy Session.

Soybean planting advances only 3% to 90% planted versus 95% average, trade was expecting 92%. Kansas made some soybean planting advancement from 16% to 73% complete. However that is 18% below average. Missouri farmers were able to only plant 9% more soybeans than previously completed which put them at 51% or 37% behind average. Soybean ratings dropped 2% to 65% G/E compared to 72% last year and 65% average.

Corn ratings fell 2% to 71% G/E vs. 74% last year and 74% average. Only an 8% increase in winter wheat harvest to bring the total harvest to 19% vs. 31% average, trade expectations were 21%. Spring wheat conditions improved 1% to 71% G/E vs. 71% last year.

Head scab, a fungal disease in wheat has spread rapidly in the wheat fields in central Kansas, a Kansas State University extension crop specialist said.

Port workers in Argentina's Rosario grains export hub expected to strike demanding salary improvements and union rights.

Options expire on Friday for July contracts at the CBOT.

An active economic calendar this week with New Home Sales and US Home Prices reports out later today. Both are expected to show improvements from last month.

Yesterday, the pace of existing home sales increased 5.1% last month from April to a seasonally adjusted rate of 5.35 million, the National Association of Realtors said Monday. Sales for April were revised up to 5.09 million from an initially reported 5.04 million.

Government data shows the worst-ever U.S. bird flu outbreak has cut the country's inventory of egg-laying hens to the smallest in seven years, while the frozen poultry in storage increases due to bans of U.S. meat imports by nearly 40 countries.

The Cold Storage report showed 468.560 million lbs. of beef in storage. That was 16 million under the April level which was revised higher today. This 16 million draw down fits in with the five year average of a 15 million decline.

The USDA reported that at the end of May pork stocks were 653.636 million lbs. That represented a 47 million lb. draw down from April (the third largest decline in May).

Cattle showlists for this week are down 38,000 head with most of the decrease in Kansas.

Dressed beef values were higher with choice up 1.51 and select up 1.62. The CME Feeder Index is 225.64. Pork cutout values are up 2.05.

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

Soybeans Firm On Planting Progress

Jun 22, 2015

Good Morning! Paul Georgy with the early morning commentary for June 22, 2015 at 5:15 am.

Grain markets are mixed with soybeans gaining strength from concerns of planting progress due to wet fields. Corn slides as traders feel Midwest rains will make more grain. The US Dollar is firm and US Equities are sharply higher.

Update - Midday Weather:

In this afternoon’s Crop Progress report the trade will be focused on how many beans got planted last week with most looking for 90-91% of the crop to be in the ground, up from 87% last week. They will be watching crop conditions with most looking for at least a 1-2% drop in both corn and beans due to damage from heavy rains in some areas.

Rains over the weekend were about as expected and the forecast over the next two weeks continues to call for moisture and lacks big heat across the Midwest.

Thanks for helping with the Planted Acreage Update. We will be releasing the results during the June Allendale Ag Leaders Webinar on Tuesday, June 23. Signup for the webinar by clicking here.

There should be a surge of private estimates this week with the focus being the bean acreage numbers. Informa’s 86.8 acres of soybeans compared to 87.2 last month.

CFTC Commitment of traders report showed that managed money funds moved considerable positions last week. They were net sellers of 29,598 contracts of corn to increase net short positions to 120,171 contracts. Managed money funds were net buyers of 19,392 contracts of soybeans to leave them nearly flat soybeans. In wheat they sold a net 12,714 contracts and remained net short 43,482 contracts.

Eurozone leaders will meet this evening to deal with the Greece situation.

USDA Cattle on Feed Report results are: On-Feed as of June 1 is 100.8%, Placed on Feed during May 89.8%, and Marketed during May is 91.7%.

Rich Nelson, Allendale’s Chief Strategist says, “this month’s Cattle on Feed report came in neutral for the nearby contracts but supportive for the far deferred contracts. USDA's survey of feedlots found May placements, the number of young cattle going into feedlots, at 89.8% of last year. That was the smallest placement since May 1996. It was also under the 92.8% average trade guess.”

Managed money funds further reduced the size of long positions in hogs and cattle by 4,500 and 5,500 respectively.

Cash cattle traded at 150 in the southern plains which was mostly 3.00 to 5.00 lower than last week, dressed sales traded mostly at 238 to 240.

Dressed beef values were higher with choice up .49 and select up 1.50. The CME Feeder Index is 225.64. Pork cutout values are down 1.29.

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

Traders Set Sights On Planted Acreage

Jun 19, 2015

Good Morning! Paul Georgy with the early morning commentary for June 19, 2015 at 5:15 am.

Grain markets are lower in a quiet session with no new fundamental news. The US Dollar index is higher as the Greek situation nears deadline. Crude oil consolidates near $60 per barrel.

Update - Morning Coffee Commentary:

The balance of the weekend across the lower portions of the cornbelt will have to deal with the remnants of tropical storm Bill. Following its passing open weather should allow for soybean planting and wheat harvest to begin.

Weekly export sales for the period between June 4 and 11 were 627,185 tonnes of old crop corn. Sales are now 92% of USDA's marketing year goal, down from the 99% normally seen at this time. Soybean export sales were 132,931 tonnes for old crop which puts total sales at 104% of USDA's whole-year goal and over the average of 101%. Wheat sales were 315,691 tonnes which brings the total sales to 20% of USDA's goal compared to 24% for the five year average.

USDA Drought Monitor map shows that dryness has been eliminated in the Eastern two-thirds of the United States.

NOAA issued an ideal forecast for growing crops during July, August and September with normal to below temperature and normal to above precipitation.

TODAY is the last day to participate. Allendale’s Planted Acreage Survey Update which you can participate in online or by calling your Allendale Representative. We will be releasing the results during the June Allendale Ag Leaders Webinar on June 23. Click here for survey.

Russia’s Deputy Prime Minister Arkady Dvorkovich expects their grain yield to reach up to 100 million tonnes in 2015 which would suggest exports to reach 25-27 million tonnes,

French consultancy Strategie Grains estimates a reduction in EU wheat production of 1.0 mmt and maize to be steady in their May forecast.

Informa updates acreage estimates later today. Their previous corn estimate was 88.7 million acres compared to USDA's 89.2 and their soybean estimate was 87.2 acres with last USDA 84.6.

CFTC Commitment of traders report this afternoon could have an impact on starting prices Sunday night.

A meeting of Eurozone finance ministers ended with “No deal” on Greece's bailout. However Eurozone leaders will hold an emergency summit on Monday in Brussels starting at 7 PM local time to discuss how to handle the Greek crisis.

Important economic reports on the calendar to watch for: Flash PMI’s from the US, China and Europe which will be released on Tuesday June 23. Personal income and spending on June 25 and the jobs report on July 2.

USDA Cattle on Feed Report this afternoon at 2:00 pm. Trade estimates are: On-Feed as of June 1 is 100.9%, Placed on Feed during May 91.4%, and Marketed during May is 91.6%.

Packers are waiting as long as possible this week to buy cattle as reduced production schedules are driving up product values and improving margins. It is likely the majority of this week’s trade will be done around the cattle on feed report. August cattle futures closed below the 50 day moving average which could prompt further technical selling this morning.

The Quarterly Hog and Pigs report will be released on June 26. Rich Nelson will be discussing his estimates over the next week in the Allendale Advisory Report. Get a Free Trial TODAY! Click here.

Pork exports remain a key wild card. Weak ham values are a warning sign that Mexico purchases may have slowed down. For now, pork supplies appear to be burdensome, especially for items that carry a large portion of the cutout value such as loins and hams.

Dressed beef values were higher with choice up .43 and select up .35. The CME Feeder Index is 225.73. Pork cutout values are down 1.57.

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

Fed Talks Dollar Drops

Jun 18, 2015

Good Morning! Paul Georgy with the early morning commentary for June 18, 2015 at 5:15 am.

Grain markets are slightly lower on profit taking ahead of weekly sales data. The US Dollar is lower on comments from Fed Chairman.

Update - Morning Coffee Commentary:

The weather models have reduced some of the amounts for the weekend and is a taking some of the moisture out of the 6 to 10 day for the plains and lower Midwest. There is no ridging in sight therefore expect waves of moisture across the central US as we move into July.

Traders are focusing on the potential prevent plant in soybeans. The June 30 planted acreage and quarterly stocks report in garnering more attention.

Ethanol production slipped a little more than expected in the latest week. The decline goes from 992,000 barrels per day to now 980,000. This was only 1% over last year. Year to date pace is still very strong at 4.7% over last year. USDA’s corn for ethanol goal is for a 0.8% increase. Ethanol stocks rose from 9.9% over last year to now 16.1% over last year.

Weekly export sales data will be released at 7:30. Trade estimates are: Old crop corn 400,000 to 600,000 tonnes, soybeans 100,000 to 250,000 tonnes, soymeal 50,000 to 150,000 tonnes soyoil 0 to 10,000 tonnes. New expectations for corn 50,000 to 200,000 tonnes, soymeal 0 to 100,000 tonnes and wheat 200,000 to 400,000.

Flooding along the Midwest river system has halted barge lines from moving grain on the Illinois River.

Allendale’s Planted Acreage Survey Update which you can participate in online or by calling your Allendale Representative. We will be releasing the results during the June Allendale Ag Leaders Webinar on June 23. Click here for survey.

Corn and soybean basis dropped 3 cents in several locations as farmer selling picks yesterday afternoon. Gulf basis increased as river levels cause a rally in barge freight rates.

Funds were estimated to have bought a net 10,000 corn contracts, 9,000 soybeans and bought 5,000 soymeal contracts. They were even in wheat and sold 1,000 soyoil contracts.

Germany's association of farm cooperatives said the German wheat and rapeseed have suffered from recent dry weather and project the 2015 wheat crop will fall 7.2 percent on the year to 25.77 million tonnes.

U.S. Federal Reserve officials indicated that the U.S. economy is growing moderately and likely strong enough to support an interest rate increase by the end of the year.

USDA Cattle on Feed Report will be released on Friday at 2:00 pm. Trade estimates are: On-Feed as of June 1 is 100.9%, Placed on Feed during May 91.4%, and Marketed during May is 91.6%.

Cash cattle trade is at a standstill and we expect the majority of this week trade will be done after the On-feed report Friday. Product is firm due to the slowdown in production by packers. Seasonally beef values drift lower after July 4 demand is met.

The Quarterly Hog and Pigs report will be released on June 26. Rich Nelson will be discussing his estimates over the next week in the Allendale Advisory Report. Today he looked at sow slaughter and how it will effect estimates for the report. During the past 5 weeks sow slaughter has been 6.7% above a year ago.

Dressed beef values were higher with choice up .93 and select up 1.82. The CME Feeder Index is 226.47. Pork cutout values are down .52.

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

Weather Fuels Short Covering

Jun 17, 2015

Good Morning! Paul Georgy with the early morning commentary for June 17, 2015 at 5:15 am.

Grain markets are higher fueled by the wet weather forecast for the Midwest and short covering. The US Dollar is “calm before the storm” as traders wait for an FOMC decision and if Greece will make payment.

Update - Morning Coffee Commentary:

Allendale’s Planted Acreage Survey Update which you can participate in online or by calling your Allendale Representative. We will be releasing the results during the June Allendale Ag Leaders Webinar on June 23. Click here for survey.

Soybeans bounce off of the contract lows as field conditions are too wet in most areas for ideal bean growth. The USDA said on Monday that 50% of the unplanted soybean acres are in KS and MO. There is more rain in the forecast for eastern Kansas and central Missouri later this week. Managed money funds are heavily short soybeans but with Tuesday’s rally one would expect them to be reducing positions. Technical resistance in November soybean futures crosses at the 50 day moving average which is 9.35 today.

December corn futures put in a 2 day double bottom on the charts after setting new contract lows and closing with in recent trading range. The 50 day moving average crosses at 384. Wet fields and strength in the soybeans is providing traders with a reason for short covering.

Rich Nelson, Allendale’s chief Strategists, looked at year where the month of June was wet. He found 6 out of 9 years since 1998 corn yields were 1.4% higher than trend on average. Soybean yields varied in wet June years but on average had minimal change.

Wheat harvest is starting in the southern plains with early yields 25 to 50 bushel per acre. World wheat stock issues and the inability of US wheat to compete with other exporting countries remains wheat’s “Achilles’ heel”.

The Farm office of the FranceAgriMer has cut French wheat ending stocks from 3.6 to 3.0 million tonnes due to increased exports. They raised soft wheat exports outside of the EU to 11.1 from 10.6 million tonnes. Maize ending stocks were lowered from 3.8 million tonnes to 3.4 million tonnes.

Eco traders wait for FOMC meeting comments at 1:00 pm CDT on their interest rate decision.

Cattle on Feed Report is Friday at 2 PM. Early trade estimates are: Cattle on Feed 100.1%, Placed 86.5% and Marketed 91.4%.

Livestock futures are flashing confusing signals. Some want to buy the futures because of the discount to cash and Technicals remain in an uptrend. Other want to sell due to the weakness in cash, seasonal timing for an increase in carcass weights and the time of year where demand slows after July 4th holiday. Bottom line, there is opportunity but pick your entry point carefully and use risk protection.

Lean hog futures are extremely oversold technically. Pork production is well above a year ago on a weekly basis but remember, a year ago we were in the middle of PEDv and declining supplies. August lean hog futures have support at May lows of 73.55.

Dressed beef values were higher with choice up 2.14 and select up 2.10. The CME Feeder Index is 226.69. Pork cutout values are up 1.42.

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

Conditions Slip For Row Crops, Wheat Harvest Behind

Jun 16, 2015

Good Morning! Paul Georgy with the early morning commentary for June 16, 2015 at 5:15 am.

Grain markets are firmer on “turnaround Tuesday” supported by poorer than expected crop conditions. The US Dollar is treading water as traders wait for news from EU on Greece and FOMC interest rate decision.

Update - Midday Weather:

Allendale’s Planted Acreage Survey Update which you can participate in online or by calling your Allendale Representative. We will be releasing the results during the June Allendale Ag Leaders Webinar on June 23. Click here for survey

The weather maps have the rain continuing for the short-term and the 6 to 10 day forecast is a bit dryer for the southern plains allowing for harvest to progress. The national weather service long range forecast is cool and wet for most of July for the Midwest. Trader’s mentality is “rain makes grain.”

The heavy rains over the past week had an effect on crop conditions. Corn ratings declined 1% in the good/excellent category to 73%. Soybean plantings gained 8% to 87% versus 90% average. Kansas farmers were able increase plantings by 26% to 57% while average progress should be 85%. The state of Missouri only planted 12% last week to put their progress at 42% when average is 79%. Soybean conditions for the growing crop declined 2% to 67% versus last year’s 73%. There are approximately 3.2 million acres left to plant in KS and MO combined.

Winter wheat conditions were steady with last week at 43% good/excellent. Spring wheat conditions improved by 1% to 70% versus last year’s 72%. Wheat harvest improved by 7% to 11% complete compared to 20% last year.

The NOPA crush data showed processors set a new record for the month of May at 148.416 million bushels of soybeans consumed. The crush was 15% above last year and well above the 8% increase needed to meet USDA’s goal. Oil stocks were much bigger than expected at 1.578 billion pounds vs. expectations of 1.441.

El Nino’s impact on vegetable oil production is worth the concern as Southeast Asia produces about 42% of the total world production. Indonesia and Malaysia are the largest producing areas where dryness would have greatest impact.

ABARES, Australian Bureau of Agricultural and Resource Economics and Sciences, released revised 2015/16 wheat production estimate of 23.6 million tonnes which was lower than earlier estimate of 24.4 million tonnes. They also lowered canola production to 2.97 million tonnes from 3.26 million tonnes.

Argentina’s government has authorized an additional 1 million tonnes of 2014/15 wheat for exports which brings the season's approved export quota to about 4.7 million tonnes.

The Eco calendar has Housing Starts today and the trade is expecting a 7 year high result. Tomorrow the results of the FOMC Meeting has traders expecting no change in interest rates.

Beef carcass weights remain lighter than seasonally expected which could be the effect of muddy lots in cattle feeding areas. Packer margins and cutout values should see improvement later this week on fill in buying by retailers. Pasture and range condition ratings continue to improve as it was up 2% to 65% good/excellent versus 54% last year.

Cash hogs trade struggles from heavy supplies of pork. The cool spring weather has helped boost gains. Futures have been pressured by fundamental news and managed funds liquidation. Technicians are projecting a move to the $80 to $81 on a retracement rally. Stay in touch with your Allendale Representative for trade ideas.

Dressed beef values were higher with choice up 1.61 and select up .04. The CME Feeder Index is 225.86. Pork cutout values are down .27.

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

Crush Data Could Provide A Lift

Jun 15, 2015

Good Morning! Paul Georgy with the early morning commentary for June 15, 2015 at 5:15 am.

Grain markets are lower as investors show risk-off attitude across commodity complex. The US Dollar Index is higher on Greece negotiations breaking down.

Update - Midday Weather

Allendale’s Planted Acreage Survey Update continues this week which you can participate in online or by calling your Allendale Representative. We will be releasing the results during the June Allendale Ag Leaders Webinar on June 23. Click here for survey.

Weather leans supportive to southern plains as precipitation was at or below expectations over the weekend. Forecast is for a drier tone for Missouri Valley while ongoing active Midwest remains in a precipitation pattern. Canadian spring grain crop is seeing a stress buildup due to a lack of rain. Traders will be watching this area closely in the coming days. Get all the details from Ryan Martin at Allendale Weather.

Crop conditions report this afternoon should show improvement in corn good/excellent category compared to last week’s 74%. The moisture and heat in recent days have been beneficial for corn growth.

Soybean planting delays will be watched for KS and MO while other areas should have made headways in seeding. Trade is looking for soybean plantings nationally to be 88%.

NOPA Crush Data for May will be released today, at 11:00 am. The May monthly crush is forecast to be 147.299 million bushels. The record for May is 144.002 million bushels, set in 2008. Crushing totaled 128.824 million bushels during May of 2014.

Managed Money Funds were large buyers last week across the grain complex. They covered 44,268 contract in corn leaving them net short 90,573 contracts. They bought a net 40,905 contracts of wheat and 11,841 contracts of soybeans.

Midwest basis bids were steady on Friday. Gulf wheat basis was down 5 to 8 cents for soft and hard red winter wheat as US wheat is uncompetitive with world prices. Egypt bought wheat out of the Black Sea region for the second day.

RJO Radio Asset Allocation highlights suggest another month of negative managed futures returns in May which makes them negative YTD. With positive YTD equity returns up 4-5% and ongoing reduced volatility has asset allocators in coming months minimizing exposure to managed futures while increasing allocation to equity strategies because of decent earnings, improving US economy and low corporate debt/equity ratios.

The economic calendar is active this week spotlighted by the FOMC meeting starting on Tuesday and the release of an interest rate decision on Wednesday at 1:00 pm.

Cash cattle traded as low as 152 in NE on Friday which was 3 to 4.00 lower than last week. The dressed trade was also 2.00 to 3.00 lower than last week at 243 to 244. Futures, although at a discount to cash, are being pressure by long liquidation. The weak cash also puts traders with long positions in the June contract at risk for delivery.

Larger than expected market ready hog supplies continue to weigh on prices. Competition for counter space at the retailer is pressing pork cutout values. Managed Money Funds reduced long positions in lean hogs by 3,533 to leave then net long only 23,746 contracts.

Dressed beef values were lower with choice down 1.47 and select down .24. The CME Feeder Index is 226.40. Pork cutout values are down 1.64.

Markets as of 5:15 AM CDT

  • Jul Corn   -2 1/4
  • Jul Beans -7 3/4     
  • Jul Wheat   -6 1/2
  • Jul Soymeal -2.60
  • Sep Dlr     .28
  • Sep S&P   -6.75
  • Jul Crude   -.77
  • Jun Gold   -5.20

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

Grains Testing Contract Low Support

Jun 12, 2015

Good Morning! Paul Georgy with the early morning commentary for June 12, 2015 at 5:15 am.

Grain markets are lower on plenty of moisture for the growing crop across the Midwest. The strong US Dollar is creating export headwinds as US grains are higher priced than the rest of the world. Greece has be sent home from negotiations to come up with a reasonable deal.

Update - Morning Audio Commentary:

Allendale is doing a Planted Acreage Survey Update which you can participate in online or by calling your Allendale Representative. We will be releasing the results during the June Allendale Ag Leaders Webinar on June 23. Click here for survey.

The June Supply and Demand report was seen as friendly but quickly turned bearish as traders now expect ending stocks to grow from the report level. South American crop size still is being estimated larger than USDA’s numbers and wet conditions will likely result in more soybean acres on the June 30th report. More acres could result in larger production. Combine the recent rally with the fundamental outlook and stronger US Dollar, and traders are now looking for support at contract lows in futures.

Corn futures are consolidating above contract lows and recent support. A concerning factor to our research staff is the amount of corn we are hearing is being delivered on a July basis contract. This would suggest this corn will have to be priced before first notice day of July futures. This is not a bullish factor. Stay tuned!

The NOAA weekly drought monitor index map shows the dry areas across the Midwest are gone. The weather forecast is alternating fronts with a few days of drying for the next 6 to 10 days.

Nebraska clients have said they finished planting yesterday ahead of the rain. Next week’s soybean planting progress report for KS and MO is important as progress has fallen behind average.

NOPA Crush Data for May will be released on Monday, June 15th. The May monthly crush is forecast to be 147.299 million bushels. The record for May is 144.002 million bushels, set in 2008. Crushing totaled 128.824 million bushels during May of 2014.

Saskatchewan Agriculture's Weekly Crop Report says seeding is virtually complete for Saskatchewan's producers except for reseeding of frost damaged crops. The five year seeding average for this time of year is 87 per cent. Much of the province needs rain to replenish topsoil moisture conditions. Provincially, topsoil moisture conditions on cropland are rated as three per cent surplus, 40 per cent adequate, 42 per cent short and 15 per cent very short. Crop development is delayed in some areas due to lack of moisture. However, most crops are in good condition.

(Reuters)-The U.S. Senate Agriculture Committee will hold a hearing on the nation's worst ever outbreak of bird flu in poultry, a notice issued on Thursday said. The hearing, set for July 7, will address the impact of the lethal disease on the U.S. poultry sector, according to the notice from Sen. Pat Roberts, a Kansas Republican and chairman of the committee.

The US House of Representatives passed a bill rescinding COOL. The Senate has yet to introduce its own bill to rescind the labeling law.

Some limited cash cattle sales yesterday at $155, even with last week’s limited trades. General bids are still at $152 while asking prices are $158.

Lean hog futures are oversold but the burdensome competitive meat supply continues to negate any hopes for a summer rally.

Dressed beef values were lower with choice down .47 and select down .07. The CME Feeder Index is 225.74. Pork cutout values are down .58.

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

Focus Now On Planted Acres Report

Jun 11, 2015

Good Morning! Paul Georgy with the early morning commentary for June 11, 2015 at 5:15 am.

Grain markets are lower on follow through selling. The US Dollar rebounds against the euro and crude gives back some of yesterday’s gains.

Update - Morning Coffee:

Traders are already concerned about the planted acreage data that will be released on June 30th. Allendale is asking for your help filling out the Allendale Planted Acreage Survey Update available online. We will be releasing the results during the Allendale Ag Leaders Webinar on June 23. Click here for survey.

Weather forecast is seen as favorable to the growing crops well into next week unless you are in KS or MO. Soybean plantings are still behind normal in those areas. More moisture is scheduled across Europe into Ukraine.

The USDA report was mostly neutral as ending stocks were in line with trade estimates. A few highlights from the report were: Old crop corn ending stocks were a bit higher than expected as ethanol usage was lowered by 25 million bushel and that was carried to the bottom line with ending stocks up by the same amount. That increase was carried over to the new crop corn balance sheet. Get all the details of the report by listening to Rich Nelson at Allendale.com.

Old crop soybean ending stocks were cut by 20 million bushel due to an increase in crush and exports by 10 million bushel each.  This was a bigger cut than the “average” guess but well within line. The lower ending stocks were carried into the new crop balance sheet accounting for most of the lowering of stocks.

Wheat ending stocks had minimal changes as winter wheat production came in a bit higher than trade was expecting.

The EIA ethanol data showed this week’s production at 992,000 barrels per day which was a retest of the year’s high. The year to date pace is 5% over last year, far greater than USDA’s expectation of a 1.3% increase.

Weekly export sales report will be released at 7:30 this morning. Trade estimates for old crop are: corn 400,000 to 600,000 tonnes, soybeans 50,000 to 150,000 tonnes, soymeal 0 to 75,000 tonnes, soyoil 0 tonnes and wheat -300,000 to -100,000 tonnes.

For new crop sales: corn 50,000 to 200,000 tonnes, soybeans 100,000 to 250,000 tonnes, soymeal 25,000 to 125,000 tonnes, soyoil 5,000 to 50,000 tonnes and wheat 200,000 to 400,000 tonnes.

Farmer selling came to a standstill as futures prices fell on Wednesday. Soybean basis is steady as crush margins remain positive.

NOPA Crush Data for May will be released on Monday, June 15th.

The World Bank cut its global growth outlook for this year and urged countries to "fasten their seat belts" as they adjust to lower commodity prices and a looming rise in U.S. interest rates.

Rich Nelson Allendale’s Chief Strategist says, “We were a little concerned over USDA’s changes to the poultry balance sheets on Wednesday. USDA added 155 million lbs. and 197 million lbs. to their 2015 and 2016 chicken production forecasts. That would put chicken production at 39.886 billion this year, 4.6% over 2014, and another jump of 2.1% for next year. With more chicken production for 2015, and an actual decline in exports due to bird flu restrictions, the amount of chicken offered to US consumers in 2015 will increase by a large 6.4%. Another 1.0% on top of that is seen for 2016. Expect chicken prices to remain pressured.”

A few cattle traded early this week but a standoff between packers and feedlots now exists.

June Lean Hogs will go off the board on Friday. Lean hog futures are oversold but traders wait for some news out of Washington on the COOL legislation.

Dressed beef values were mixed with choice up .46 and select down .02. The CME Feeder Index is 225.03. Pork cutout values are up .34.

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

June 2015 USDA Supply Demand Recap

Jun 10, 2015

Please call us with any questions 800-262-7538

Traders Adjust Positions Ahead Of USDA Report

Jun 10, 2015

Good Morning! Paul Georgy with the early morning commentary for June 10, 2015 at 5:15 am.

Grain markets are nearly unchanged ahead of the USDA report. The US Dollar is lower against the basket of currencies and crude oil is higher.

Update - Morning Coffee Commentary:

Traders are waiting for the release of the June Supply and Demand report. Weather is very much a concern for producers in MO, KS and OK as they get ready for wheat harvest and finish planting row crops. The crop insurance planting date is quickly upon us, with most areas June 12 to 15 the final date without discounts.

The talk of switching acres from soybeans to sorghum or corn to sorghum or taking preventative planting are all viable reason for planted acreage variations on the June 30 report. Most likely 5 minutes after today’s report, trade will be talking about the weathers impact on planted acres. If you a moment, take a look at our acreage survey going on now.

Production in South America could get some adjustments from USDA on today’s report, now that their harvest is almost completed.

USDA 2014/15 U.S. grain and soybean ending stocks will be released today at 11:00 am.  Reuter’s trader survey has the following range of estimates (view our report page after 11:00 AM today for results):

            USDA June   Average Est.   USDA May

Wheat         _______          0.712      0.709

Corn          _______          1.859      1.851

Soybeans      _______          0.339      0.350

CME Group Inc. confirmed on Tuesday that it will extend the trading session for grain and oilseed futures by five minutes starting next month as part of a transition to nearly all-electronic futures trading. Starting on July 6, they will change the closing time for grain and oilseed futures to 1:20 p.m. CDT from 1:15 p.m.

Australian Bureau of Agricultural and Resource Economics and Science (ABARES) puts the Australian winter wheat crop at 23.6 million tonnes in 2015/16 amid a drought-inducing El Nino weather event.

The market consensus for Wednesday’s weekly EIA report is for a 1.45 million barrel decline in U.S. crude oil inventories, a 50,000 barrel increase in gasoline inventories, a 600,000 barrel increase in distillate inventories, and a 0.5 point increase in the refinery utilization rate to 93.7%.

The U.S. Energy Information Administration, in its monthly short-term energy outlook, called for U.S. crude-oil output to average 9.43 million barrels a day in 2015 and 9.27 million barrels a day in 2016.

Cuba has suspended the import of U.S. chicken citing the bird flu epidemic affecting U.S. poultry.

The lean hog futures have been hit with selling due to the concern over congresses slow pace of dealing with COOL. The House Ag Committee has voted to repeal but the challenge remains in the senate. Many are concerned sanction will be imposed before congress makes a decision.

Live cattle futures discount to cash is providing support and short-covering is possible when chart resistance is taken out.

Dressed beef values were lower with choice up 3.09 and select up 4.44. The CME Feeder Index is 225.05. Pork cutout values are up 1.50.

 

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

Planting Progress Behind and Crop Conditions Drop

Jun 09, 2015

Good Morning! Paul Georgy with the early morning commentary for June 9, 2015 at 5:15 am.

Grain markets are mixed in a quiet session. Soybeans are getting support from planting delays. The outside markets are reversing the direction from yesterday.

Update - Midday Weather:

Soybean planting fell behind the 5 year average of 81%, posting only 79% planted. Soybean conditions start this year at 69% good/excellent compared to 74% last year. The heavy rains in recent weeks across KS and MO where less than a third of the soybeans are in the ground as of Sunday. The 5 year average suggest planting progress should be near 75%.

Corn conditions stayed at 74% good/excellent as a national average however the eastern cornbelt improved and western states dropped slightly due to cold and wet conditions.

Wheat conditions dropped 1% in winter wheat and 2% in spring wheat good/excellent conditions. Winter wheat harvest was only 4% complete when the 5 Year average is 12%. The states of OK is 25% and TX is 10% behind normal.

Weather forecasts are putting heat in for the southern US. This could have an impact on corn pollination in GA through the Carolinas. The Midwest is expected have plenty of moisture over the next 10 days. Forecasts for Russia and Ukraine are not quite as favorable in the 11 to 15 day period as summer heat arrives across the dry Volga valley.

The large fund short positions have traders worried about what will trigger further short covering. Daily volume is relatively light and any shift in positioning could have a significant impact on price movement.

USDA 2014/15 U.S. grain and soybean ending stocks will be released tomorrow at 11:00 am.

China’s General Administration of Customs indicated May soybean imports at 6.13 million tonnes. This is under the 7.0 mmt that the Ministry of Agriculture had been estimating. It was higher than the April imports of 5.3 (normal) and was 3% over last year's May import at 6.0.

The University of IL in its weekly outlook report says corn consumption for ethanol and co-product production is driven almost entirely by ethanol demand, not by co-product demand. There are a number of factors at play in determining the demand for domestically produced corn based ethanol so that a number of future scenarios are possible. Those factors include the EPA's annual Renewable Fuels Standards (RFS) and the methods for implementing those standards, the magnitude of domestic motor fuel consumption, the economics of ethanol blending, and the quantity of domestic ethanol produced from feed stocks other than corn, and the magnitude of ethanol imports and exports.

Michigan Department of Natural Resources says they found three young geese in Sterling Heights, Michigan, about 20 miles north of Detroit that were infected with the highly pathogenic H5N2 flu strain.

Feedlot showlists were up 39,000 head this week. Packer margins are in the red and beef values remain under pressure. The reduced slaughter this week could provide some support to product.

Technicals point to resistance in the cattle complex at slightly higher levels however a close above the 153.30 level in the August contract could trigger more buying. The pork complex is oversold and seasonally tends to rally into summer. Due to choppy action in livestock, spreads may provide a lower risk opportunity.

Dressed beef values were lower with choice down .54 and select down 1.26. The CME Feeder Index is 225.93. Pork cutout values are down .32.

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

Soybean Planting Progress Concerns Traders

Jun 08, 2015

Good Morning! Paul Georgy with the early morning commentary for June 8, 2015 at 5:15 am.

Grain markets are higher on weather worries and outside market support. Greece missed its payment deadline as they continue to meet with creditors.

Update - Midday Weather

Weather takes the spotlight this week as rains are supportive to crop growth in most areas. The too wet and unplanted areas of KS, MO, NE and IA are also garnering attention as planting season quickly passes by. This afternoon’s planting progress for soybeans will be watched closely.

Soybean oil continues to get the attention in the soy complex closing 1.44 higher last week. The technical and fundamental situation is providing the reason for short covering in soybean oil.

CFTC Commitment of Traders report showed managed money funds reducing short positions in grains. They were net buyers of 5,602 contracts of corn putting them net short 134,842 contracts. In soybeans they are net short 94,781 after buying 9,182. They also covered short positions in wheat (11,662) and soymeal (991). They added 31,059 contracts in soyoil to make them net long 59,630 contracts. Funds were net buyers in cattle and hogs as well.

There is more attention to disease problems in southern plains wheat as researchers are finding head scab affecting yield potential. Harvest should begin in a few weeks.

The USDA Crop Production report will be released on Wednesday June 10. Traders are expecting increases in corn and soybean production in Brazil and Argentina. They are looking for ending stocks in US corn and wheat to increase but expecting the USDA to lower soybean ending stock due to the aggressive export demand in recent months.

Positive crush margins in the US and South America are providing support for soybeans. The aggressive global meal demand and surge in soyoil values has some Midwest processors scrambling to buy soybeans.

There is a possible truckers strike set for today in Argentina which traders will be watching for headlines and details.

Ukraine’s Ag Minister raises the 2015 harvest estimate to 23 million tonnes due to increased planting of wheat this spring. Last month they were forecasting 21 to 22 million tonnes.

China's agricultural yields could be affected by El Nino, a weather pattern that has the potential to cause both droughts and flooding, warned the Chinese Ministry of Agriculture.

Eco traders are watching how Greece will work through its debit payments and negotiations with creditors.

Average prices for beef and pork fell in grocery store advertisements. The 15 cut average for beef decreased to $5.43 a pound from $5.63 last week and $4.99 a year ago. The 5 cut average for pork prices fell to $2.73 a pound versus $3.17 last week and $3.36 average last year. Chicken prices climbed modestly. The 2 cut average increased to $1.92 per pound from $1.89 last week, and was down from $2.15 a year earlier.

Today is the first notice day for June cattle contracts and the last trading day for June Lean Hogs on Friday June 12.

Traders in the livestock markets ended the week with an attitude that the COOL legislation would be rescinded in time to prevent retaliatory actions from Canada and Mexico. The deferred contracts of hogs will be watched closely for a possible seasonal bottom.

Dressed beef values were mixed with choice down .80 and select up .71. The CME Feeder Index is 223.61. Pork cutout values are up .34.

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

Chart Patterns May Provide Clues To The Close

Jun 05, 2015

Good Morning! Paul Georgy with the early morning commentary for June 5, 2015 at 5:15 am.

Grain markets and commodity markets in general are quiet. The US Dollar is slightly higher while crude oil is lower. Grain markets are mixed.

Update - Morning Coffee Commentary:

Closing out the week in the grain market, traders will be focusing on weather and chart points. They will be looking at a higher outside week in several contracts which could prompt more short-covering if prices are higher going into the closing bell. Weather conditions are getting attention as not all of the cornbelt is in ideal condition, a few spots are too dry and some areas are too wet. Although NOAA's recent map has reduced all the dry areas from a week ago.

Managed money funds are heavily short and many are expecting them to have a quick trigger finger when exiting positions.

Farmers would be happy to see a rally, however this could create resistance on rallies as they price some of their unsold inventory.

Cash grain buyers said that movement picked up a little on Thursday but most Midwest basis were steady. Although Decatur IL dropped corn basis by 3 cents and held steady on soybeans.

Funds were estimated to have bought a net 6,000 corn contracts, 7,000 wheat contracts, 7,000 soybeans, and 4,000 soymeal contracts on Thursday.

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Macro market news will remain on the minds of traders as they go home for the weekend. May payroll report is due to be released at 7:30 and trade is expecting it to show a respectable increase of 227,000 jobs and would keep alive the worries about a Fed rate hike.

Greece yesterday avoided its 300 million euro payment that was due to the IMF today by bundling all its June payments into a single payment of about 1.6 billion euros that is now due June 30. The market now will wait to see if the Eurozone and IMF will accept their offer.

A United States trade representative comments on the “substantially inflated" requests from Canada and Mexico over the US country of origin rule. “The United States will object to these requests at the appropriate time, referring the matter to (World Trade Organization) arbitration," spokesman Andrew Bates said. "Canada and Mexico did not provide any justification for their requests, but we would note that the annual values appear to be substantially inflated."

Beef exports to Mexico were 8,561 tonnes, down 26% from a year ago while exports to Canada at 8,267 MT were down 15%.

Lean hog futures summer contracts are now at their lowest level since late April. The potential tariff issue with Canada and Mexico is a big deal for pork. In April, Mexico imported 25% of our pork exports and Canada received 8%. April US pork exports jumped to 483.362 million lbs. which was the largest export volume since October 2012. Imports in April were 87.174 million lbs. and 10% over last year.

Dressed beef values were mixed with choice down .80 and select up .71. The CME Feeder Index is 223.61. Pork cutout values are up .34.

Markets as of 5:15 AM CDT

  • Jul Corn     3/4
  • Jul Beans - 1/2      
  • Jul Wheat   1
  • Jul Soymeal -.40
  • Jun Dlr     .13
  • Jun S&P   -5.75
  • Jul Crude   -.23
  • Jun Gold    .50

Technical 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

Grains Wait For Macro Market Guidance

Jun 04, 2015

Good Morning! Paul Georgy with the early morning commentary for June 4, 2015 at 5:15 am.

Grain markets are mixed while currency markets provide tailwinds ahead of the export sales data.

Update - Midday Weather Update:

The grain fundamentals have not changed but due to an oversold condition the slightest bit of positive news has provided short covering. On the recent rally there has been more farmer selling in US and in South America. Macro markets and early month money flow will be watched for further directional moves. Unemployment claims report is expected to show small declines ahead of Friday’s unemployment report and macro markets are waiting to see if Greece will make its IMF payment on Friday.

Corn basis across the Midwest was softer as farmer movement has picked up on futures rally. Soybean basis at interior processor remains firm as their operating margins are still positive.

Ethanol production remains aggressive as profit margins are positive. EIA production ethanol was 972,000 barrels per day compared to 969,000 the previous week. Ethanol stocks remain at 20.1 million barrels. In order for us to meet USDA’s production goal, ethanol plants would have to run 855,000 barrels per day each week from now through August. Is that realistic or will the USDA raise the corn for ethanol usage on the next S D report?

The USDA data showed exports of 601,834 tonnes of DDGS to China in April which was the second largest monthly shipment ever to the top importer of the animal feed.

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The following are estimates for Weekly Export sales report gathered by Reuters.

        Trade estimates for      Trade estimates for

                    2014-15                  2015-16

Wheat     (-75,000)-100,000          200,000-400,000

Corn        550,000-750,000          100,000-300,000

Soybeans    150,000-350,000           50,000-150,000

Soymeal      75,000-150,000          100,000-200,000

Soyoil             0-12,000                        0

Informa raises production for South American corn and soybeans. They pushed Argentina corn production to 25.0 mmt, Argentina soybeans to 60.0 mmt and Brazil soybeans to 95.5 which was up 1.00 mmt for each. They also see Russia corn production up 2.0 mmt and Ukraine corn up 1.0 mmt from last estimate.

Brazil has raised interest rates by 50 basis points to 13.75%. They are attempting to tame the wild inflation however many are expecting their economy to suffer the worst recession in 25 years.

The world’s largest meat packer, JBS said it is closing another plant in Brazil’s Rondonia state due to lack of market ready cattle. This is the second plant closed this year due to the lack of cattle.

Australia has been benefiting from high cattle prices in the US and at current export rates they may hit the quota allocation for shipments to the US. Currently Australia has reached 55% of its quota for this marketing year.

CME asks for CFTC approval to change trading hours of livestock options to match the opening times of the electronic trading when open outcry futures pits close.

Beef product values continue under pressure as supplies outpace demand. Beef supplies are burdensome currently due to poor clearance the last 2 weekends at the retail counter. Cash trade will likely wait until late in the week as packer’s resistance purchases due to poor margins.

Dressed beef values were lower with choice down 2.31 and select down 1.55. The CME Feeder Index is 223.61. Pork cutout values are down .85.

Markets as of 5:15 AM CDT

  • Jul Corn   -1 1/2
  • Jul Beans 2 1/4     
  • Jul Wheat   -2 3/4
  • Jul Soymeal 1.80
  • Jun Dlr     -.68
  • Jun S&P   -12.00
  • Jul Crude   .16
  • Jun Gold   -2.00

Technical Chart of the Day

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Market Quiet Waiting For Fresh News

Jun 03, 2015

Good Morning! Paul Georgy with the early morning commentary for June 3, 2015 at 5:15 am.

Grain markets are trading near unchanged waiting for fresh news. The US Dollar has rebound from Tuesday’s sharp decline.

Update - Morning Coffee:

Yesterday’s US Dollar index decline was the largest one day move since 2013. The excitement was triggered by positive inflation data out of Europe and the hope of Greece putting together a payment plan with creditors by Friday. Today reality has set in as Greece is still waiting for a response from creditors on the proposal.

The grain markets will be spurred by talk of technical reversals from an oversold condition and hopes of better export demand because of currency exchange rates.

Fundamentals remain the same with rallies expected to be met with selling from producers in the US and South America.

Ryan Martin, Allendale’s Meteorologist has all your weather information, click here.

Funds were estimated to have bought a net 11,000 corn contracts, 9,000 wheat, 9,000 soybeans, 3,000 soymeal and sold 3,000 soyoil on Tuesday.

Argentine farmers were noted heavy sellers yesterday as the labor situation continues to look like it is getting better. The concern of a major national strike is waning.

The Goldman roll will start in Friday, expect more pre-rolling to be done ahead of them. The Deutsche Bank roll started yesterday. In years past they’ve rolled wheat positions from July 15 to the following year July 16 but this year they are moving positions from July 15 wheat to September 15 due to the roll differential. Keep an eye on those spreads.

The EU raised their estimate of their corn crop by 1.8 million tonnes to 68.1 million tonnes as good weather prevails. The USDA’s last estimate was 68.34 million tonnes and last year they produced 77.8 million tonnes. This puts them more in line with the USDA at 68.34 mmts. Last year the EU had a record crop at 77.8 mmts so they’ll be down year over year by quite a bit.

Canada’s Agriculture Minister Gerry Ritz says they are whittling down the list of U.S. products that they may hit with steep tariffs in retaliation against US meat-labeling laws. The Canadian government is likely to target beef, pork, California wines, mattresses, cherries and office furniture, as they narrow their target from an earlier list of three dozen U.S. products.

CME released its trading volume statistics for May 2015 with gross volume up 8% over may of 2014. Agricultural volume average 1.2 million contracts per day which was 27% higher than same period last year.

China's Dalian Commodity Exchange (DCE) successfully completed its first system test for soybean meal option trading on May 30, paving the way for the introduction of the new option product.

Russia suggests they will decide whether to renew their food embargo ban in the coming months on whether or not EU relaxes their sanction.

The sharp decline in product values is driving packer margins to the negative side and likely will force packers to call contracted cattle in this week. The smaller showlist has feedlots expecting more money this week which one would have to think will be late on Friday before either side shows their hand.

Live cattle option expire on Friday and first notice day for June contracts is Monday.

Lean hog futures are in a trading range taking direction from money flow and the cattle complex. Cash and June futures are in line going into expiration.

Dressed beef values were lower with choice down 2.69 and select down 3.27. The CME Feeder Index is 223.06. Pork cutout values are up .27.

Markets as of 5:15 AM CDT

  • Jul Corn   0
  • Jul Beans 3/4      
  • Jul Wheat   - 3/4
  • Jul Soymeal .30
  • Jun Dlr     .41
  • Jun S&P   3.75
  • Jul Crude   -1.38
  • Jun Gold   -6.90

Technical Chart of the Day

daily chart

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Soyoil Breaks Out Of Trading Range

Jun 02, 2015

Good Morning! Paul Georgy with the early morning commentary for June 2, 2015 at 5:15 am.

Grain markets are higher on bargain hunting and, “turn around Tuesday”. The US Dollar Index is giving back some of recent gains due to positive economic news in Europe.

Update - Midday Weather:

Soybean planting is behind trade expectations of 75% however the 10% increase from the previous week put plantings at 71% and above the five year average of 70%. There were no conditions report for soybeans this week.

USDA estimated the corn planting progress at 96% which the trade looks at “as good as done.” Conditions remained at 74% good/excellent. The trade was reported as expecting an improvement but the chat on social media was talking about the poor crop conditions due to the heavy rain and cold weather.

Winter wheat good/excellent condition fell by 1% to 44% while the spring wheat good/excellent category improved by 2% to 71%. The spring wheat emerged was 91% compared to the 5 year average of 69%.

Soybean oil breaks out of a trading range and posts values not seen since Nov 3 of 2014. Buying interest in soyoil has come from the EPA release of renewable fuels mandates, frost in the canola crop area in Canada and meal/oil spread unwinding. Technical traders are suggesting to watch for a third leg up in the nearby soyoil contracts.

Get the full weather roundup from Ryan Martin, Allendale’s Meteorologist by clicking here.

The South American pricing advantage has widened to $12 compared to US soybeans from just $5 a tonne last week. However when reviewing export sales data the US has to sell on 7 million bushel this marketing year to reach the USDA’s goal. In the past 2 years net sales increase by 22 and 34 million bushel from now to end of the year.

AgRural says Brazil's has sold 68 percent of its 2015/16 soybean crop compared to 75 percent of last year’s crop at this time.

Rich Nelson, Allendale’s Chief Strategist, has drilled into the EPA announcement last Friday. He says “the bottom line is we are currently seeing our largest ethanol production unless gasoline demand or exports increase over the next few years.”

The U.S. Department of Agriculture reported corn usage for ethanol during April at 409.0 million bushels which was down from 439.7 million bushels in March. They said ethanol produced 1.691 million tons of DDGS in March compared to 1.811 million tons produced in the previous month.

The dollar has been getting support from the solid manufacturing data suggesting the U.S. economy is emerging from its slump. A survey released by the Institute for Supply Management showed U.S. manufacturing and employment expanded in May, which provides support for the jobs report that will be released on Friday.

The National Restaurant Association “Restaurant Performance Index” showed growth for all categories not seen since 2004 and 2005. This may be the reason for positive demand for beef in recent months.

Weekly beef production figures show carcass weights are now 37 pounds heavier than a year ago. When adding the trend of increasing supplies of market ready cattle with the increased weights one becomes concerned about price. Remember we have seen this action in the pork complex not long ago.

Feedlot showlists decline by 39,000 head this week while trade is expecting a steady to lower cash market.

Dressed beef values were lower with choice down 4.26 and select down 2.91. The CME Feeder Index is 222.71. Pork cutout values are up .30.

Markets as of 5:15 AM CDT

  • Jul Corn   2 1/2
  • Jul Beans 6 3/4     
  • Jul Wheat   4
  • Jul Soymeal 2.70
  • Jun Dlr     -.58
  • Jun S&P   -.50
  • Jul Crude   .62
  • Jun Gold   -1.20

Technical Chart of the Day

daily chart

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Dollar Rally And Strike Settlement Feed The Bears

Jun 01, 2015

Good Morning! Paul Georgy with the early morning commentary for June 1, 2015 at 5:15 am.

Grain markets are lower as the US Dollar rallies and the euro falls on Greece not meeting a self-imposed deadline for an agreement. Money flow has a risk-off attitude across all commodities as we start a new month.

Update - Morning Coffee Commentary:

The crusher unions in Argentina came to an agreement that the Government has signed off on. The dockworkers union that was expected to start a strike on Monday will now not strike as they have meetings scheduled for Wednesday. This resolution will provide a diagram for further strike resolutions.

Trade is looking for soybean plantings to advance to 73% complete versus 61% last week and 70% on average. Corn planting should hit 96% complete while corn conditions are expected to improve 1-2% to 75-76% G/E. Winter wheat conditions should climb as well from last week’s 69% G/E.

U.S. Department of Agriculture Secretary Tom Vilsack said the agency will invest up to $100 million in grants for fuel pumps at gas stations to distribute higher ethanol blends known as E15 and E85.

The EPA on Friday unveiled much anticipated targets for the blending of renewable fuels into motor fuel for the three years to 2016, proposing some 17.4 billion gallons of renewable fuels must be used in gasoline or diesel next year.

Record April/May Brazil soybean exports were over 17.5 million tonnes suggesting USDA will need to adjust 2015/16 Brazilian exports.

Harvest of second crop corn has begun in Mato Grosso, Brazil. The corn planted after soybeans amounts to about 61% of Brazil’s total corn production.

Local analysts and farm groups in Brazil are expecting farmers to increase planted soybean acres in 2015/16 for the 9th consecutive year in spite of the price decline from a year ago.

The Eco markets this week will focus on key U.S. economic data including today’s May ISM manufacturing index and Friday’s May payroll report. The Greek situation negotiations remain very difficult but Greece is expected to either make Friday’s 300 million euro IMF payment or bundle all the June payments into a single payment due at the end of the month. This week’s ECB and BOE meetings are not expected to produce any policy changes.

Cash cattle traded at 159 to 160 in KS late last week. With the sharp decline in product traders will likely take a selling attitude on the opening today, however, the sharp discount of futures should find support on dips.

Cash hogs and cash pork gained last week on the seasonal decline in supplies. Seasonally hogs should find support into late June.

Dressed beef values were lower with choice down 4.26 and select down 2.91. The CME Feeder Index is 222.61. Pork cutout values are up 2.17.

Markets as of 5:15 AM CDT

  • Jul Corn   -1 1/4
  • Jul Beans -8 3/4     
  • Jul Wheat   -1 1/4
  • Jul Soymeal -2.90
  • Jun Dlr     .54
  • Jun S&P   -.25
  • Jul Crude   -.81
  • Jun Gold   -3.20

Technical Chart of the Day

daily chart

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USDA Needs To Adjust Corn For Ethanol Demand

May 29, 2015

Good Morning! Paul Georgy with the early morning commentary for May 29, 2015 at 5:15 am.

Grain markets are mixed as headlines provide the fuel for the move. The end of month position adjusting and direction of the US Dollar will be on trader’s minds throughout the session. Weekly export sales and 1st Qtr GDP will be released later today.

Update - Midday Weather:

Ethanol posted another strong production last week of 969,000 barrels per day which was 11,000 barrels per day over the previous week. It was a 5% increase from last year. The year to date pace is a 4.8% increase over last year. The USDA’s whole-year goal is only a 1.3% increase. In order to meet USDA’s number production would have to fall to 854,000 barrels per day from now through the end of August. We have not seen a single week of production run that low since September of 2013.

Argentine soy crushers' union has expressed optimism that a salary agreement was near and would end its three week old strike, which has affected the Rosario soy market. According to the union they have agreed to a 36% pay increase and are waiting for government approval.

Reuter’s survey of trade for this morning’s USDA Weekly Export Sales:

          Trade estimates for      Trade estimates for

                      2014-15                  2015-16

Wheat       (-75,000)-100,000          100,000-300,000

Corn          550,000-750,000          100,000-300,000

Soybeans      150,000-300,000          100,000-300,000

Soymeal        75,000-175,000           50,000-150,000

Soyoil               0-15,000                        0

Egypt's state grain buyer, GASC bought 240,000 tonnes of Russian and Romanian wheat in a tender for July 1-10 shipment. Trade did not expect any purchases out of the US due to a price advantage out of the Back Sea Region.

U.S. environmental protections agency proposed a rule that would create temporary pesticide free zones to protect commercial honeybees, which are critical to food production and have been dying off at a fast rate.

Russia is likely to cut acreage planted to wheat this year compared with 2014, says the head of Russia's Grain Union. Russia has sowed wheat on 9.3 million hectares versus 10.4 million ha in the same period last year as farmers are cutting sowing area due to higher costs affected by the weak rouble.

Economic reports that will be important to traders today are the 1st Qtr GDP and the Chicago PMI.

Rich Nelson, Allendale’s Chief Strategist observes, “On the demand side today’s GDP report will be important to watch. Economists expect the Bureau of Economic Analysis to revise Q1 GDP down from a 0.2% growth to a 0.8% year over year decrease.

Average prices for beef and pork rose in grocery-store advertisements this week, according to the latest Wall Street Journal retail-meat survey. The 15-cut average for beef increased to $5.63 a pound from $5.31 last week and 5.03 a year ago. The five-cut average for pork prices rose to $3.17 a pound from $2.64 last week however lower than the $3.63 average a year earlier. Chicken prices climbed modestly this week. The two-cut average increased to $1.89 per pound from $1.85 last week and $1.79 a year ago.

Dressed beef values were lower with choice down 1.86 and select down 3.14 The CME Feeder Index is 222.45. Pork cutout values are down 2.65.

Markets as of 5:15 AM CDT

  • Jul Corn   2 1/2
  • Jul Beans 3/4      
  • Jul Wheat   -2 3/4
  • Jul Soymeal -.20
  • Jun Dlr     -.10
  • Jun S&P   -3.25
  • Jul Crude   .73
  • Jun Gold    1.50

Technical Chart of the Day

daily chart

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Grains Rally as Dollar Gives back Gains

May 28, 2015

Good Morning! Paul Georgy with the early morning commentary for May 28, 2015 at 5:15 am.

Grain markets are higher on short covering. The US Dollar is giving back some of its gains as a Greece government official talks of a deal with creditors by Sunday.

Update - Morning Coffee Commentary:

The weather forecast looks positive to the growing crops and should allow time to get the balance of corn and soybeans planted. Soybean planting for the US is 6% above the 5 year average with the states of KS and MO well behind normal due to the wetness.

Soybean and meal markets are being influenced by the labor problems in Argentina as strikes are hampering movement of grain and the availability of products to export. There continues to be talk that unions and crushers have come to an agreement but the government has rejected the contract.

Gulf wheat premiums remain firm as traders are concerned about the declining quality of the southern plains crop. US wheat is not expected to be competitive in Egypt’s GASC tender.

Wheat farmers in southern Russia are concerned about lower yields this year due to the heat and dryness in region. Rostov is the second southern region affected by a lack of moisture after Krasnodar, the main region for wheat exports via Black Sea to North Africa and the Middle East.

A key waterway in Brazil used to transport grains will reopen soon, after it was closed for over a year due to drought, the government's water transportation agency said.

Argentina’s government has nearly tripled export taxes on biodiesel retroactively for April to 13.2 percent. It had cut the tax to 5 percent in March from 8.9 percent in February. "If things continue like this, the Argentine biodiesel industry is on track to a crisis of unheard of proportions," said the head of the Argentine Biofuels Association.

Egg prices rose approximately 93% from the end of April compared to current prices. Liquid eggs have jumped approximately 158% during the same period. Turkey breast meat is up 21% to over $4.00 per pound in the last four week. These price increases have been mainly due to the bird flu findings in the US.

Beef imports for April by China reached a new record high at 34,775 tonnes as demand remains intact.

Futures traders are waiting for cash market activity this week. Many are expecting a steady to lower cash but the discount could still allow the futures to rally. Establishing a long-term strategy requires a risk management plan. Call your Allendale representative to discuss the opportunities.

Dressed beef values were higher with choice up .04 and select up .68 The CME Feeder Index is 222.11. Pork cutout values are up .61.

Markets as of 5:15 AM CDT

  • Jul Corn   1 3/4
  • Jul Beans 2         
  • Jul Wheat   4 3/4
  • Jul Soymeal -1.50
  • Jun Dlr     -.28
  • Jun S&P   -2.00
  • Jul Crude   .21
  • Jun Gold    2.30

Technical Chart of the Day

daily chart

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Corn Crop Not In Record Condition

May 27, 2015

Good Morning! Paul Georgy with the early morning commentary for May 27, 2015 at 5:15 am.

Grain markets are mixed as corn and wheat remain under pressure due to positive production outlook. Soybeans are finding support on labor problems in South America. The US Dollar is holding gains causing headwinds for a commodity recovery.

Midday Weather Update:

Frost and too much rain are reasons US corn did not set a record for Good/Excellent condition on the first report of the year.

The USDA weekly crop progress report put the corn crop at 74% Good/Excellent, the trade was expecting 80%. Planting progress for corn gained 7% to 92% versus 88% average. Soybean planting improved to 61% done versus 55% average.

The winter wheat crop conditions held steady at 45% Good/Excellent. Spring wheat planting was 96% completed versus 79% average.

The Canadian Food Inspection Agency has started to detain and test corn imports for Aflatoxin from India, the 6th largest corn exporter in the world.

The Port of Rosario soy market was paralyzed for a sixth consecutive day as most exporters refrained from purchases in an effort to pressure the government to resolve a nearly three-week long strike among crushing workers.

Soybean oil is getting support from talk that the EPA will release the details of their biodiesel program this week. A judge has ordered them to release the details by June 1st.

Chinese soymeal market continues to make new lows which gives a reason to watch a market that has a very large open interest and continues to set contract lows. Demand for meal in China is down and there’s a lot of talk of feeders defaulting on soymeal they had bought $40-50 per tonne higher than current prices. Stay Tuned!

Russia's Agriculture Ministry said they are putting a proposal together the methodology for the calculation of a wheat export duty that will be introduced from July 1. They have proposed exporters pay a duty of 1 rouble per tonne on wheat priced up to 11,000 roubles ($218.2) per tonne on a FOB basis.

Funds are estimated to have sold a net 11,000 wheat contracts, 8,000 corn contracts and were even in soybeans on Tuesday.

The USDA hasn't confirmed any new cases of bird flu but state officials in IA and MN are looking at several probable cases.

The currency markets will be watching for comments from the European Central Bank at its weekly Greek review today. Will it make further decisions on its emergency lending programs to Greece?

The April 30 Cold Storage report showed total meats inventory of 2.336 billion pounds which was 20.1% larger than one year ago.

Cattle weights continue to rise as shown on USDA’s weekly data. Last week federal inspected slaughter was down 6.4% from last year while weights were up 2.45%. Seasonally we would expect weights to grow as more yearlings come to market. However the discount in futures is already factoring in larger supplies.

Lean hog futures are being pressured by the concern over exports as the US Dollar gains on other currencies. Pork production is running 8% above a year ago as weights are 1% less than last year.

Dressed beef values were higher with choice up .82 and select up 1.58 The CME Feeder Index is 222.01. Pork cutout values are up 1.09.

Markets as of 5:15 AM CDT

  • Jul Corn   -1 1/2
  • Jul Beans 3 1/2     
  • Jul Wheat   -5 1/4
  • Jul Soymeal 1.80
  • Jun Dlr     -.12
  • Jun S&P   1.00
  • Jul Crude   .28
  • Jun Gold   -1.70

Technical Chart of the Day

daily chart

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Rains Beneficial As Heat Arrives

May 26, 2015

Good Morning! Paul Georgy with the early morning commentary for May 26, 2015 at 5:15 am.

Grain markets are mostly lower due to risk off bias across commodities in general. The US Dollar is sharply higher as Eurocurrency falls on Greece comments.

Update - Midday Weather:

On this afternoon’s Crop Progress report traders are expecting corn planting progress to be 92% to 94% complete with soybean plantings reaching 60%. The first crop conditions status will be released this afternoon for corn and many are expecting the Good/Excellent to be as high as 80%. With all the rain in the southern plains it is expected wheat conditions could improve. The thought is the benefit outweighs the damage done by the heavy rains.

As expected, rain totals across northern and eastern TX, OK and southeastern KS were heavy with 2-5 inch totals seen across most areas and isolated reports of 8 inches seen in OK over the past three days. The rest of KS and the panhandle saw amounts of .25-1.0 inch.

Weather forecasts for Russia’s Volga Valley has peaked traders interest. The rains will determine if Russia will produce 53.5 million tonnes as suggested by USDA or something closer to the 59.1 million tonnes they produced last year. Currently Russia is offering wheat at $192 per tonne for old crop (the cheapest in the world).

Labor issues continue in Argentina but most expect to see the oilseed workers settle their strike sometime this week. There is still a national strike talked about for June 9th.

Managed money funds were large sellers last week as reported on the CFTC Commitment of Traders Report. They increased their net short position by 39,820 contracts to 90,271 in soybeans, increased short positions in corn by 18,160 contracts and reduced short positions in wheat by buying 31,690 contracts. They are building net long positions in live cattle by adding 7,583 contracts.

The Eco markets will focus this week on the Greek situation after Greece’s Interior Minister over the weekend said that Greece will not be able to make its four separate IMF payments due in June totaling 1.6 billion euros. The U.S. economic calendar is rather active during this short trading week.

The USDA released the May 1 Cattle-on-Feed report during the session on Friday which allowed the trade to react to the numbers immediately. The surprise and friendly portion of the report was seen in placements. The trade was expecting a 100.9% increase year over year but the actual placement number was 95%. This was seen as supportive to the deferred contracts while the marketing’s during April were the lowest on record at 92% suggesting plenty of heavy weight cattle available in coming weeks.

Dressed beef values were mixed with choice down 1.97 and select down 1.70. The CME Feeder Index is 220.30. Pork cutout values are down 1.47.

Markets as of 5:15 AM CDT

  • Jul Corn   - 1/4
  • Jul Beans 2 1/4     
  • Jul Wheat   -2 3/4
  • Jul Soymeal -.06
  • Jun Dlr     1.01
  • Jun S&P   -7.25
  • Jul Crude   -.43
  • Jun Gold   -9.80

Technical Chart of the Day

daily chart

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Weather, Holiday Trade In Focus

May 22, 2015

Good Morning! It's Friday May 22nd at 5:30 AM.

Grain markets are higher as traders adjust for the three-day holiday weekend. Wheat remains the leader supported by moisture and quality concerns. Outside markets await today's inflation numbers.

Update - Morning Coffee Commentary:

Talks of rust in the Hard Red Wheat, and vomitoxin in the Soft Red continue to swirl in the wheat trade. Yesterday, Ryan Martin wrote of the HRW area, "While we don’t see large coverage heavy rains as much starting next week, areas that need to dry off in a big way may run into some headwinds from the hit and miss moisture that will be around. For the week to 10 day period starting next week…we likely will see 90% coverage in the plains of at least some moisture." Look for an update this morning on our weather blog.

While the US wheat growing areas are seeing too much rain, parts of Russian and Canadian wheat growing areas are suffering the opposite fate and not seeing enough.

The weather-related volatility has led CME Group to raise the initial margin for Wheat from $1,430 to $1,650 per contract for speculators, and $1,300 to $1,500 for hedgers beginning with the close of business today.

Weekly export sales out yesterday had old crop corn at 812,594 metric tonnes, soybeans at 165,463 tonnes, and wheat at 74,380 tonnes. New crop numbers were 80,732 tonnes for corn, 77,500 tonnes for soybeans, and 128,163 for wheat.

Old crop soybeans were the highlight of the sales report as we are nearing USDA's whole year goal (which ends August 31st). Last year's pace for these same remaining months suggests we will surpass USDA's goal, especially as this years US soybean pricing vs. South America is far more favorable vs. last year.

If you missed it, yesterday NOAA released its updated June through August forecast. They see normal to below normal temperatures and normal to above normal precipitation. Our yield studies suggest this could lead to higher than trend yields.

NOAA's shorter-term June forecast has normal temps in the Midwest and normal to above normal precip. Bottom line, they are showing no weather concerns for corn or soybean yields at this time. Watch for changes in long-term forecasts though as they could provide sharp market moves.

For more on what will impact this years corn crop, listen to the recording of Tuesday's Ag Leaders webinar. We had some great insight from AgriGold Agronomist Mike Kavanaugh. You can get the recording here.

On the economic calendar today at 7:30 CDT, CPI and core CPI data will be released. Trade averages are for increases of .01% and .02% respectively. Janet Yellen is also slated to give a speech in Rhode Island at 12:00 PM CDT. Keep an eye on these issues as they could have a US Dollar impact on commodities as a whole.

Today's Cattle on Feed and Cold Storage reports will be released at 11:00 AM CDT instead of their usual 2:00 PM CDT, due to Monday's holiday. Estimates are for Cattle on Feed: 101.7%, Marketed: 92.4%, Placed: 102.5%.

This month’s Cold Storage report is likely to take a backseat to the COF numbers. We see beef stocks ending last month at 472.996 million lbs. This would be 7 million under the previous month which is more of a drawdown than the 1 million decline normally seen that month.

For pork, we see stocks at 681.772 million lbs. This would be a 13 million lb. increase over the previous month, near the normal increase of 11. This stock number would be 17% over last year.

Markets will have a regular close today and are closed Sunday night as well as during Monday's day session for the Memorial Day holiday. Grains will reopen at 7:00 PM CDT Monday night, while livestock will remain closed until Tuesday morning at 9:05 AM CDT. Crop Progress is also delayed and will be released Tuesday at 3:00 PM CDT instead of Monday.

Have a happy and safe Memorial Day. Thank you to those who gave all.

Markets as of 5:30 AM CDT

  • Jul Corn   2 1/2
  • Jul Beans 1/2
  • Jul Wheat   6 1/2
  • Jul Soymeal 1.50
  • Jul Crude   -.33
  • Jun Gold   .9.80

Technical Chart of the Day

daily chart

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High Expectation For Crop Conditions

May 21, 2015

Good Morning! Paul Georgy with the early morning commentary for May 21, 2015 at 4:45 am.

Grain markets are higher on pre-report bargain hunting. The US Dollar is giving back some of this weeks gains.

Update - Morning Coffee Commentary:

Early estimates for the Monday afternoon crop conditions for corn is expected to be record high at 80%. The previous high for the first conditions report is 78% in 2007.

Stay in touch with Allendale Meteorologist Ryan Martin as the weather a big influence on futures markets. You can read his AM Weather comments and listen to his midday commentary by going on our weather blog.

Ethanol production jumped from 912,000 barrels per day in the previous week to 958,000 barrels which was much more than anyone was expecting. Last week’s production was a 4% increase over last year however to hit USDA’s target for the 2014/15 marketing year ethanol crush will have to fall to only 871,000 barrels per day in each of the 15 remaining weeks.

The USDA weekly export sales data will be released at 7:30.

       Trade estimates for                 For

                   2014-15             2015-16

Wheat    (-200,000)-50,000     200,000-350,000

Corn       400,000-600,000      50,000-200,000

Soybeans   100,000-250,000     150,000-350,000

Soymeal     50,000-125,000            0-75,000

Soyoil            0-15,000            0-10,000

With a strike already at the Rosario port, and a ship running a ground and blocking the entrance to the pivotal hub, at least 48 ships have been blocked from entering. A maritime leader says ships are being loaded but not to maximum capacity in order to get draft approval to pass through the area where the ship went a ground.

Ukraine’s Ag Minister says Ukrainian farmers had sown 6.5 million hectares of spring grain for the 2015 harvest as of May 19, or 92 percent of the initial sowing area.

Initial Jobless Claims and Existing Home sales are on the economic calendar for later today.

After the release of minutes of the Federal Reserve's April meeting the U.S. short-term interest-rate futures contracts rose modestly suggesting that most policymakers saw little chance of a June rate hike. The trade is thinking it will be December before any rate hike would occur.

"In light of the World Trade Organization's decision and the certainty that we face significant retaliation by Canada and Mexico, we cannot afford to delay action," said Texas Republican Mike Conaway, chairman of the House of Representatives agriculture committee. The committee overwhelming approved legislation to repeal COOL, voting 38-6 in favor sending the measure to the full House of Representatives.

Cattle-on-Feed Report Friday at 2:00 pm CDT. Early estimates are: COF: 101.7%, Marketed: 92.4%, Placed: 102.5%.

There has been some confirmed trades in the southern Plains at 159 for cattle which would be a couple of dollars lower than last week. The packers in the north are biding 252 to 253 dressed.

Packers are buying for a holiday shortened production week as supplies of market ready cattle continue to rise. Cattle traders are also looking at a low marketing number on Friday’s report as a reason for profit taking.

Seasonal tendencies suggest a weaker trend for cash hogs for the balance of the week then find strength again following Memorial Day. Nearby lean hog futures are now in line with the cash index. Spreading is a major reason for individual month price movements.

Dressed beef values were mixed with choice down .61 and select up .03. The CME Feeder Index is 219.85. Pork cutout values are down .42.

Markets as of 4:45 AM CDT

  • Jul Corn   2 3/4
  • Jul Beans 3 3/4     
  • Jul Wheat   4 1/4
  • Jul Soymeal 1.30
  • Jun Dlr     -.30
  • Jun S&P   -4.25
  • Jul Crude   .55
  • Jun Gold    .50

Technical Chart of the Day

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US Dollar Drives Traders Attitude

May 20, 2015

Good Morning! Paul Georgy with the early morning commentary for May 20, 2015 at 5:15 am.

Grain markets are lower on follow through selling due to strong US Dollar and chart patterns.

Thanks to all who attended the May Allendale Ag Leaders Webinar yesterday evening. If you were unable to attend you can listen to the recorded session by clicking here.

Update - Morning Commodity Comments:

Soybean futures closing below key support on Tuesday is gathering more selling pressure. Next support level in July soybeans is 9.35 ¼ which is a low made last Oct 1.

Weather remains a market mover however it is a drag on prices. There is an open forecast for much of the Midwest into the weekend which should allow further planting progress. Temperatures are expected to warmup next week. Traders are already expecting a better than average row crop conditions report next Monday.

Russia sold wheat at a sizeable discount to the US price on Monday. There are reports Russia is offering more wheat at $180 per tonne compared to US values at $216 per tonne.

Argentina is heading for a national strike set for June 9th. This could impact movement of grain to the ports and slowdown exports. One would have to expect the soybean complex could find support the closer we get to a strike reality.

The U.S. Environmental Protection Agency (EPA) said it plans to extend the reporting deadline for compliance with its biofuels program from June 1, 2015 to January 1, 2016 which is part of an effort to get the program "back on track."

Germany's national statistics office says their winter wheat area for the 2015 harvest has been expanded by 3 percent to about 3.25 million hectares.

Russia may allow up to 20 firms from Hungary, Cyprus and Greece to return to its market after it orders the lifting of an embargo on food imports from the European Union, reported Interfax news agency.

Funds are estimated to have sold net 7,000 wheat contracts, 7,000 corn, and 6,000 in soybeans contracts on Tuesday.

FOMC minutes from the Apr 28-29 meeting will be released later today. Trade is hoping it may provide some color on Fed’s interest rate hike intentions. Markets wait to see if ECB will boost the Greek bank collateral haircut. The weekly EIA report is expected to show third weekly decline in crude oil inventories.

The U.S. House of Representatives Agriculture Committee Chairman Michael Conaway said he expects an early June vote on legislation to repeal U.S. meat labeling laws to avoid costly retaliation from Canada and Mexico.

China announced they have ended their ban on Brazilian beef. Eight beef plants have been approved. More are expected to receive approval in June. Beef values jumped to new highs on Tuesday while the trade is expecting cash cattle to trade lower this week.

Cattle-on-Feed Report Friday at 2:00 pm CDT. Early Estimates are: COF: 101.7%, Marketed: 92.4%, Placed: 102.5%.

Cash hogs are mostly steady as packers prepare for the short work week ahead. Futures have fallen in line with cash which should provide support.

Dressed beef values were higher with choice up 2.67 and select up .61. The CME Feeder Index is 219.83. Pork cutout values are up 2.16.

Markets as of 5:15 AM CDT

  • Jul Corn   -1 1/4
  • Jul Beans -5 3/4     
  • Jul Wheat   -2 1/4
  • Jul Soymeal -2.10
  • Jun Dlr     .16
  • Jun S&P   .25
  • Jul Crude   .58
  • Jun Gold    1.90

Technical Chart of the Day

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Headlines and Chart Points Key Focus

May 19, 2015

Good Morning! Paul Georgy with the early morning commentary for May 19, 2015 at 5:15 am.

Grain markets are lower due to improving crop data and headwinds from a sharply higher US Dollar.

Headlines continue to be the moving force in the grain markets with the focus on wheat. Cold temperatures in the northern plains with coldest period this morning. Heavy rains in the drought stricken area of the southern plains is also being viewed as positive to price. Disease and quality issues are a concern in both soft and hard wheat production zones.

8:30 AM Video Update:

The labor issues in Argentina are continuing to get worse and beginning to have an impact on grain movement as harvest winds down. The national transportation union is calling for a strike and other unions are expected to jump on board. These headlines are providing support for all grains.

Agronomist Mike Kavanaugh will be on hand to take your questions tonight at this month’s Allendale Ag Leaders Webinar. Join us LIVE this evening. Registration is free, here.

Crop progress was in line with trade expectations as corn plantings reached 85% which was an increase of 10% for the week. The 5 year average is 75%. Soybean planting was 45% a little les than what the trade was thinking however well above the average of 36%.

Spring wheat planting progress is 94% compared to 47% last year and 65% average. Winter wheat conditions improve 1% to 45% in the G/E categories. The crop is maturing faster than normal with 68% headed verses 56% average.

Watch for chart support in the July soybeans at 9.49 and 9.35 which will be key to price directions. November soybeans key support is 9.27 ½.

China will offer 5.32 million tonnes of corn from state reserves this week, 39 percent more than last week, after an increase in subsidies attracted more bidders to recent sales. The government sold 429,500 tonnes last week out of the 3.84 million tonnes it offered.

Economic traders are expecting today’s April U.S. housing starts report to show an increase of 9.9% month over month rise to 1.018 million, adding to March’s 2.0% rise to 926,000.

Markets are also waiting to see if European Central Bank (ECB) will boost the Greek bank collateral haircut during their weekly meeting. The ECB threatened to boost the haircut on Greek bank capital last week but then backed off after progress was reported on Greek negotiations.

Early estimates for the Cattle on Feed Report Friday are: COF: 102.4%, Marketed: 91.8%, Placed: 105.5%.

The United States has lost a battle with Canada and Mexico over its meat labeling rules, the World Trade Organization backed calls to scrap the laws or risk costly trade retaliation. It will be important for congress to act quickly or risk retaliation from Canada and Mexico. Canada has already published a hit list of potential U.S. targets, including wine, chocolate, ketchup and cereal.

The feedlot showlist this week is 15,000 head larger than last week. Next week production will be reduced by 1 day due to Memorial Day. Cattle weights are building as feedlots fight for higher prices on a weekly basis. Fill in buying by retailers will be supportive early this week.

Hog futures are dealing with premiums, larger production and WTO news. Technical chart points and moving averages are providing support.

Dressed beef values were mixed with choice up .99 and select down .68. The CME Feeder Index is 219.55. Pork cutout values are up .91.

Markets as of 5:15 AM CDT

  • Jul Corn   -3 1/4
  • Jul Beans -2 3/4     
  • Jul Wheat   -8 1/4
  • Jul Soymeal -.30
  • Jun Dlr     .63
  • Jun S&P   5.50
  • Jun Crude   -.43
  • Jun Gold   -7.40

Technical Chart of the Day

daily chart

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Weekend Rains Create Quality Concerns

May 18, 2015

Good Morning! Paul Georgy with the early morning commentary for May 18, 2015 at 5:15 am.

Grain markets are higher lead by wheat where weekend rain across the southern plains damaged crop. Row crops are being supported by short covering. The US Dollar fights to hold technical support after last week’s selling pressure.

Agronomist Mike Kavanaugh will be on hand to take your questions at this month’s Allendale Ag Leaders Webinar. Join us LIVE tomorrow evening. Registration is free, here.

Morning Coffee Update:

Weekend rains across winter wheat areas concern traders about damage and potential poor quality. However the rain across Midwest row crop areas should prove to be beneficial. Corn conditions are expected to be near record good/excellent right now.

This afternoons planting progress should show corn planting is nearly 85% complete compared to 76% average with soybeans 50% done verses 38% average.

On Friday’s Commitment of traders report managed futures were about even in corn while they reduced short positions in wheat by 6,720 contracts. They sold 21,271 contracts of soybeans making them net short 50,451 contracts.

NOPA Crush was 150.363 million bushel which beat the 147.827 expectation. It is a new record for April and beat last year by 13%. USDA’s Sep – Aug goal is 1.805 million for all crush plants. There is about 82 million bushels of crush that are not NOPA members which makes NOPA crush goal of 1.723 million bushel for the marketing year. To hit USDA’s goal we need to crush 516 million bushel by NOPA members from May through August. That would be 8.3% over last year.

Russia lifted the duty on wheat exports to help domestic producers which would boost overseas sales by one million tonnes. The Russian government is still trying to decide on a new formula for calculating the wheat exporting duty which could take effect after July 1.

Cash market bids are steady for soybeans while corn seems to be drifting lower.

Chart support in the July soybeans is 9.49 and 9.35 which will be key to price directions this week. November’s key support is 9.27 ½.

The Federal Reserve Bank of Chicago reported an average rise of 1 percent in the value of prime farmland in the first quarter of 2015 compared to the prior three months, with values holding steady from a year ago.

June hog futures made new highs for the move last week and sold off late on profit taking and bearish product price outlook. The USDA WASDE report put the 2015 pork production at a record 24.41 billion pounds up 6.8% year over year.

Cattle futures are battling the outlook for lower product values and the discount of futures to cash.

Dressed beef values were weaker with choice down 2.81 and select up .21. The CME Feeder Index is 220.40. Pork cutout values are down .89.

Markets as of 5:15 AM CDT

  • Jul Corn   2 3/4
  • Jul Beans 2 1/4     
  • Jul Wheat   6 1/4
  • Jul Soymeal 1.20
  • Jun Dollar     .45
  • Jun S&P   -4.00
  • Jun Crude   .32
  • Jun Gold    5.40

Technical Chart of the Day

daily chart

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Wheat Shorts Rolled As Funds Buy

May 15, 2015

Good Morning! Paul Georgy with the early morning commentary for May 15, 2015 at 5:15 am.

Grain markets are higher on follow through short covering. The US is recovering from the sell-off in recent sessions while crude oil is mostly steady.

Join us in our next live webinar May 19, 2015 for a look at the national yield potential of the 2015 US Corn Crop. Agronomist Mike Kavanaugh will be on hand to take your questions and give us his insight on how the crop is shaping up. Registration is free, here.

Update - Morning Coffee Commentary:

The southern plains has rain on the 1-5 day and 6-10 day forecasts. Too much rain has become a concern and reports of rust and poor quality wheat is circulating through the trade. The confirmation of El Nino and its possible impact on Australia and Southeast Asian production combined with dryness in the Volga River Basin in Russia has ignited a buying frenzy for wheat.

As of last Friday the Commitment of Traders report showed funds holding record short positions in wheat. Due to the anticipated large world supply of wheat and the lopsided fund and small spec position in futures, the spark of the least bit of friendly news is causing short covering. Could we have seen the low in wheat?

Funds were estimated to have bought a net 15,000 wheat contracts and 9,000 corn. They were even in soybeans, even in soymeal.

The Climate Prediction Center, an agency of the National Weather Service, in its monthly report noted there was a more than 80 percent chance that El Nino conditions will last through 2015.

This week’s Drought Monitor released by the National Drought Mitigation Center showed dry areas shrinking in the Southern Plains and Northern Midwest.

Only 370,030 metric tonnes of old crop corn was sold in the period between April 30 and May 7 when trade was expecting 600,000 - 800,000. This is the lowest weekly sale of the marketing year. Corn sales are now 86% of USDA's whole-year estimate which is under the 93% five year average and after the USDA raised their whole-year estimate by 25 million bushels.

NOPA Crush data will be released today at 11:00. Trade is looking for April soybean crush at 147.827 million bushels.

Informa estimated US farmers will plant 88.7 million acres of corn compared to USDA at 89.2. They are expecting an increase of 2.6 million acres above March prospective plantings for soybeans to 87.2 million. History suggests they underestimate corn and overestimate soybeans compared to June.

China is expected to increase corn planted areas this year, even with corn prices being low. The government reserve program has been creating incentive for the aggressive farmer planting.

The Rosario Grains Exchange revised Argentina's 2014-15 soy production higher to a record 59.6 million tonnes from their previous estimate of 59 million tonnes. They held corn production at 25.7 million tonnes. USDA is estimating 57 million tonnes for soybeans and 25 million tonnes for corn.

Brazil is "closer than it had ever been" to exporting fresh beef to the United States, says the CEO of the Brazilian meat packer JBS, adding that he expects shipments to start later this year.

Nebraska Gov. Pete Ricketts issued a state of emergency declaration, after federal agriculture officials confirmed a second farm site had tested positive for the avian flu virus.

An Eastern South Dakota farm with 1.3 million egg-laying chickens is the first in state to be infected with the deadly bird flu virus.

Meat prices firmed up on Thursday as retailers finish the buying for the Memorial Day featuring. Historically beef prices peak the week before Memorial Day. Will that be the case this year? The discount of futures to cash is providing underlining support. Traders are waiting for packers or feedlots to show their hand first as we approach the Friday deadline.

Dressed beef values were higher with choice up 1.57 and select up 2.20. The CME Feeder Index is 219.68. Pork cutout values are up .97.

Technical Chart of the Day

daily chart

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Retail Sales Rattle Dollar Support

May 14, 2015

Good Morning! Paul Georgy with the early morning commentary for May 14, 2015 at 5:15 am.

Grain markets are slightly higher in a quiet session supported by the weaker US Dollar.

Update - Morning Coffee Commentary:

Tractors are rolling again and making very quick work of the corn and soybeans left to plant. More moisture and warmer temperatures are in the forecast for later this week, working from west to east with heaviest amounts in the southern plains and western cornbelt.

The weekly EIA data showed crude oil stocks declining slightly, gasoline stocks and distillate stocks declining vs trade ideas for marginal build up. Ethanol production rises verses last week but was 1% below last year. In order to meet USDA’s goal, production will need to run 6.4% below last year for the balance of the marketing year.

The USDA weekly export sales estimates for old crop are: corn 600,000 to 800,000 tonnes, 100,000 to 300,000 tonnes, meal 75,000 150,000 soyoil 0 to 10,000 tonnes and wheat (150,000) to 50,000 tonnes. New crop sales are: corn 0 to 150,000 tonnes, soybeans 250,000 to 500,000 tonnes and wheat 300,000 to 500,000 tonnes.

The US 2015/16 soybean supply and demand numbers are bearish but they are not the only reason for concern. USDA's first projection of 2015/16 world stocks/use, the best measure of tightness of supply, comes in at 22.6%. This a record high with the only year coming close was 2006/07 at 21.2%. The bottom line, the South American supply is burdensome.

The trade is talking about the El Nino forecast out of Australia being bullish for wheat and bean oil but that seems to be a longer term impact affecting Australia, Indonesia/Malaysia and India.  El Nino usually brings cool wet weather into the Midwest which would suggest not much stress on corn and soybean production this year.

India's wheat output in 2015 could fall 4 percent from last year after rains and hailstorms flattened crops in February and March. India the world's second-biggest wheat producer, is expected to produce 96 million tonnes in 2014.

May contracts will expire today.

NOPA Crush data will be released on Friday at 11:00. Trade looking for April soybean crush at 147.827 million bushels.

Informa is expected to release their update for 2015 planted acreage later this morning.

The Commerce Department says retail sales were unchanged in April. Sales have risen just 0.9 percent over the past 12 months. While gas prices are low and unemployment has dropped, stagnant wages have kept spending in check.

Join us in our next live webinar May 19, 2015 for a look at the national yield potential of the 2015 US Corn Crop. Agronomist Mike Kavanaugh will be on hand to take your questions and give us his insight on how the crop is shaping up. Registration is free, here.

The wholesale beef price remain firm as retailers stock up going into the Memorial Day Holiday. However it is likely the majority of the buying will be done this week and seasonally prices peak in the middle May. Cash cattle are still in a stand-off but expectations are for a mostly steady trade this week. The futures discount to cash is still a supportive factor.

Nearby June hog futures are and overbought and carrying a sizeable premium to cash index. Our contacts are expecting a correction in futures but expect cash markets to remain firm as market ready supplies tighten and live weights come into line.

Dressed beef values were higher with choice up 2.21 and select up 1.36. The CME Feeder Index is 219.17. Pork cutout values are down .27.

Markets as of 5:15 AM CDT           

  • Jul Corn   3/4      
  • Jul Beans 00        
  • Jul Wheat   2 1/4
  • Jul Soymeal -.70
  • Jun Dlr     -.34
  • Jun S&P   8.50
  • Jun Crude   .15
  • Jun Gold    .40

Soybean Carryout Smacks Hope For Rally

May 13, 2015

Good Morning! Paul Georgy with the early morning commentary for May 13, 2015 at 5:15 am.

Grain markets are mixed as bargain hunting supports soybeans. The outside markets are following yesterday’s path with the dollar weaker and crude oil higher.

Update - Morning Commentary:

USDA surprised trade with a 500 million ending stock in soybeans for the 2015/16 crop year. The trade was expecting 443 million bushel. The USDA adjusted export demand as we expected, however, we are concerned about the reality of increasing crush demand. Using these increased crush goal, it means we have to run 9% above a year ago for the balance of the marketing year. Thus far, year over year usage has averaged about 1%. Crush margins have declined to a normal profitability.

Corn stocks were in line with trade expectations for the US. The world supply was increased by 4 million tonne from previous estimate due to production increases in Brazil and Argentina.

Wheat supplies around the world continue to rise as US ending stocks for 2014/15 stocks was increased by 25 million bushel.

USDA 2014/15 Ending Stocks (in billion bushels)

  USDA 5/12 USDA APR. Avg. Guess
Corn  1.851 1.827 1.864
Soybeans  0.350 0.370 0.360
Wheat  0.709 0.684 0.693

USDA 2015/16 Ending Stocks (in billion bushels)

  USDA 5/12 USDA FEB Avg. Guess
Corn  1.746 1.687 1.752
Soybeans  0.500 0.430 0.443
Wheat  0.793 0.763 0.750

Chinese crush margins continue to erode as profitability has dropped from $30.00 per tonne in early January to only $14.00 per tonne today.

France’s farm ministry said they estimate 2015, grain maize area at 1.63 million hectares, down 6.9 percent on 2014 and 1.2 percent below the average of the past five years.

Brazil’s government crop supply agency CONAB estimated a 2015 wheat crop of 7.05 million tonnes, up from 5.97 million tonnes in 2014. CONAB also raised its forecast for 2014/15 soybean crop to 95.07 million tonnes from last estimate of 94.28 million tonnes.

Later today the EIA will release the Petroleum Status report and the Weekly Ethanol Production.

Technical support in soybeans is being tested and a close below 9.49 in the July contract and 9.27 in the November contract could trigger more selling pressure. Spreaders seem to be the dominate players in the price movement between corn, wheat and soybeans.

Economic reports today consists of Retail Sales, Import and Export Prices and Business Inventory.

Join us in our next live webinar May 19, 2015 for a look at the national yield potential of the 2015 US Corn Crop. Agronomist Mike Kavanaugh will be on hand to take your questions and give us his insight on how the crop is shaping up. Registration is free, here.

The United States Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS) has confirmed the presence of highly pathogenic H5N2 avian influenza in a commercial layer flock in Dixon County, Nebraska where 1.7 million birds could be affected.

AP reports the prices for eggs and turkey meat are rising as an outbreak of bird flu in the Midwest claims more chickens and turkeys. A carton of eggs in the Midwest is up nearly 17 percent to $1.39 since mid-April. Eggs used as ingredients in products like cake mix and mayonnaise have surged 63 percent in 2½ weeks. Iowa, the leading egg producer, has lost 26 million hens.

Rich Nelson says, “This year’s chicken price rise into summer is a train wreck. Current chicken breast prices are 11% under last year. Leg quarters are a 31% under last year. This is a direct result of all the chicken export bans. As the vast bulk of our exports are dark meat, they are hit the hardest.”

Dressed beef values were mixed with choice up 1.39 and select down .35. The CME Feeder Index is 219.26. Pork cutout values are up 2.67.

Markets as of 5:15 AM CDT           

  • Jul Corn   -2         
  • Jul Beans 3 1/2     
  • Jul Wheat   1/4
  • Jul Soymeal 1.2
  • Jun Dlr     -.04
  • Jun S&P   6.25
  • Jun Crude   .56
  • Jun Gold    1.00

Technical Chart of the Day

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May USDA Supply & Demand recap

May 12, 2015

Please give us a call with questions 800-262-7538. For more visit our report recap page here.

2015 Crops Off To A Fast Start

May 12, 2015

Good Morning! Paul Georgy with the early morning commentary for May 12, 2015 at 5:15 am.

Grain markets are a bit softer as traders bide their time in front of the USDA report at 11:00 am CDT. The outside markets have increased volatility with US financial and currency markets sliding on positive news out of the European Union.

Update - Morning Coffee Commentary:

US farmers have 75% of the 2015 corn planted compared to the 5 year average of 57%. Planters were very busy last week as soybean plantings increased to 31% completed versus 20% average. The states of OH, KY, PA and WI that were well behind average last week are now above the 5 year for corn planting.

Winter wheat conditions improved by 1% to 44% Good/Excellent. Spring wheat planting is 87% versus 51% average with 54% of the crop emerged compared to 11% a year ago.

At yesterday’s Allendale Weekly Broker meeting Rich Nelson discussed the likely adjustments the USDA might make in order to achieve a lower ending stocks for soybeans and higher ending stocks for corn. Rich thinks the USDA will likely increase exports of soybeans due to the aggressive sales pace in recent weeks. There could be an adjustment in the crush demand but USDA may wait until a later date for that change. The trade is looking for an increase corn stocks due to a likely drop in feed use.

The USDA follows a historical methodology to come up with the first supply and demand for the 2015/16 corn and soybean balance sheets. The wild card is what they will do with yield since planting progress is above normal.

Trade estimate for US wheat production is expected to increase from last month’s USDA estimate of 1.378 billion bushel to 1.470 billion bushel on today report.

Reuters average analyst estimates for today's report for the 14/15 crop ending stocks are .693 wheat, 1.864 corn, .360 soybeans. For 15/16 .750 wheat, 1.752 corn, and .443 soybeans.

Brazil's soy industry group Abiove raised its estimate for the 2014/15 soybean crop to 92.7 million tonnes from 92.3 million tonnes.

On the economic front: Greece makes a 750 million euro payment to the IMF and the San Francisco Fed President will be speaking in New York.

Join us in our next live webinar May 19, 2015 for a look at the national yield potential of the 2015 US Corn Crop. Agronomist Mike Kavanaugh will be on hand to take your questions and give us his insight on how the crop is shaping up. Registration is free, here.

World Trade Organization is expected to issue a ruling on the country of origin (COOL) for meats by next Monday.

The highly pathogenic H5N8 strain of bird flu has been confirmed in a backyard poultry flock in Whitley County, Indiana, marking the first time the strain has appeared in the state, the U.S. Department of Agriculture said in a statement.

Cattle slaughter last week was 5.48% larger than same period a year ago while beef production was down only 2.52% from last year. Showlists are increasing this week by 26,000 head. Are we seeing a pattern here? Reminds us a lot of the hog market earlier this year when production outpaced demand for a while. However the cattle industry does not multiply as rapidly as the hog industry giving more time for adjustments.

Dressed beef values were higher with choice up 1.45 and select up 1.28. The CME Feeder Index is 219.26. Pork cutout values are up 1.43.

Markets as of 5:15 AM CDT           

  • Jul Corn   -1         
  • Jul Beans - 1/4      
  • Jul Wheat   - 1/4
  • Jul Soymeal -.60
  • Jun Dlr     -.68
  • Jun S&P   -14.25
  • Jun Crude   1.08
  • Jun Gold    10.90

Technical Chart of the Day

daily chart

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Managed Funds Raise Shorts In Wheat

May 11, 2015

Good Morning! Paul Georgy with the early morning commentary for May 11, 2015 at 5:15 am.

Grain markets are steady/firm as traders adjust positions ahead of the USDA report tomorrow. Weather conditions remain a bearish factor as planting progress should be above average. China’s lowering of their interest rate is providing early support to soybeans.

Join us in our next live webinar May 19, 2015 for a look at the national yield potential of the 2015 US Corn Crop. Agronomist Mike Kavanaugh will be on hand to take your questions and give us his insight on how the crop is shaping up. Registration is free, here.

Morning Coffee Commentary:

On this afternoon’s report the trade is looking for corn planting progress to be 70-75% planted on today’s report with 25-30% of the soybeans in the ground. Normal pace for this time of year is 58% in corn and 21% in beans.

The CFTC Commitment of Traders Report showed Managed Money Funds increasing short positions in corn by 24,602 contracts to make them net short 116,985. They were net buyers in soybeans of 2,853 contracts while they increased selling of 4,496 contracts in wheat to post a record short positions of 111,409.

Safras estimates the Brazilian corn crop at 82.3 mmt, well above the last USDA estimate of 75.0 mmt.

China will offer 3.83 mmt in this week’s reserve auction. This is an increase of 12.6 percent more than previous week, after Beijing increased subsidies to attract bidders.

The USDA is scheduled to release the Supply and Demand report tomorrow at 11 AM CDT. Reuters surveyed analyst estimates and for the 14/15 crop ending stocks of .693 wheat, 1.864 corn, .360 soybeans. For 15/16 .750 wheat, 1.752 corn, and .443 soybeans.

Economic traders will be focused this week on the reaction to yesterday’s unexpected Chinese 25 bp rate cut to 5.10%, which was the Peoples Bank of China’s third rate cut in six months, and whether there is any significant progress on Greek negotiations at today’s critical Eurozone finance ministers meeting.

Hong Kong banned imports of US poultry and poultry products from Minnesota, Iowa, and Wisconsin in response to bird flu findings. Hong Kong was the #3 buyer of US broiler exports in March.

Last week’s hog slaughter was cut 53,000 head, a bit more than expected to only 2.111 million head. Pork production was down 4%.

The live cattle futures closed near technical resistances on Friday. Traders will likely try and test the resistance level as futures are at a discount to cash prices.

Dressed beef values were higher with choice up .54 and select up .98. The CME Feeder Index is 214.81. Pork cutout values are up .73.

 

Technical Chart of the Day

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Aggressive Planting Progress This Week

May 08, 2015

Good Morning! Paul Georgy with the early morning commentary for May 8, 2015 at 5:15 am.

Grain markets are quiet as producers focus on planting and traders wait for upcoming reports.

Update - Morning Coffee Commentary:

All markets could be affected by this morning’s April payroll report as it will give an indication of what Fed may do with interest rates. Trade is expecting payrolls to increase a respectable 230,000.

Join us in our next live webinar May 19, 2015 for a look at the national yield potential of the 2015 US Corn Crop. Agronomist Mike Kavanaugh will be on hand to take your questions and give us his insight on how the crop is shaping up. Registration is free, here.

There is trade talk that perhaps corn planting could be as much as 75% complete come Monday which is a 20% increase and right on the 5 year average planting progress for this week. Could progress be even higher due to the dry weather over the Ohio Valley, IN and OH where catch planting was needed?

Wheat Quality Council tour results are in and a little less than what trade was expecting. The Kansas 2015 wheat crop yield is estimated at 35.9 bushels per acre compared to last year’s estimate of 33.2 and an actual harvested yield of 28.0 bushels per acre. The five-year tour average of is 40.3 bushels per acre.

The USDA is scheduled to release the report on May 12 at 12 p.m. EDT. Reuters surveyed analyst estimates and for the 14/15 crop ending stocks of .693 wheat, 1.864 corn, .360 soybeans. For 15/16 .750 wheat, 1.752 corn, and .443 soybeans.

The tornados and storms on Wednesday night damaged an ethanol plant in Scandia, Kansas which could knock it out of production for as much as three months.

Agriculture Minister Oleksiy Pavlenko said Ukraine is likely to export no more than 32 million tonnes of grain in the 2014/15 season, lowering an earlier forecast that put exports at up to 37 million tonnes.

Central Illinois corn and soybean basis improved by 1 and 3 cents respectively. Farmers holding on to grain therefore end users will have to pay up to get it.

CME lowers soybean meal futures initial margins for speculators by 9.5 percent to $2,090 per contract from $2,310 which will be effective after the close of business on Friday, May 8.

Poultry veterinarians in Minnesota believe an outbreak of avian flu has spread and could have been tracked onto poultry farms by people or trucks that come into contact with contaminated feces. They also think it may also be carried into barns by wind blowing in contaminated dirt or dust. The U.S. Department of Agriculture, which until now has focused on water fowl spreading the bird flu, is investigating "the potential transmission of virus between operations," a spokeswoman said.

U.S. pork exports grew sharply in March while U.S. beef exports grew slightly. The increases were expected due to the tentative agreement reached in late February by West Coast port operators and dock workers.

Livestock traders are waiting for the cash cattle market to set the stage for the bulls or the bears. A steady cash market would encourage buying at CME due to the futures discount.

Hog traders are concerned that the good planting weather has kept hogs from coming to market which suggests larger supplies next week.

Dressed beef values were higher with choice up 1.43 and select up 1.57. The CME Feeder Index is 215.41. Pork cutout values are up 1.35.

Markets as of 5:15 AM CDT           

  • Jul Corn   1/2      
  • Jul Beans -1         
  • Jul Wheat   1 3/4
  • Jul Soymeal -.90
  • Jun Dlr     .10
  • Jun S&P   3.25
  • Jun Crude   .16
  • Jun Gold    3.40

Technical Chart of the Day

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Can Weather Get Any Better To Kick Start the Crops?

May 07, 2015

Good Morning! Paul Georgy with the early morning commentary for May 7, 2015 at 5:15 am.

Grain markets are mixed in a quiet trading session as traders wait for more news. Weather conditions are ideal in most areas as the US corn and soybean crops get off to an excellent start.

Update - Morning Coffee Commentary:

 

On May 12th the USDA will provide us with their first look at the 2015/16 supply and demand report and balance sheet. USDA historically follows a set methodology for these starting numbers. Planted acres for all three crops will be the same as released on the March 31 Prospective Plantings report. They usually will not change acres until a later report when planting estimates will be adjusted to the current situation. Harvested acreage will come from a historical percentage. For the three major crops they will likely use their February conference estimate of trend yields but modified for planting progress they expect to see by mid-month.

Ethanol production fell from 921,000 barrels per day to only 887,000 in the latest week. This was the second largest weekly decline of this marketing year. It was the smallest weekly production since October 10, 2014 and it was only the second week of this marketing year that production ran below last year. However, USDA and the market has already been figuring that ethanol production would slip under last year in the coming months. Currently ethanol production is 5.3% above last year and USDA is projecting a 1.3% increase year over year average.

The USDA Weekly Export Sales report will be released at 7:30 am today. The following are trade estimates gathered by Reuters:

             Trade estimates       Trade estimates

                 for 2014/15           for 2015/16

Wheat       -100,000-100,000       300,000-600,000

Corn         450,000-750,000             0-150,000

Soybeans           0-350,000       300,000-500,000

Soymeal       90,000-150,000              0-50,000

Soyoil              0-10,000                     0

Stats Canada reported wheat stocks at 16.7 mmt which was down 1-2mmts from expectations though it still leaves plenty of wheat with spring wheat harvest just a few months off.

Census Bureau reported March DDG exports at 923 tmt vs 803 mmt in Feb and at the highest levels since last Aug when they were 1087 tmt. Relaxation of the China MIR-162 restrictions accounted for the increase with China taking 469 tmt vs 272 tmt in Feb. These were the largest monthly shipments to China since last Aug when they took 477 tmt.

The USDA reported a few cattle trading in NE at 160 with a 30 day delivery. Feedlots are looking for steady to higher this week. Seasonally we should be putting in new highs in beef values but currently struggling to get back to the 260 level. The higher prices at the gas pump are taking some of the food dollar spending.

Cash hogs are strong as farmers focus on field work while the cheaper priced pork is getting the attention at the retail counter.

Dressed beef values were higher with choice up .59 and select up .57. The CME Feeder Index is 21. Pork cutout values are up 1.47.

Markets as of 5:15 AM CDT           

  • Jul Corn   -1 1/2     
  • Jul Beans 2 1/4     
  • Jul Wheat   - 1/4
  • Jul Soymeal 1.70
  • Jun Dlr     -.02
  • Jun S&P   -13.00
  • Jun Crude   .03
  • Jun Gold   -8.00

Technical Chart of the Day

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Short Covering Rally or Fundamental Shift?

May 06, 2015

Good Morning for Wednesday May 6, 2015 at 5:15 AM!

Grain markets are higher on follow-through buying after yesterday's bean led rally. Crude oil is higher ahead of today's EIA inventory report (expecting a 1.1 million barrel increase in crude stocks), and dollar traders await this morning's ADP jobs report.

Update - Midday Weather:

Yesterday saw buying across the board, and at times with strong volume. This might suggest that funds are covering some of their near-record short positions. Surges of fund buying could provide further support to grains.

South American headlines continue to spark buying in soybeans. Yesterday's news of more strikes in Argentina provided additional support to the soy complex. Attention should be paid to these stories, but keep in mind that strikes occur in South America at this time every year.

Hopes of increased world soyoil demand were spurred yesterday with the announcement that China had purchased 100,000 palm oil. This caused the soyoil contract to take out the 200 day moving average.

The Kansas Wheat Quality Tour enters its second day today. Twitter was abuzz with some early tour findings yesterday, where it was noted that dryness was an issue for wheat in some parts of the state. Keep an eye on headlines from the tour as it continues today.

Russia’s new Ag Minister is suggesting an end to the export tax on Russian wheat. The tax repeal is expected on May 15th.

Estimates for next Tuesday's USDA Supply and Demand report were released yesterday. Trade estimates old crop corn ending stocks will be 1.856 million bushels, 362 million bushels for soybeans, and 691 million bushels for wheat. Next week's report will also be the first report from the USDA with new crop (15/16) numbers. Trade is anticipating new crop ending stocks of 1,759 million bushels for corn, 446 million bushels for soybeans, and 751 million bushels for wheat. More report estimates are expected today.

On the weather front, rain is the word. For wheat, rains have added pressure to prices as quality is seen improving with the rain falling/forecast. In corn and soybeans, however, some are suggesting that too much rain in the forecast will lead to planting delays. With planting progress already so far ahead, however, be careful chasing this story, but stay up to date with our daily ag commodity weather forecasts here, or have an audio version sent to you here.

Chart watchers will be keeping an eye on the 10 day moving average on the corn chart after yesterdays close above support at 362 3/4.

Traders will be watching the ADP jobs number at 7:15 CDT this morning for its influence on the dollar and markets as a whole. Estimates are for 205,000 private sector payrolls added in April.

Bird flu continues to grab headlines in the meat complex as its spread widens and the USDA commits another 330 million dollars to combating the outbreak. Hormel Foods, producers of the Jennie-O Turkey brand, announced they will lay off 233 workers at a Minnesota plant due to the bird flu.

Allendale's Rich Nelson reminds us again that for now, bird flu is bearish to US meats as it simply means more meat offered to US consumers as exports of US poultry become restricted throughout the world. Further expansion of the diseases, however, could change that story.

The last few days of cattle trade have stirred some bullish hopes of a climb higher in cattle pricing. Longer term fundamentals, particularly supplies, need to be watched closely for pricing direction.

Markets as of 5:15 AM CDT           

  • Jul Corn   1 1/2     
  • Jul Beans 2         
  • Jul Wheat    3 1/2
  • Jul Soymeal -.50
  • Jun Crude   1.55
  • Jun Gold   -3.40

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Corn Planting Makes Incredible Advancement

May 05, 2015

Good Morning! Paul Georgy with the early morning commentary for May 5, 2015 at 5:15 am.

Grain markets are lower due to planting progress of US crops. The Dollar is higher as it bounces off of the 100 day moving average and crude oil is consolidating near recent highs.

Update:

Corn planting progress at 55% outpaced the trade estimate of 49% while the 5 year average was only 40%. Soybean plantings were estimated at 11% and USDA says 13% of the crop is in the ground compared to 9% average. Winter wheat conditions improved to 43% good/excellent which was on the trades guess.

Today the Kansas wheat tour begins which should provide some headlines and create more movement in KC wheat prices. The group estimate of yield will be watched closely as they have been very accurate in recent years.

Workers in Argentina's grains hub threatened to launch an open-ended strike that would put upward pressure on global food prices by interrupting supply.

The Trade ministry says Brazil exported 6.55 million tonnes soybeans in April vs 5.59 million tonnes in March and 8.25 million tonnes a year ago and exported 159,249 tonnes of corn in April vs 675,434 tonnes in March and 562,407 tonnes a year ago. Brazil exported 21.02 million liters of ethanol in April vs 111.01 million liters in March and 137.39 million liters a year ago.

China will offer 3.4 million tonnes of corn from state reserves in this week’s auction, up from the previous week offerings. Most of the excess comes from its four northeastern provinces.

On Wednesday, Statistics Canada will report crop supplies in commercial storage and on farms as of March 31, 2015, based in part on a farmer survey.

Federal Reserve Bank of Chicago leader Charles Evans repeated on Monday his belief that raising rates this year would be a bad idea. In his comments he said, "It likely will not be appropriate to begin raising the federal funds rate until sometime in early 2016."

Increasing cattle and beef supplies have been a market focus in the past few weeks. We are about halfway through the February to June supply increase and prices are $8 off the cash cattle high. The demand side of the issue is the wildcard. The month of May typically is a big deal for spring grilling demand but once we get into June end users are procuring for a lower demand environment due to summer heat.

Brazil beef exports in April came to 83,351 tonnes which was just under the 82,067 from March and 91,503 in April of last year. On a separate note, Brazil’s Agriculture Minister suggested the US may allow imports of Brazilian fresh beef by August.

Dressed beef values were higher with choice up 1.00 and select up .68. The CME Feeder Index is 215.77. Pork cutout values are up .46.

Markets as of 5:15 AM CDT           

  • Jul Corn   -3 3/4     
  • Jul Beans -1         
  • Jul Wheat   -4 3/4
  • Jul Soymeal -.70
  • Jun Dlr     .12
  • Jun S&P   -2.50
  • Jun Crude   .51
  • Jun Gold   -.10

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Planting Progress Should Beat The Average

May 04, 2015

Good Morning! Paul Georgy with the early morning commentary for May 4, 2015 at 5:15 am.

Grain markets are mixed as soybeans are higher with corn and wheat lower. The outside markets are providing headwinds as the dollar and crude oil are higher. The beginning of the month money flow is likely affecting price directions after the majority of the world was on holiday, Friday.

Update - Midday Commodity Weather:

There seems to be more talk that corn planted acreage could be as high as 50-55% with beans 15% or higher on the progress report this afternoon. The average increase for last week is 20% which would suggest around 40% complete when added to last week’s number. Weather across the cornbelt was excellent for planting in most areas and many of our clients are saying they are finished planting corn and already working on soybeans. The soybean number is expect to be close to 13-14% completed.

The bird flu situation continues to be a major issue as the Governor of IA declared a state of emergency as 4 more cases were reported over the weekend. The trade is concerned about meal demand due to bird loss.

The Kansas Wheat Quality Tour starts up this week which should create lots of headlines. Over the past couple of years this group has had a decent track record with their production estimates.

The CFTC Commitment of Trader showed managed money selling another 27,085 contracts of corn to make them net short 92,383. Funds bought 15,472 contracts of soybeans and sold 10,289 contracts of wheat.

(Reuters) - Tumbling global corn prices have raised the prospect of a pickup in imports by China, the world's second-largest consumer, as a widening discount to high domestic prices makes full-duty imports more economic.

The economic markets this week will focus on whether Greece can reach a bailout agreement with the Eurozone, Friday’s U.S. April unemployment report, and comments by various Fed officials this week including an appearance by Fed Chair Yellen at a conference on Wednesday in Washington DC.

The bird flu caseload is the largest since 1924. However the findings are not in the main chicken meat producing areas, rather in turkey and egg laying facilities which has not lead to a bullish impact on chicken prices. Considering wholesale chicken breast prices are 9% under last year. Dark meat, which is the bulk of our exports, are 38% lower for legs and 32% lower for leg quarters from a year ago.

Cash cattle end the week with a trade at 160 in the south which was 2.00 higher than the previous week. Cattle slaughter increased to 566,000 head last week which produced 460 million pounds of beef. Supporting that production was the carcass weights being nearly 30 pounds greater than a year ago.

Dressed beef values were mixed with choice down 2.26 and select down .83. The CME Feeder Index is 218.00. Pork cutout values are up .58.

Markets as of 5:15 AM CDT           

  • Jul Corn   -1 1/2     
  • Jul Beans 4 1/2     
  • Jul Wheat   -3 1/2
  • Jul Soymeal .06
  • Jun Dlr     .28
  • Jun S&P   3.25
  • Jun Crude   .24
  • Jun Gold    7.70

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Bulls Take a Stand To Stop Slide

May 01, 2015

Good Morning! Paul Georgy with the early morning commentary for May 1, 2015 at 5:15 am.

Grain markets are mixed as this week’s lows provide support. US Dollar is higher on short covering ahead of weekend while crude oil is giving back some of its gains.

Corn planters are running across the cornbelt with most areas dry until Tuesday or Wednesday of next week. The areas that have been wet such as the eastern cornbelt and the delta are expected to be dry through most of next week. Early talk for the corn planting progress on Monday’s report is 50% or more. Many producers we are talking to, expect to be done planting corn by this weekend.

The Argentine government stepped in to settle its ship captain’s strike. There will be more strikes in coming weeks as workers want cost of living raises. Inflation in Argentina is 40% annually. However, without disruptions of exports in South America traders are running out of bullish incentives.

Weekly export data was supportive for corn and soybeans as sales were above the trade expectations. Wheat on the other hand was a surprise as total sales were net cancellations of 449,167 tonnes when trade was expecting new sales of 0 to 100,000 tonnes. Old crop wheat sales are only 97% of USDA's whole-year goal, when the normal pace is 102% at this time of year.

AgRural says Brazilian farmers have sold 61 percent of the nearly harvested 2014/15 soybean crop, but still behind last year’s pace of 69 percent.

Buenos Aires Grains Exchange is expecting Argentine farmers to harvest 60 million tonnes of soybeans in this crop year, which is an increase from its previous estimate of 58.5 million tonnes. The exchange raised it Argentine corn production from 23 million tonnes to 25 million tonnes.

Daily price limits for Chicago Board of Trade corn and wheat futures will rise starting today, while soybean limits will not change. The new limits for corn, will move to 30 cents per bushel from the current 25 cents. The limit for CBOT wheat will rise to 40 cents from 35 cents, and the limit for K.C. hard red winter wheat will stay at 40 cents. Soybeans, daily limit will remain at 70 cents per bushel.

The market is expecting today’s ISM manufacturing index to show a small upward rebound of 0.5 points to 52.0, which would finally snap a 5-month losing streak.

The Greek stock and bond markets rallied sharply this week as the Greek government seems more determined to reach some kind of deal after Greece’s finance minister was sidelined by PM Tsipras in daily negotiations with the Eurozone.

The dollar index on Thursday fell to a 2-month low as bearish factors included U.S. economic concerns that may further delay a Fed rate hike and strength in Euro which rallied to a 2-month high on signs that deflation risks are easing after Eurozone Apr CPI was unchanged y/y and ended four straight months of declines.

An Iowa-based chicken broiler breeding farm has initially tested positive for the highly pathogenic bird flu, according to the Iowa Department of Agriculture and Land Stewardship.

Cash hogs have seen a sharp rally in the past four days. Through this morning the gain comes to 10.02. The gain in wholesale pork through today is only 3.34. This news is great but the reason for the rally is a concern. Farmers are focusing on field work and not on marketing hogs. With rain in next week’s forecast it could mean a moderate setback in prices.

Cash cattle bids were pulled back from $157 to now $156 in Kansas. This was a signal the supply issue is becoming a little too hard to ignore. Cattle slaughter is running 15,000 head larger than last week.

Dressed beef values were mixed with choice down 1.65 and select down 2.01. The CME Feeder Index is 217.37. Pork cutout values are up 1.94.

Markets as of 5:15 AM CDT           

  • Jul Corn   - 1/2      
  • Jul Beans 1/2      
  • Jul Wheat   1 1/4
  • Jul Soymeal -.30
  • Jun Dlr     .25
  • Jun S&P   6.25
  • Jun Crude   -.18
  • Jun Gold   -2.30

Technical Chart of the Day

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Monetary Concerns Underpin Grains

Apr 30, 2015

Good Morning! Paul Georgy with the early morning commentary for April 30, 2015 at 5:15 am.

Grain markets are higher on support from the weaker US Dollar and stronger crude oil values. The Dollar has tested and held the lows made after last month’s FOMC meeting. Crude oil has broken out of recent consolidation which should provide support to grains.

Update - Midday Commodity Weather Update:

If you missed this month’s Ag Leaders Monthly Webinar, you can still listen in to the recording and get the planting through harvest weather update. Get the Recording Now.

Ethanol production fell from 930,000 barrels per day to 921,000 barrels last week. Production was 3% over same period last year. Year to date pace is 5.2% above a year ago. In order for us to meet USDA’s 5.200 billion bushel corn for ethanol estimate we would have to run 5.8% below last year from now through the end of August. Ethanol stocks remain large at 21% over last year.

The following are estimates for this mornings export sales report gathered by Reuters: Wheat  0-100,000 (14/15); 100,000-300,000 (15/16); Corn 500,000-700,000 (14/15); 50,000-200,000 (15/16); Soybeans 50,000-250,000 (14/15); 200,000-400,000 (15/16); Soymeal 100,000-200,000 (14/15); 0-50,000 (15/16); Soyoil 0-20,000 (14/15); 0 (15/16).

China’s direct subsidy program for soybean producers has analysts thinking it could cause a reduction in production this year by 15 to 20%. The subsidy is a trial government program in some of the key producing provinces. Which is intended to replace the controversial stockpiling program.

Scattered soybean sales by farmers caused a slippage in basis at some country elevators and the gulf.

Russian Deputy Prime Minister Dvorkovich asked the agriculture minister to submit a proposal and remove the tax on wheat exports by mid-May.

Argentina's main grains port of Rosario was paralyzed by an open-ended wage strike by boat captains needed to help dock incoming cargo ships, the country's port management chamber said. We must remember this is the time of the year where workers strike to get cost of living increases. Trade is not too worried about the immediate problems.

Funds were net buyers across the board yesterday. It is estimated they bought a net 7,000 soybean contracts, 5,000 wheat, 4,000 corn, 3,000 soymeal and 1,000 in soyoil contracts

The Fed's policy statement after the FOMC meeting, puts it on track to begin a meeting-by-meeting approach toward deciding when to pull the trigger on its first rate hike since June 2006. The central bank, however, acknowledged soft patches across the economy, making it more likely that it will not be ready to hike rates until at least September.

Confirming months of data that suggested a slowdown, the government said Wednesday that the American economy barely grew in the first quarter of 2015. At 0.2 percent, the pace of growth was the slowest in a year, when a winter wipeout in the first quarter of 2014 prompted the economy to contract at a 2.1 percent rate.

China's domestic meat consumption increase has slowed, affected by economic slowdown and anti-corruption government edicts.

The april cattle contract goes off the board today at noon. Currently the June contract is at a $10.00 per cwt discount.

Dressed beef values were mixed with choice up .83 and select down 1.92. The CME Feeder Index is 215.79. Pork cutout values are up .32.

Markets as of 5:15 AM CDT           

  • May Corn   1 1/2     
  • May Beans 4 1/2     
  • May Wheat   3 3/4
  • May Soymeal -.00
  • Jun Dlr     -.25
  • Jun S&P   -6.50
  • Jun Crude   .40
  • Jun Gold   -7.80

Technical Chart of the Day

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Dollar Overrides Favorable Planting Weather

Apr 29, 2015

Good Morning! Paul Georgy with the early morning commentary for April 29, 2015 at 5:15 am.

Grain markets are steady-firm as the weak US Dollar provides support to prices. Fieldwork is progressing and weather outlook is favorable to new seedings.

Do Soybeans really need to buy acres from corn? In recent days, with the fall in corn and rise in soybeans, the incentive to plant corn has fallen by $50 per acre. Corn acreage will likely increase on the June report. The soybean/corn ratio spread has widened from 2.35 corn to soybeans last week to 2.51 yesterday. Talk to your Allendale Representative about the opportunities available now.

First notice day tomorrow has traders cleaning up May positions as longs will be eligible for delivery.

Cash grain movement is limited as farmers are busy planting. The weather forecast is favorable to getting crops in the ground for the next few days followed by 85 to 100% moisture coverage next week.

Brazil’s soybean harvest is virtually complete with 91% done compared to 94% average. Their corn harvest is still trailing normal with only 72% completed verses average of 81%.

K-State University reports of stripe rust in central and eastern Kansas continue early this week. The disease is still at low levels in most fields, but with favorable weather conditions over the weekend, the severity of the infection is likely to increase.

On Tuesday funds are estimated to have sold a net 5,000 wheat contracts, bought 3,000 in soybeans, 3,000 soymeal, sold 4,000 soyoil contracts and were even in corn.

Weekly EIA report expected to show another increase in U.S. crude oil inventories. The market consensus for today’s weekly EIA report is for an increase of 2.4 million barrels, a drawdown of 33,000 barrels in Cushing crude oil inventories.

The market consensus for today’s Q1 GDP report is an increase of 1.0%, down from the already weak level of 2.2% in Q4. The FOMC today concludes its 2-day policy meeting today.  There will be no press conference by Fed Chair Yellen today and no updated Fed forecasts.

The United States wants China to limit trade only from states or regions that have had cases of the bird flu, which is deadly to poultry, Vilsack told reporters. The United States also has pressed Mexico, the top importer of U.S. poultry, to ease its restrictions on imports of U.S. chickens and turkeys. Mexico limits imports from states with infected flocks, and the USDA would like the restrictions to be applied only to counties with infected farms.

Tyson Foods Inc, the largest U.S. poultry producer, plans to eliminate the use of human antibiotics in its chicken flocks by September 2017, one of the most aggressive timetables yet set by an American poultry company.

Livestock futures markets have rallied early this week fueled by the weaker dollar. Traders anticipate an improvement in exports of beef and pork as poultry exports struggle due to bird flu findings.

Beef production rises as all plants are back on line. Cattle slaughter numbers are expected to increase over the next several weeks. However, the large discount of June futures to cash is providing buyer’s optimism.

Lean Hog futures are currently at a large premium to the cash index. Cash hogs are firmer as producers focus on fieldwork while the weather is open.

Dressed beef values were mixed with choice up .83. The CME Feeder Index is 214.90. Pork cutout values are up .16.

Markets as of 5:15 AM CDT           

  • May Corn   1 1/4     
  • May Beans - 3/4      
  • May Wheat   2 1/2
  • May Soymeal -.70
  • Jun Dlr     -.11
  • Jun S&P   -2.00
  • Jun Crude   -.34
  • Jun Gold   -8.70

Technical Chart of the Day

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Corn Planting Could Reach 50% By Weekend

Apr 28, 2015

Good Morning! Paul Georgy with the early morning commentary for April 28, 2015 at 5:15 am.

Grain markets are mixed as planting progress weighs on corn. Soybean futures are getting strength from outside influences such as weaker US Dollar and firm crude oil prices.

Weather's Impact on Grains This Year: 

As planting continues throughout the US, we'll update our weather outlooks in our next live webinar, tonight at 8:00 PM CDT.  Register Here

Update - Morning Coffee Commentary:

USDA says that 19% of the US corn crop is planted and 2% of the soybean crop. The goal of having 50% of the corn planted by May 8 seems very possible as the average progress for this week is 20%. Current moisture and field conditions combined with open weather should allow Midwest farmers to plant faster than average this week.

The weather models are projecting more heat and moisture for next week which should get the crop off to a great start.

Winter wheat conditions remained at 42% while trade was looking for a 1 to 2% improvement. However spring wheat planting progress jumped to 55% versus 29% average.

Wheat futures are struggling due to planting progress and technical selling. However the soft red winter wheat grown east of the Mississippi River has been very wet which has producers concerned about disease issues. Travelling to southern IL this past weekend we saw very uneven wheat fields with drown out and winter kill evident.

Weekly export inspections were 1.294 mmt for corn, 311,622 tonnes of soybeans and 543,929 tonnes of wheat. All the shipments were larger than what trade was expecting.

Archer Daniels Midland Company announced that it is investing to give the company`s Enderlin, North Dakota, processing plant the ability to crush soybeans in addition to canola and sunflower seeds.

Russian grain exports for the current marketing year totaled 27.4 million tons of grain, compared with 22.4 million tons in the corresponding period last year.

Russia's recently appointed agriculture minister has set a goal of increasing the country's grain production to 110-120 million tonnes per year in the near future, reported by the RIA news agency.

FOMC meeting starts today and runs through tomorrow. Comments from the meeting should be released at 1:00 pm central time. Trade is not expecting any major changes but hoping for a clearer picture when the Fed will raise interest rates.

Plenty of economic data this week but trade is setting their sights on the employment numbers on May 8.

State officials in Iowa say that bird flu virus has been found in four more northwest Iowa poultry farms affecting more than 2 million chickens. The latest cases include three commercial laying operations and one farm that produces young hens. The largest operation is in Sioux County, with 1.7 million birds in a commercial egg-laying farm.

Livestock futures reacted to the somewhat bearish Cattle-on-Feed Report with a rally after the open on Monday. Cash cattle are expected to trade steady to lower than late week values. Showlists in the southern and central plains feedlots increased slightly compared to last week. Beef production estimates are expected to increase this week by as much as 10,000 head. When combining heavier than year ago weights total beef production could be up as much as 2% this week.

Lean hog futures premium to cash is tugging on the rallies. However industry contacts are expecting an improvement in pork demand due to retailers profit margin on pork compared to beef.

Dressed beef values were mixed with choice down .10 and select up .36. The CME Feeder Index is 214.35. Pork cutout values are up .92.

Markets as of 5:15 AM CDT           

  • May Corn   - 3/4      
  • May Beans 3 1/2     
  • May Wheat   -2 1/2
  • May Soymeal 1.10
  • Jun Dlr     -.32
  • Jun S&P   -3.50
  • Jun Crude   -.10
  • Jun Gold   -1.60

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Planting Progress And Technicals Leave Corn Vulnerable

Apr 27, 2015

Good Morning! Paul Georgy with the early morning commentary for April 27, 2015 at 5:15 am.

Grain markets are mostly lower pressured by favorable planting weather for the week ahead. The lower close last Friday has technical traders looking for further downside potential in corn. The Dollar is higher and crude oil is lower creating more headwinds for grains.

Weather's Impact on Grains This Year: As planting continues throughout the US, we'll update our weather outlooks in our next live webinar, on Tuesday, April 28th, 2015.  Register Here

Update - Morning Coffee Commentary:

In the week ahead grain traders will be waiting for the planting progress numbers this afternoon. We are hearing expectations of 18 to 25% of the US corn acres planted which would compare to 28% average. This afternoon we should see our first soybean planting progress number where estimates are coming in at 3 to 4% compared to 4 % average. Winter wheat conditions are expected to improve by 1 to 2% in the Good/Excellent category.

The week ahead has an active calendar on the economic front with Consumer Confidence on Tuesday, FOMC meeting results on Wednesday and several other reports on Thursday and Friday.

Friday’s CFTC Commitment of Traders report showed managed money increased short positions in corn by 16,986 to make them net short 65,298 contracts. They also were net sellers of 14,502 contracts of wheat which put them at a record short position of 96,624. Managed money funds were net buyers of 34,211 contracts of soybeans making them net short 47,505 contracts. In livestock funds bought 2,407 contracts of hogs and sold 4,504 contracts of cattle.

Cash bids for soybeans and corn are holding steady as farmers resist the weaker futures prices. This week farmers will be focused on getting a crop in the ground not marketing grain.

Dave Toth from RJO Market Insight says the following about July corn futures, “Friday’s clear break of the past month’s support between 3.77 and 3.75 reaffirms broader bearish count that now exposes accelerated losses and possibly the resumption of the secular bear trend. Thursday and Friday’s resumed break leaves Thursday's 3.85 high in its wake as the latest smaller-degree corrective high and new short-term risk parameter this market is now minimally required to recoup to even defer, let alone threaten the bear. In lieu of such 3.85 strength, further and possibly accelerated losses are expected straight away with former 3.77-area support considered new near-term resistance.”

The Cattle-on-Feed numbers are considered bearish and we would expect a lower opening especially after the sharp rally late last week. The on-feed and marketing numbers were in line with trade expectations. However the placements were more aggressive than expected at 100.4% of a year ago compared to trade average estimate of 94.5%. After looking at the placement breakdown it suggests late summer beef production could see a sizeable jump as the heavy weight cattle placed were up 14%. Adding the increased weights of cattle going to market, total beef production will be above year ago levels. Seasonally, production is expected to increase through the second quarter.

Beef prices and pork have already started their price adjustment as wholesale beef values have dropped sharply while pork and chicken stabilize.

Dressed beef values were weak with choice down 3.02 and select down 3.42. The CME Feeder Index is 212.97. Pork cutout values are up .27.

Markets as of 5:15 AM CDT           

  • May Corn   -1 3/4     
  • May Beans 1/2      
  • May Wheat   -1 
  • May Soymeal -.80
  • Jun Dlr     .29
  • Jun S&P   3.25
  • Jun Crude   -.31
  • Jun Gold    7.20

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Corn Planting Progress Seen In Most Of Midwest

Apr 24, 2015

Good Morning! Paul Georgy with the early morning commentary for April 24, 2015 at 5:15 am.

Grain markets are lower as weekend takes spotlight. Larger production estimates out of Argentina and lighter than expected road blockage in Brazil weigh on markets. Outside markets were mostly lower on profit taking.

Update - Morning Coffee Commentary:

Weather forecasts for the next 10 days open up for more fieldwork in much of the Midwest. Delta and Mid-south still struggle with wet conditions.

Canadian farmers intend to plant more wheat, oats, and barley in 2015 than they did in the last year, according to a Statistics Canada survey. Field conditions should allow them to plant 24.8 million acres compared to 23.835 million acres in 2014.

Argentine’s agriculture ministry says farmers are expected to harvest 59 million tonnes of soybeans this season which is up from its previous estimate of 58 million tonnes.

The International Grains Council on Thursday raised its forecast for 2015/16 global corn production by 10 million tonnes to 951 million although it remained well below the prior season's record 994 million tonne crop. Global wheat production in 2015/16 was cut by 4 million tonnes to 705 million due to reduced prospects in Argentina, China.

US Trade Representative Michael Froman expressed disappointment that the European Commission has decided to let member states have 'opt-outs' on imports of genetically-modified food and feed

Expiration for the May grain options is at today’s close.

Effective Thursday, April 30, 2015 for the trade date May 1, 2015 the CBOT will reset price limits for grain and oilseed futures. The changes for the daily limit in corn will go from $.25 to $.30, CBOT wheat changes from $.35 to $.40 and soybeans will remain the same at $.70.

Weekly egg sets were 102% while chicks placed at 104% of a year ago.

USDA will release April 1 Cattle on Feed numbers at 2:00 pm this afternoon. Trade is expecting COF to be 98.6% of a year ago and March placements at 94.5%. Marketing’s are expected to be 98.6% of a year ago.

The discount of futures to cash prompted short covering in cattle on Thursday. Today’s trading limit will increase to $4.50 per cwt for live cattle contracts. June cattle will have resistance at the 100 Day moving average which crosses at 149.25. Cash trade is done for the week with most cattle trading at 158.

Dressed beef values were mixed with choice down .05 and select up 1.52. The CME Feeder Index is 215.57. Pork cutout values are up 2.19.

Markets as of 5:15 AM CDT           

  • May Corn   -2 1/4     
  • May Beans -4 1/4     
  • May Wheat   -1 1/4
  • May Soymeal -1.10
  • Jun Dlr     -.03
  • Jun S&P   -.50
  • Jun Crude   -.25
  • Jun Gold   -2.70

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Brazilian Trucker Woes Continue

Apr 23, 2015

Good Morning! Paul Georgy with the early morning commentary for April 23, 2015 at 5:15 am.

Grain markets are mixed with soybeans leading the rally on strike headlines out of Brazil. Outside markets are trading near unchanged in overnight session.

Update - Morning Coffee Commentary:

The USDA weekly export sales report will be released at 7:30 this morning. Trade estimates are corn 400,000 to 600,000 tonnes, soybeans (100,000) to 150,000 tonnes, soymeal 50,000 to 150,000 tonnes, soyoil 0 to 20,000 tonnes and wheat 0 to 100,000 tonnes.

Weekly ethanol production was 930,000 barrels per day in the latest week. This is slightly higher than the 924,000 barrels per day from the previous week which is 2% above last year. In order to meet USDA’s corn for ethanol estimate we will have to run 5.4% under last year from now until the end of August. On the bearish side; stocks rose by 697,000 barrels this week which puts it at the largest level in seven weeks.

China imported 243,000 tonnes of distillers' grains in March, down 44 percent from a year ago, though triple February's shipments.

Allendale Meteorologist, Ryan Martin’s weather commentary can be found by clicking here.

A quick view of how much corn poultry consumes over a lifetime gathered from the University of Illinois. Turkeys: 1 bushel of corn per bird lifetime, 18 weeks to grow out, ration is heavy on bean meal up front and then mostly corn at the end. Chickens: Layers on a 65-70% corn diet, total ration consumption is 1/4 lb. per bird per day of which 65-70% is corn.

Stats Canada will release their planting estimates at 7:30 this morning. Analyst estimates are for 24.2 million acres of wheat and 20.2 million acres of canola.

Brazilian Government said they would approve a reference table for freight rates but confirmed they would not and could not enforce any such table. The independent truckers are mobilizing and promising stoppages. While the government is dispatching police to break up attempts of road blockage. The bottom line will be “How much support will the movement garner?”

(Reuters) Farmers in the central U.S. grain and livestock states continued to take out new operating loans in the first quarter of 2015 as low grain prices failed to cover high costs for seed, rents and crop chemicals ahead of spring field work, the Federal Reserve Bank of Kansas City said.

Allendale’s very own Rich Nelson will be the guest on today’s University of Illinois radio show. There will likely be questions on the bird flu impact on meat and grain prices.

Pork in cold storage was under the trade estimate as stocks fell by 18 million pounds which is greater than the average drawdown for March of 16 million pounds. This number should be a bit of a surprise as March production was higher than a year ago which suggests good demand.

Beef stocks for April 1 were 479.784 million pounds, less than expected. Beef stocks fell by 12 million pounds compared to a normal 3 million pound increase. Chicken in storage is up 27% versus a year ago.

Cash trade is reacting to increasing supplies and weak futures prices as packers paid $158 in the Southern Plains. Last week’s USDA compiled average price was $161.

Lean hog futures remain on the defensive as bird flu spreads across the northern cornbelt and poultry importing countries ban purchases.

Dressed beef values were mixed with choice up .24 and select down .03. The CME Feeder Index is 217.48. Pork cutout values are down 1.13.

Markets as of 5:15 AM CDT           

  • May Corn   - 1/2      
  • May Beans 3 3/4     
  • May Wheat   1 1/4
  • May Soymeal 1.40
  • Jun Dlr     .02
  • Jun S&P   -5.50
  • Jun Crude   -.18
  • Jun Gold    1.60

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Bird Flu Outbreak Ills Grain Rally

Apr 22, 2015

Good Morning! Paul Georgy with the early morning commentary for April 22, 2015 at 5:15 am.

Update - Morning Coffee Commentary:

Grain markets are mixed as corn and soybeans fight usage concerns over bird outbreak. Wheat is higher mostly due to spreading. Outside markets are a bit weaker across the board.

Bird flu findings are having an impact on grains and protein markets as traders worry about loss of demand. Rich Nelson has looked at the possible impact of current demand changes verses a wide spread breakout of the influenza. Total feed usage is 5.250 billion bushels of corn and 31 million tons of meal. The poultry industry uses about 1.240 million bushels corn and 15 million tonnes of meal. Bottom line: current poultry numbers affected are a small portion of production and has a minimal impact on corn and soymeal usage.

Ryan Martin’s Soybean Weather outlook: Heavy rain moves back into the Deep South this weekend and then again early next week. But, there will be nice windows on either side of those rains to get work done. Rain totals will be half to 2” out of each system. Temps will be below normal for a good chunk of this week, but should get back close to normal next week. Read the full story.

The Reuters Chatroom had a conversation with an analyst from Brazil who believes the meeting between the truckers and government is more of a formality and no change will come from it. However, he does not believe there will be wide spread strikes as a result. There may be some localized situations because there are many different factions in the trucking industry in Brazil. He does not expect any disruptions in soybean export loading.

Stats Canada will release their first acreage estimate for 2015/16 on Thursday, trade looking for small acreage adjustments.

Funds were estimated to be net sellers of 6,000 corn contracts, 4,000 soybeans, bought 2,000 wheat, sold 2,000 soymeal and bought 3,000 soyoil contracts on Tuesday.

May options for Ag commodities will expire Friday followed by first notice day for May futures on Thursday, April 30th.

U.S. existing home sales should improve going into spring. The market is expecting today’s Mar existing home sales report to show an increase of 3.1% to 5.03 million units, adding to Feb’s increase of 1.2% to 4.88 million.

Mexico, the biggest buyer of U.S. chicken, has halted imports of live birds and eggs from the U.S. state of Iowa due to an outbreak of deadly bird flu there.

Live cattle futures rallied yesterday on short covering and because of the discount of nearby futures to cash market prices. Lean on the other hand are struggling with large supplies of pork and the premium to cash markets. The price relationship of beef to pork at the wholesale level has traders looking for a narrowing of the spread.

Cash cattle are testing long-term uptrend support at 157 this week. Cash hogs should be supported by producers heading to fields to plant over the next few weeks.

Dressed beef values were mixed with choice up .68 and select down 2.65. The CME Feeder Index is 217.48. Pork cutout values are up .75.

Markets as of 5:15 AM CDT           

  • May Corn   -1 3/4     
  • May Beans -1 1/4     
  • May Wheat   1 3/4
  • May Soymeal .20
  • Jun Dlr     -.46
  • Jun S&P   -8.75
  • Jun Crude   -.42
  • Jun Gold   -1.00

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Delays in South Offset by Progress in North

Apr 21, 2015

Good Morning! Paul Georgy with the early morning commentary for April 21, 2015 at 5:15 am.

Grain markets are lower for a combination of reason; planting progress, less rain and headwinds from US. Dollar.

Update - Morning Coffee Commentary:

Corn planting progress showed the states of MN, IL, IA and SD were busy last week. USDA put the total corn plantings at 9% complete compared to 13% average and 10% trade estimate.

Spring wheat planting progress was on fire as the northern plains added another 19% to have a total of 36% planted verses 19% for the 5 year average. Winter wheat Good/Excellent conditions remained the same as last week at 42%. Traders were expecting an improvement to 44% due to the rain in the southern plains.

A portion of Ryan Martin's weather comments from yesterday: Evaporation rates will slow due to the colder air. The next system we are watching is on track for this weekend – Saturday and Sunday over the Corn Belt. Low pressure tracks out of KS into MO and will have a strong circulation similar to this past weekend’s system. Models right now are showing a tendency to keep this low south, curving it toward the OH River. We still like a track that is farther north…but for now will have to sit back and wait to see if that can develop…Read More.

Allendale’s Rich Nelson looked at planted acres on March 31st report compared to June 30 planting number and found that on average corn planted acreage increase by 674,000 acres. Soybean planted acres were down 10 out of the last 15 for an average of 913,000 acres.

StatsCan will release their first acreage estimate for 2015/16 on Thursday April 23rd, trade looking for small acreage adjustments.

May options for Ag commodities will expire Friday followed by first notice day for May futures on Thursday, April 30th.

Argentina said it had authorized the export of an additional 3.5 million tonnes of the 2014/2015 corn crop. They had already authorized the export of 8 million tonnes of corn late last year.

(Reuters) Iowa, the top U.S. egg-producing state, found a lethal strain of bird flu in millions of hens at an egg-laying facility on Monday, the worst case so far in a national outbreak that prompted Wisconsin to declare a state of emergency. The infected Iowa birds were being raised near the city of Harris by Sunrise Farms. The facility houses 3.8 million hens, according to the company, which sells eggs to food manufacturers, government agencies and retailers.

Second quarter beef cattle supplies are determined by the amount of cattle placed during the August – November period of the previous year when placements were down 1.6%. Combine the lower placements with current slaughter weighs (2 to 3% above a year ago) and the results gives you larger than a year ago production. This outlook is a reason for the lower futures prices going forward. But the question is has the futures already priced in the pending increases?

Dressed beef values were higher with choice up 1.35 and select up 1.23. The CME Feeder Index is 217.66. Pork cutout values are down .13.

Markets as of 5:15 AM CDT           

  • May Corn   -3 3/4     
  • May Beans -4 1/2     
  • May Wheat   -4 1/4
  • May Soymeal -2.70
  • Jun Dlr     .33
  • Jun S&P   8.25
  • May Crude   -.23
  • Jun Gold    3.90

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Watch For Headlines Out of Brazil This Week

Apr 20, 2015

Good Morning! Paul Georgy with the early morning commentary for April 20, 2015 at 5:15 am.

Grain markets are mixed as China’s stimulus and Brazilian strike concerns outweigh weather forecasts. Dollar reverses overnight on weak euro.

Update - Morning Coffee Commentary:

Markets participants are looking ahead to weather forecasts for the Delta and Midwest. Many are getting concerned about planting delays in the south. Farmers may switch to soybeans but it is just too wet to get in the fields in the Mid-South and the Delta to do any work.

Today’s planting progress report will tell us just how much corn got planted in the upper Midwest as filed conditions were right but the calendar was a little early. Early estimates for corn planting progress is 10 to 12% the 5 year average is 14%.

Spring wheat planting should have had a sizable gain last week. Customers in ND and MN are amazed by the amount of wheat being planted.

Excitement in the soybean market this week could come from headlines out of South America. Brazilian truckers are meeting with the government and it is expected that the truckers will not like the outcome. There may be some road blockage but not as wide spread as the last strike. There is talk of a dockworkers strike on Wednesday.

CFTC Commitment of Traders showed funds adding to short positions in a big way. They were net sellers of 57,403 contracts of corn, 33,124 contracts of soybeans and 11,235 contracts of wheat. They are now net short 19,717 contracts of soybean meal.

Japan and the United States reported progress in the first of two days of cabinet-level discussions. Access to Japan's farm market and the U.S. car market remain obstacles to a bilateral deal between the two nations, vital to the success of a long-delayed Trans-Pacific Partnership (TPP) pact.

Egypt's state grain buyer, the General Authority for Supply Commodities, said it had bought 300,000 tonnes of French, Russian and Romanian wheat.

China's central bank cut the amount of cash that banks must hold as reserves, adding more liquidity to the world's second-biggest economy to help spur bank lending and combat slowing growth.

Rich Nelson reported in the Allendale Advisory Report on Friday that for second quarter slaughter, we will now draw from placements made between August and November. They were only 1.6% smaller than last year. Our weights are about 2% to 3% higher than last year. That means we will transition from an incredibly tight supply to beef production over last year. This will be a very abrupt supply change that most of the cattle market is simply not psychologically prepared for.

Live cattle and feeder cattle traders will be looking for chart support at the 50 day moving average

Dressed beef values were weaker with choice down 2.59 and select unchanged. The CME Feeder Index is 219.47. Pork cutout values are up 1.85.

Markets as of 5:15 AM CDT           

  • May Corn   - 1/2      
  • May Beans 4 1/2     
  • May Wheat   2 1/4
  • May Soymeal 1.50
  • Jun Dlr     .27
  • Jun S&P   11.50
  • May Crude   .26
  • Jun Gold   -1.00

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Weekend Weather Provides Price Tug-O-War

Apr 17, 2015

Good Morning! Paul Georgy with the early morning commentary for April 17, 2015 at 5:15 am.

Grain markets are mixed in very narrow trading ranges. The US Dollar is testing the 50 day moving average and long-term uptrend support.

Update - Morning Coffee Commentary:

Corn has been quiet this week with May futures down ¾ of a cent. Soybeans for the week are up 15 ½ cents while May wheat is down 33 ¼ cents through Thursdays close.

Traders will be going home today concerned about how much rain will fall across the southern plains hard red wheat area. Row crop traders will be watching weather forecasts to see when the rain moves out of the Ohio Valley and the Delta so farmers can get some planting done.

Monday’s crop progress report will tell us just how active farmers in the upper Midwest were this week.

USDA export sales for wheat last week was a dismal 48,000 tonnes for old crop and 112,500 tonnes for new crop. There are only 8 weeks remaining in the marketing year and it looks like the USDA may need to decrease their projected exports.

NOAA released their long range forecast for May, June, and July. There are no major temperature anomalies for the Corn Belt with a slight bias for dryness in parts of Wisconsin and Michigan and a slight bias for higher than normal rain in the delta and southeastern US.

Soybean harvest in Argentina has slowed a bit this week due to rain. However they have been active sellers off the combine while total production estimates continue to rise.

China could double its subsidies this year to corn processors in the main producing area in the northeast in a bid to help a negative margin industry and stimulate consumption.

France’s Strategie-Grains increased their projection of new crop EU soft wheat production by 1.0 million tonnes and reduced their 2015/16 carryout to 15.9 million tonnes versus 20 million last month.

G3 Global Grain Group, a joint venture of Bunge and Saudi Agricultural and Livestock Investment Co, said it will buy a 50.1 percent stake in CWB, a Canadian grain handler for C$250 million ($201 million).

Federal Reserve Bank of Boston President Eric Rosengren said Thursday the economy is not yet ready for higher short-term rates. Given the Fed's current inflation and job market performance goals, "I do not think that either condition has been met" to support moving short-term rates off of their current near-zero levels, Mr. Rosengren said.

Minnesota turkey industry could see a 3.2% drop in production in 2015 due to the bird flu findings. However the US total turkey production is expected to increase by 4.7% in 2015. The more significant impact affects other competitive meats. Beef is the only meat that has less production this year while pork and chicken are looking at large increases.

As we head into Friday’s cash cattle action the trade is still not 100% sure what to expect. Bulls are pointing to strength in wholesale beef prices and that end users are still accepting incredibly high prices for beef at the start of a major demand period (grilling season). Bears are arguing cattle packer margins are in the black and the production level could be 540,000 head this week compared to only 502,000 last week. Beef supplies will increase next week which could cause a quick adjustment in product values.

Dressed beef values were weaker with choice down .42 and select down .25. The CME Feeder Index is 218.40. Pork cutout values are down 1.15.

Markets as of 5:15 AM CDT           

  • May Corn   - 1/4          
  • May Beans -2 1/4     
  • May Wheat   1/4
  • May Soymeal -.30
  • Jun Dlr     -.24
  • Jun S&P   -9.25
  • May Crude   -.50
  • Apr Gold    6.20

Technical Chart of the Day

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Soybean Crush Well Above Expectations

Apr 16, 2015

Good Morning! Paul Georgy with the early morning commentary for April 16, 2015 at 5:15 am.

Grain markets are mixed as spreaders unwind after recent gains. Traders are waiting for export sales later this morning. Dollar stabilizes against the basket of currencies while crude retraces gains.

Mid-Morning Update:

NOPA crush data showed very aggressive soybean processing during March by setting a record for the month at 162.822 million bushel. This pace was 5.8% over last year. This brings the year to date pace increase to 1.3% year over year. In order to meet the USDA’s aggressive crush goal we have to run 7.8% over last year from April through August. This is not out of the realm of possibility but suggests some very aggressive processing demand for the rest of the marketing year.

Ethanol production was down 2% when compared to the same period a year ago. The bigger concern is that ethanol stocks increased during this week of lower production. Crude oil stocks set new record inventories however it was less than trade was expecting. Cushing, OK now has 61.462 million barrels of crude oil in inventory.

Weekly export sales data will be released today at 7:30 am. Trade estimates are: Corn 400,000 to 600,000 tonnes, soybeans (50,000) to 150,000 tonnes, soymeal 50,000 to 150,000 tonnes, soyoil 0 to 20,000 tonnes and wheat 100,000 to 300,000 tonnes. All of these estimates are for the 2014/2015 marketing year.

Rosario Exchange in Argentina says the soybean crop is 59.0 mmt compared to their last estimate of 58.0 mmt. They are looking for corn production to be 25.7 mmt which is 2.2 mmt larger than their last estimate.

The U.S. economy expanded across most regions of the country in February through the end of March, with cheaper gasoline boosting retail sales in some districts and travel and tourism rebounding in other areas. Still, a strong dollar, falling oil prices and harsh winter weather slowed activity in some sectors, according to the Federal Reserve's Beige Book report, a survey of regional economic conditions.

The USDA finding of several more cases of the Avian Brid Flu in Minnesota and IA had hog traders running for cover. On Wednesday the June Lean Hog futures gave back more than 50% of the past 3 week rally. The concern was that poultry destined for export will now stay in the US and compete with pork at a time when pork supplies are burdensome. Nearby lean hog futures are also being pressured due to the large premium to the cash hog index.

Cash cattle traded as much as $2.00 lower than last week and packers did not want the cattle delivered until the first week of May. Strong product values for beef is providing underlying support but we caution too much excitement. The reduced slaughter in recent weeks has supported packer break evens and product values.

Much of Wednesday’s action at the CME was driven by spreaders liquidating long hog/short cattle and long nearby hogs/short deferred contracts. Look for more volatility during today’s session.

Dressed beef values were higher with choice up 2.35 and select up 1.80. The CME Feeder Index is 219.78. Pork cutout values are up .81.

Markets as of 5:15 AM CDT           

  • May Corn   -1 1/4     
  • May Beans -1 3/4     
  • May Wheat   1 1/2
  • May Soymeal -.40
  • Jun Dlr     -.17
  • Jun S&P   -3.50
  • May Crude   -.60
  • Apr Gold    6.50

Technical Chart of the Day

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Rain Sends Wheat Prices South

Apr 15, 2015

Good Morning! Paul Georgy with the early morning commentary for April 15, 2015 at 5:15 am.

Update - Morning Coffee Commentary:

Grain markets are mixed with some bargain hunting in European wheat. US Dollar chart shows signs of double top while crude oil reaches 100 day moving average resistance.

Weather forecasts are the focus of the trade as planting season is upon us for corn and the winter wheat crop needs rain to determine this year’s production.

Now is the time to be staying in touch with Allendale’s Meteorologist Ryan Martin, click here for the full commentary. An excerpt from Ryan’s thoughts: The next wave of moisture comes together over HRW areas starting Thursday afternoon. Initially, rains will just be scattered in nature as heavy rains take their time developing along the TX gulf coast. But, by Friday we should start to see nice, slow circulation around a low coming into CO and western KS that will gradually work its way east across the rest of the plains. This should promote 1-3 inch rain totals from North TX up through OK, KS and southern NE. WE look for coverage to be nearly 100%.

NOPA crush March data out today at 11:00 am. Trade is looking 155.3 million bushels crushed which would be above the record high of 153.84 million bushel set last year during March of 2014.

Recent rains across most of Ukraine have boosted soil moisture content, creating favorable conditions for late spring sowing, analyst UkrAgroConsult said.

US cash grain markets are steady as farmers are not interested in selling.

Funds are estimated to have been net buyers of 7,000 contracts of beans, 6,000 corn, 2,000 meal and 1,000 soyoil contracts.

Brazilian government releases on Tuesday 2 billion Reals for rural credit financing. This should be good news for Brazilian farmers trying to protect 2016 input costs.

China’s corn import margins are estimated to be in excess of $4.00 bu compared to feed users alternatives such as DDG, sorghum and barley.

Chinese farmers are likely to grow 1.9 percent more corn this year while reducing cotton acreage by 11.2 percent compared with last year, according to the National Bureau of Statistics.

(Reuters)-Farm pollution in China is worsening, despite moves to reduce excessive use of fertilizers and pesticides, said the agricultural ministry, urging farmers to switch to organic alternatives to tackle severe soil and water pollution. But experts say achieving the ministry's goal will be difficult without sacrificing food output, a top priority in the world's most populous country.

North Dakota's oil production slid for the second month in a row during February as falling crude prices zapped producers' incentives to keep the spigots fully open, according the state's Department of Mineral Resources.

EIA data is expected to show that crude stockpiles rose 3.5 million barrels to another record high. Eco calendar has Capacity Utilization and Industrial Production at 8:15 am.

April Hogs futures expires today. The June contract is currently trading approximately $18.00 above the cash index.

The number of U.S. poultry flocks infected with a deadly strain of bird flu rose on Tuesday as Iowa identified its first case and Minnesota confirmed eight more cases, according to the U.S. Department of Agriculture.

Dressed beef values were higher with choice up .75 and select up .23. The CME Feeder Index is 219.28. Pork cutout values are up .51.

Markets as of 5:15 AM CDT           

  • May Corn   -2         
  • May Beans 2 3/4     
  • May Wheat   1
  • May Soymeal .60
  • Jun Dlr     .36
  • Jun S&P   5.25
  • May Crude   .67
  • Apr Gold   -.70

Technical Chart of the Day

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Bin Doors Close As Futures Slide

Apr 14, 2015

Good Morning! Paul Georgy with the early morning commentary for April 14, 2015 at 5:15 am.

Grain markets are mixed with spreaders creating the most volume overnight. Outside markets are preparing for economic news later this morning.

The rains across the southern plains over this past weekend will be helpful but if not followed by more rain this week the benefit will be minimal, says a customer in Kansas. Weather models are differing on the amount and coverage expected on Thursday through Saturday. Now is the time to be staying in touch with Allendale’s Meteorologist Ryan Martin, click here for more.

The Midwest has a favorable mix of sunshine, moisture and warming temps through next week. Planters are ready to roll but farmers are waiting for the calendar to get past mid-month before putting seed in the ground. Fieldwork preparation is getting done in many areas as reported by our clients. The American Farmer has the ability to plant a lot of acres in a short period of time when the conditions are right.

Crop conditions in wheat declined 2% to 42% Good/Excellent. Trade was looking for a 44% G/E number. However trade is already expecting next to see an improvement next Monday due to last weekend’s rain in the Southern Plans.

Wheat drills were active last week as the spring wheat planting pace of 17% is well above the 5 year average of 11%.

The USDA’s first corn planting progress was 2% complete compared to an estimate of 2% to 6% by the trade. Not really a surprise as the delta and mid-south are well behind normal.

Brazil analyst AgRural estimated Brazil Soybean harvest 84% complete which compares to 77% last week and 84% last year.

NOPA March crush report will be released tomorrow at 11:00 am. Average estimate is 155.2 million bu. vs. 146.9 million bu. of soybeans crushed in February and compares to 153.8 million bu. last March’s record. This is an outstanding number but in order to reach the USDA’s crush goal we have to run 9% above a year ago for the rest of the marketing year.

Under a consent decree, the EPA established that they will propose ethanol volume requirements for 2015 by June 1 and they will finalize the 2014 and 2015 volume requirements by November 30.

Goldman roll out of May contracts expected to continue through today’s close.

Technical traders are looking at recent lows as support in grains however if these areas fail the next downside target would be the lows made in September of 2014.

Retail Sales report will be released later this morning

Public-health groups urged the Obama administration to take more aggressive steps to limit and track the use of antibiotics in cows, chickens and other food animals after the Food and Drug Administration reported a sharp increase in antibiotic sales between 2009 and 2013. The FDA, in a report measuring sales of antibiotics that are medically important to humans, said the amount approved for use in food animals jumped 20% between 2009 and 2013. The North American Meat Institute, which represents meat and poultry companies, dismissed the sales figures since they don't indicate how the drugs were used in the animals and for what purposes.

The U.S. Department of Agriculture confirmed the first case of a lethal strain of H5N2 bird flu in a commercial chicken flock of 200,000 chickens in Jefferson County, Wisc. Last year Wisconsin produced 158 million lbs. of young chicken which makes up 5% of the nation’s 3.176 billion total production.

April Hogs futures expire tomorrow, Wednesday the 15th.

Dressed beef values were lower with choice up 1.19 and select down .72. CME Feeder Index is 222.18. The CME Feeder Index is 219.57. Pork cutout values are down .17.

Markets as of 5:15 AM CDT           

  • May Corn   - 1/4      
  • May Beans 4         
  • May Wheat   -4 1/4
  • May Soymeal 1.70
  • Jun Dlr     .02
  • Jun S&P   -2.25
  • May Crude   .53
  • Apr Gold   -9.80

Technical Chart of the Day

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Rains Give Life to Wheat Crop

Apr 13, 2015

Good Morning! Paul Georgy with the early morning commentary for April 13, 2015 at 5:15 am.

Grain markets are mostly lower with wheat catching the brunt of the selling. The US Dollar is sharply higher.

Rains in southern plains over the weekend and more in the forecast is weighing on wheat futures. Stay in touch with the weather outlook by checking in with Allendale’ Meteorologist Ryan Martin at www.allendale-inc.com. Forecasts have some rain moving across the Midwest this week. The longer term forecast suggests drying next week but temps to remain on the cool side.

Update - Morning Coffee Commentary:

Traders continue to watch planting progress of corn as delta and mid-south region remain wet. There is talk that 200,000 acres of corn switched to soybeans in the 4 major delta states. This attitude is providing bearish soybean bias.

Trade estimates for corn planting progress released this afternoon is 4 to 6% while spring wheat planting progress could be 8 to 10%. Traders are expecting winter wheat conditions to drop a few percentage points in the Good/Excellent categories.

NOPA soybean crush data is due to be released on Wednesday. Traders are expecting a record March crush of 155.26 verses 153.84 million bushel in March of last year.

The COT numbers on Friday showed managed money selling a net 14,949 contracts of meal leaving them short for the first time in over three years. They were net sellers in soybeans and wheat while buying only 538 contracts in corn. In the livestock managed money sold 3,626 hog contracts and were net buyers of 2,534 contracts of cattle. As of last Tuesday they were net long 7,157 contracts of hogs and 69,583 contracts of cattle.

US crude oil production remains strong as US stocks continue to build. Last week rig counts are estimated to have dropped another 42 to 760.

The Eco calendar gets active starting Tuesday with PPI and Retail Sales.

Cash cattle traded last week was 3 to 7 dollars lower than the previous week. Cash hog found some interests by packers as they end the week 1 to 2 dollars. The retail buyers will be watched closely as beef carries hefty premium to pork and poultry.

Weekly slaughter for cattle was 12.7% less than a year ago while hog slaughter was 8.59% larger than same period a year ago.

Dressed beef values were lower with choice down 1.88 and select down 2.54. The CME Feeder Index is 219.68. Pork cutout values are down .27.

Markets as of 5:15 AM CDT           

  • May Corn   -3         
  • May Beans -3/4       
  • May Wheat   -11 3/4
  • May Soymeal -.90
  • Jun Dlr     .55
  • Jun S&P   -2.75
  • May Crude   .53
  • Apr Gold   -6.30

Technical Chart of the Day

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Weather Takes Center Stage For Next Few Weeks

Apr 10, 2015

Good Morning! Paul Georgy with the early morning commentary for April 10, 2015 at 5:15 am.

Grain markets are mixed with prices near unchanged. The US Dollar strength is providing reasons for world buyers to shop elsewhere. Crude oil falls below the 50 day moving average.

Update - Morning Coffee Commentary:

The USDA March Supply and Demand report had no surprises for the trade. However some questions left for a later report are: How will they fully adjust for the quarterly stocks number as of March 1? Will they adjust for soybean export cancellations? Can corn exports achieve USDA’s target with the strong dollar?

Now that the report is behind us weather moves to “center stage.” The delta and mid-south remain very wet and corn planting is well behind normal there. Coming in next week, Midwest farmers will become more concerned about fieldwork delays. The weather could be the catalyst to run prices back to the high end of the trading range or a clear forecast could drive longs out of their positions by breaking key support areas on the charts. Farmer’s ability to hold grain off the market has been the supportive factor. Cash bids at the processors have increased on Thursday.

Morning Weather Update: All major storm action is off to the east this morning and will be moving away. The Corn Belt should settle in for 3 dry days at least as strong High pressure slowly slides across the region. Models have flipped around several times on the arrival and structure of our next system, but look to have settled on a Monday event right now that is a melding of first some moisture coming up the backside of the strong high that exits our region, and then a cold front sweeping in from the northwest...continue reading

The US Dollar is providing strong headwinds on rallies as South American and European exports are able to offer a cheaper product.

Harvest is winding down in Brazil and Argentina is in full swing. Currency exchange rates are watched closely by our South American producers as the stronger dollar gives them more real or pesos to pay bills.

Soybean futures are being hit with selling although USDA lowered ending stocks by 15 million bushel. The weekly export sales at a negative 150,000 tonnes was the dose of reality that South American beans are going to replace US soybeans in coming weeks.

Brazil's Santos port has been unable to export 400,000 tonnes of soybeans and soymeal after a week old blaze restricted truck access to much of that country’s largest export hub, Abiove, Brazil’s soy industry association said.

Bird flu is now confirmed in at least 15 different farms throughout the Midwest. The latest finding has been in 34,000 bird turkey flock in Kingsburg County, South Dakota.

USDA added 150 million pounds to its 2015 beef production forecast due to cow slaughter and larger finishing weights. They added pounds to the beef import estimate and the export guess. The net result is domestic consumption needs to increase by 105 million in 2015. The bottom line suggests lower beef prices to attract consumer dollars. The US consumer will also have 340 million more pounds of pork and 420 million pounds of chicken in 2015, said USDA. Bird flu, stronger dollar and larger production is the cause for the increase in meat supply.

Cash cattle traded in KS at 162 to 163 while 264 to 265 dressed in NE with a few in the western cornbelt at 265. Dressed beef values were mixed with choice down .75 and select up 1.40. The CME Feeder Index is 221.00. Pork cutout values are up .50.

Markets as of 5:15 AM CDT           

  • May Corn   1 1/4     
  • May Beans - 1/4      
  • May Wheat   -1 1/4
  • May Soymeal -.20
  • Jun Dlr     .21
  • Jun S&P   .75
  • May Crude   -.35
  • Apr Gold    8.90

Technical Chart of the Day

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April USDA Supply Demand Recap

Apr 09, 2015

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Ethanol Production Remains Above USDA Target

Apr 09, 2015

Good Morning! Paul Georgy with the early morning commentary for April 9, 2015 at 5:15 am.

Grain markets are quietly mixed as traders wait for the export sales data and the monthly supply and demand report. Outside markets are choppy with the dollar and crude oil significantly higher.

Update - Morning Coffee Commentary:

USDA March Supply and Demand estimates gathered by Bloomberg for today’s 11:00 am release has US corn ending stocks at 1,857, soybeans at 369, and wheat at 694. World ending stocks are estimated at 186.91 for corn, 89.57 for soybeans, and 197.63 for wheat. For a recap of today's report, take a look at our report post.

The trade estimates for the 7:30 am USDA Weekly Export sales are: corn 350,000 to 450,000 tonnes, soybeans (50,000) to 150,000 tonnes and wheat 50,000 to 150,000 tonnes.

Ethanol production slipped a little in the latest week, from 952,000 barrels per day down to 936,000 which is still over last year’s level. The year to date pace is above last year by 5.6% and above USDA’s March whole year production estimate by 1.3%.

Trade rumors have PRC crushers asking Brazil to slowdown soybean shipments due to eroding crush margins.

CONAB’s Brazilian soybean and corn reports are due tomorrow. Corn production is expected to be 77 to 78 MMT in Brazil and 94.5 to 95 MMT in soybeans (USDA last estimate was 75 MMT for corn and 94.5 MMT for soybeans).

The U.S. Energy Information Administration (EIA) said in its Short-Term Energy Outlook released on Tuesday that the Iranian nuclear agreement could cut oil prices by $5-15 per barrel in 2016.

A lethal strain of bird flu has infected an eighth turkey flock in Minnesota, the nation's top turkey producer, in just over a month. Japan and Taiwan imposed a ban on poultry from Ontario after H5 bird flu was found in 8 turkey farms killing 7,500 birds. Ontario is Canada’s top turkey producing province.

Dressed beef values were mixed with choice up 2.16 and select down .18. CME Feeder Index is 222.18. The CME Feeder Index is 220.95. Pork cutout values are up .32. Pork cutout rallied in 2013 by 44% from April 10th to June 26th.

Markets as of 5:15 AM CDT           

  • May Corn   1/4      
  • May Beans -4 1/4     
  • May Wheat   -1 3/4
  • May Soymeal -.30
  • Jun Dlr     .47
  • Jun S&P   -5.00
  • May Crude   1.40
  • Apr Gold   -8.00

Technical Chart of the Day

daily chart

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Markets Calm Before Planting Season

Apr 08, 2015

Good Morning! Paul Georgy with the early morning commentary for April 8, 2015 at 5:15 am.

Grain markets are quietly steady as traders wait for USDA report and a change in weather forecast. The basket of foreign currencies is firmer against the US Dollar this morning which could provide underling support to grains. Crude is giving back yesterday gains.

Mid-Morning Update:

Weather forecasts remain the center of focus on trader’s minds as the wheat crop is in a very important growth stage. The southwest hard red wheat areas are dry and weather models conflict on time and amount of rain. The Ohio Valley where soft wheat is grown is too wet and many are concerned about disease problems.

Corn and soybean farmers are starting to get nervous about field work. We are reminded that we are in early April and we know for a fact that when the fields are ready the American farmer can get the crop in the ground hurry.

From this mornings weather update: Moisture kicks off in earnest again starting tomorrow in the Deep South, and from tomorrow through next Wednesday, we see two very strong fronts moving through, bringing potential for 1-2 inches of rain and 80% coverage. Timing is mostly the same, from late tomorrow through early Saturday, and then Sunday night to Tuesday morning. However, models continue to bring more action in later next week…continue reading

Talk circulated yesterday that China was a buyer of a large volume of Mexican sorghum. There has been no confirmation of sales and our contacts think it is unlikely due to logistics in Mexico and the Phytosanitary agreements are still being negotiated between governments.

UN’s Food and Agricultural Organization has raised their estimate of Chinese corn stocks to 94.5 million tonnes versus the current USDA estimate at 79.22 million tonnes. Others believe China somewhere north of 100 million tonnes in stock.

Russian Agriculture Minister has been quoted as saying that he did not rule out that Greece, Hungary and Cyprus would be removed from the Western food imports ban.

Dry weather in Argentina's main soy-growing area is expected to last another two to three weeks, which should keep them on track to harvest a record soybean crop.

France’s Ag minister raises French soft wheat exports to 10.6 million tonnes from 10.4 million tonnes while leaving their wheat ending stocks at 3.6 million tonnes.

As mentioned in the Allendale Advisory Report yesterday, the upcoming grilling season is about to tell the story price has on meat demand. Rich Nelson wrote that wholesale beef is 13% to 16% higher than last year, wholesale pork is 49% cheaper, and chicken ranges from 10% to 36% cheaper. Will retailers feature the lower priced products?

Dressed beef values were mixed with choice up .50 and select down .32. The CME Feeder Index is 221.23. Pork cutout values are down .38.

Markets as of 5:15 AM CDT           

  • May Corn   1/4      
  • May Beans 1/2      
  • May Wheat   - 1/2
  • May Soymeal .40
  • Jun Dlr     -.51
  • Jun S&P   2.25
  • May Crude   -1.19
  • Apr Gold   -.50

Technical Chart of the Day

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Strong Dollar Pressures Grains

Apr 07, 2015

Good Morning! Paul Georgy with the early morning commentary for April 7, 2015 at 5:15 am.

Grain markets are lower as are most commodities due to the strong US Dollar. The release of economic data in Euro zone has traders selling the Euro thus supporting the Dollar.

Update - Midday Weather Commentary (Get this daily via text message):

Corn planting progress will be reported next week as the national average is currently less than 3%. Sorghum planting was released and it came in at 9% versus 11% last year and 14% for the five year average.

The USDA did release the winter wheat condition ratings for the nation at 44% Good to Excellent (G/E) versus 35% last year. The plains wheat states continue to decline with Kansas taking the honor for the lowest rated crop at 33% G/E followed closely by neighboring Nebraska at 34% while Oklahoma at 43% and Texas at 54% are in better shape due to timely rains. The SRW crop is off to a good start with Ohio rated 59% G/E.

March Supply and Demand estimates gathered by Bloomberg for Thursdays USDA report release is for corn ending stocks at1,847, soybeans 369, and wheat 694. Global stock estimates are for corn at 186.91, soybeans 89.57, and wheat 197.63.

Brazil’s soybean exports are still in jeopardy due to the fire at the Santos port. However the fire has been burning since Thursday with the issue not supply of beans at the port, but rather an issue with ships getting enough fuel to set sail. 

Safras says Brazilian farmers as of last Thursday had sold only half the 2014-5 soy crop, which is currently being harvested. Last year they had already sold 62%, which itself was below the 64% average.

China will begin auctioning corn out of their reserves on Thursday.

CONAB updates 2015 Brazil soybean crop on Friday.

Goldman Roll will start on Wednesday which could provide pressure to the May contracts at the CBOT.

Crude oil is finding support from news that Saudi Arabia raised prices for May sales to its Asian customers by 30 cents per barrel due to firm demand and increased refiner margins, and news that the world powers and Iran have no agreement on ending sanctions.  The main bearish factor remains the market consensus for Wednesday’s weekly EIA report to show an increase of 3.0 million barrels of U.S. crude oil inventories.

After weeks and weeks of bearish news in the hog market the trade is hoping for a change. Futures are in a fledgling uptrend right now. On the cash side hogs bottomed six business days ago and cash pork bottomed three days ago. Traders are waiting for Thursday’s USDA supply/demand report which will likely revise production estimates up due to last month’s Hogs and Pigs report.

Today’s feedlot showlist increase by 22,000 head which could indicate that cattle supplies have bottomed and larger numbers are on the horizon. The technical key reversal in the cattle and feeder cattle contracts will be watched closely over the next few sessions. The 100 day moving average is now support which crosses at 150.65.

Dressed beef values were higher with choice up .91 and select up 2.26 on post-holiday buying. CME Feeder Index is 222.18. The CME Feeder Index is 219.89. Pork cutout values are down .05.

Markets as of 5:15 AM CDT         

May Corn    - 1/4     

May Beans   -3 1/2    

May Wheat   -4 1/4

May Soymeal -.40

Jun Dlr     .80

Jun S&P     -.50

May Crude   -.56

Apr Gold    -9.70 

Wet Weather For Much Of Midwest

Apr 06, 2015

Good Morning! Paul Georgy with the early morning commentary for April 6, 2015 at 5:15 am.

Mid-Morning Update:

Grain markets are higher in a quiet overnight session. Much of the world is on holiday today. The eco markets are playing catch-up after the release of the employment numbers while markets were closed on Friday.

The focus this week will be on the US wheat crop. Weekend temperatures in KS were below 32 degrees for several hours according to a customer’s thermometer on Friday night. The first national crop conditions report this afternoon will be important as traders are looking for a 1 to 3% decline in Good/Excellent in wheat crop. Traders will also be focused on the chart resistant levels that were tested last Thursday.

Corn and soybean traders will be very attentive to the weather forecast as the delta remains wet. The Ohio valley received rain over the weekend but warmer temps are in the forecasts. Several forecasting models keep plenty of moisture crossing the Midwest for the next week. Planting delays are not a huge concern the first week in April however traders and headlines will be spinning it as positive. The USDA April Supply and Demand report on Thursday will provide some headlines of its own when the recent quarterly stocks numbers are added into the balance sheet.

Managed Money funds increased their net short positions in wheat by 4,526 to 70,491 contracts. They also increased short positions in soybeans by 7,359 contracts and were net buyer of 7,802 contracts.

USDA confirmed that migratory birds had helped spread bird flu now to South Dakota. H5N2 was found at a 53,000 head turkey farm on the Eastern end of the state. On top of this finding, USDA reported its fourth finding of bird flu for the state of Minnesota.

Managed money are now net short lean hog futures by 126 contracts and net long live cattle 17,198 contracts.

Packers came out aggressive on Friday to fill their needs by paying $3.00 to $5.00 higher than last week. High prices in CO reached $170 as dressed sales sold $3.00 to $4.00 higher from $265.00 to $267.00.

Dressed beef values were lower with choice down .37 and select down 1.17 on Friday. CME Feeder Index is 216.71. The CME Feeder Index is 219.89. Pork cutout values are up 1.31.

Markets as of 5:15 AM CDT           

  • May Corn   2 1/2     
  • May Beans 2         
  • May Wheat   7 1/4
  • May Soymeal -.06
  • Jun Dlr     .09
  • Jun S&P   -15.50
  • May Crude   1.49
  • Apr Gold    17.60

Technical Chart of the Day

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Weather And Strikes Now Come Into Focus

Apr 02, 2015

Good Morning! Paul Georgy with the early morning commentary for April 2, 2015 at 5:15 am.

Update - Morning Coffee Commentary:

Grain markets are lower as traders have risk-off attitude across-the-board heading into a long weekend.

Will we see early month and new quarter buying continue today on synthetic Friday? Markets are closed for observance of Good Friday tomorrow. Weather forecasts and rumblings of strikes out in South America provide underlying support for now.

Allendale’s Meteorologist, Ryan Martin says in his comments: “The pattern continues to get wetter over parts of the Corn Belt in the weeks ahead. The eastern half of the Corn Belt sees rain potential increase in the next two systems, the one that comes through tomorrow and Friday, and the one for next week. This increase in moisture is only seen over the eastern half of the Corn Belt. The western belt still sees the same potential as earlier, although we are open to slightly more rain potential at the end of next week.” Read more by clicking here.

Strike season in South America is upon us. The crush union in Argentina went on strike yesterday ahead of a long weekend. They were asking for a 42% increase in pay in order to keep their salaries in line with inflation. It is expected once this strike is settled, another group will go out looking for more money.

The Brazil truckers are talking about striking again in late April. This is creating concern for Chinese buyers and providing underling support to the soybean contracts that they may have to come back to the US for fill-in purchases.

Ethanol data released by the EIA showed production was very close to a week ago levels however ethanol stock declines from 21.3 million barrels to 20.5 million barrels. They suggest a pickup in driving by US consumers or an increase in exports.

Trade estimates for USDA's weekly export sales data to be released at 7:30 am are: wheat 100,000-300,000 tonnes, corn 400,000-500,000 tonnes, soybeans 150,000-300,000 tonnes, soymeal 100,000-200,000 tonnes and soyoil 0-20,000 tonnes.

A reminder, CBOT grains close at their regular time today and will be closed on Good Friday. They will reopen Sunday night at regular time.

Commodity funds were net buyers on Wednesday of an estimated 9,000 soybean contracts, 8,000 corn, 7,000 wheat, 4,000 soymeal and 2,000 soyoil contracts.

Labor market data released tomorrow morning is expected to remain firm but March payrolls may show unexpected weakness due to weather in February. Trade will likely be making adjustments today as the data will be released when markets are closed.

The livestock trade is dealing with a series of battles. Packers are fighting for better margins, feedlots are holding out for higher prices because they can (tight market ready numbers) and retailers are trying to stock up for post Easter holiday featuring. Bottom line it suggests feedlots have the upper hand for now. Pork is struggling at the wholesale level as supplies are plentiful and the consumer still likes to eat beef. Price competition will kick in soon as beef is at record highs compared to wholesale pork.

Dressed beef values were higher with choice up 1.29 and select up 1.57. CME Feeder Index is 216.71. The CME Feeder Index is 218.65. Pork cutout values are down 1.38.

Markets as of 5:15 AM CDT           

  • May Corn   -1 1/4     
  • May Beans -5 1/4     
  • May Wheat   -1
  • May Soymeal -2.00
  • Jun Dlr     -.35
  • Jun S&P   -8.00
  • May Crude   -.58
  • Apr Gold   -5.60

Technical Chart of the Day

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Fewer Soybean Acres May Not Be Bullish

Apr 01, 2015

Good Morning! Paul Georgy with the early morning commentary for April 1, 2015 at 5:15 am.

Update - Morning Coffee Commentary:

Grain markets are firmer as bargain hunters provide support. The outside markets are quiet as traders expect another large buildup in crude inventories when EIA data is released.

USDA found 7.745 billion bushels of corn in storage at the end of the second quarter of the marketing year. This was a bit over the trade guess of 7.609. Assuming our ethanol and export numbers are correct this would imply feed/residual in the Dec-Feb quarter of only 1.439 billion. That is down from last year’s second quarter use of 1.453.

In order to have such a large stocks number could the USDA be telling us they have under estimated the production for 2014/15? All of these irregularities will give reason for volatility going into the USDA Supply and Demand Report in 9 days.

Corn Prospective Plantings is supposed to be a strict farmer survey with no USDA influence on the numbers. The survey suggested 89.199 million for corn. That would be only a 1.4 million acre decline from last year. The USDA will give us their first balance look at 2015/16 numbers on the May 12th report.

Rich Nelson, Allendale’s Chief Strategist suggests with these acreage numbers, and Allendale’s reasonable 165.4 trend yield, production computes to 13.498 billion bushel and total supply of 15.307 billion bushel. Using our more aggressive demand of 13.905 we compute a 1.402 billion bushel ending stock for 2015/16.

There were no surprises in USDA’s 1.334 billion bushel March 1 soybean stock number as we already have solid data on Dec-Feb demand from both crush and exports.

There has been a lot of talk about soybean acreage in recent weeks. Using the soybean projected planting number, USDA Ag Forum yield and demand numbers it would suggest soybean carryover could increase to 481 million bushel in 2015/16.

Brazil truckers are planning for another strike on April 22 unless the government sets higher minimum freight rates.

A well-known crop analyst has raised Argentina soybean production and Brazil’s second crop corn production by 1.0 million tonnes each.

Weather conditions are the next focus for grain traders as wet conditions in the delta and mid-south have slowed corn planting. Stay in touch with the forecast by reading Allendale’s Meteorologist, Ryan Martin’s daily comment and listening to his midday updates at Allendale Weather.

India has bought up to 80,000 tonnes of Australian wheat in recent deals, which are the biggest such imports in five years as unseasonal rains damage their crops.

U.S. Midwest cash soybean and corn basis bids are steady as farmers stopped selling after corn futures closed sharply lower.

Funds are estimated to have been net seller of 20,000 corn contracts, 9,000 wheat and bought 6,000 in soybeans and 3,000 soymeal contracts on Tuesday.

The stand-off between packers and feedlots will come to an end soon. Packers are reducing harvest as margins are tight and beef is running into competition at the retail counter. Feedlots have tight supplies of market ready cattle and are willing to hold out for higher price. Both sides have a growing problem. Packers know if prices get too high consumers will go to other products as we approach the cookout season. Feedlots know there are more numbers on the horizon and weights are getting heavier. Time will tell who wins the stand-off.

Dressed beef values were higher with choice up 2.43 and select up 1.02. The CME Feeder Index is 218.89. Pork cutout values are down .03.

Markets as of 5:15 AM CDT           

May Corn   2 1/2     

  • May Beans 4 3/4     
  • May Wheat   3 1/4
  • May Soymeal 1.70
  • Jun Dlr     .07
  • Jun S&P   -1.50
  • May Crude   -.39
  • Apr Gold   -1.30

Technical Chart of the Day

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Stocks and Acreage Report Results

Mar 31, 2015

Plus check here for a complete analysis of today's reports and what these numbers could mean moving forward.

Corn Stocks Expected To Be A Market Mover

Mar 31, 2015

Good Morning! Paul Georgy with the early morning commentary for March 31, 2015 at 5:15 am.

Update - Morning Coffee Commentary:

Grain markets are quiet ahead of the USDA reports. The US dollar regains strength against most currencies while crude slide again.

Trade will be doing last minute position adjusting ahead of the Prospective Plantings Report and the March 1 Quarterly Stocks Report. The trade average corn planted acreage is 88.866 million compared to 90.597 million acres in 2014. Soybean planted acreage for this year is estimated at 85.950 million acres, when last year US producers planted 83.701 million acres.

The trade average corn stocks estimate is 7.609 billion bushels, soybean stocks average estimate is 1.348 billion bushels.

Allendale’s Chief Strategist, Rich Nelson says the numbers which will have the most long lasting effect on the corn market is the Quarterly Stocks report. Allendale’s corn usage calculation wildcard is the feed and residual category. We are projecting for an increase usage in the feed category of 9% over last year due to larger hog and poultry numbers. Soybean stocks usually not as much of a surprise because the usage data is available for calculations. You can listen to Rich Nelson’s pre-report comments by clicking on the Weekly Strategy Session.

Weather will be the focus in the wheat market as dry conditions prevail in the southern plains. The large short positions by funds and traders would lead us to believe they are anticipating a normal to above normal wheat yield in 2015.

Wheat conditions declined overall in major states reporting. Kansas the largest wheat producing state went from 41% G/E last week to 39% this week. South Dakota and Nebraska had sharp declines since there last report with SD 39% G/E compared to 49% last month and NE 34% G/E compared to 62% last month. Illinois Soft Red Wheat improved by 5% since last week. Bottom-line, moisture is making the difference.

The lean hog futures did a fine job holding positions against a bearish reaction from Friday’s Hogs and Pigs report. Chart watchers are pointing to an outside day reversal with the 20 day moving average providing resistance. A hog trader reminded me yesterday that cheap prices will cure cheap prices. Pork cutout values were up .04. Wholesale meat price relationships as we approach the cookout season suggest pork is carrying the competitive advantage. Currently, wholesale beef prices are over .70 per pound higher than pork when compared to same time a year ago.

Dressed beef values were higher with choice up .90 and select up .91. CME Feeder Index is 216.71. The CME Feeder Index is 217.73.

Markets as of 5:15 AM CDT           

  • May Corn   1/4      
  • May Beans -3 3/4     
  • May Wheat   -3 3/4
  • May Soymeal -1.20
  • Jun Dlr     .54
  • Jun S&P   -10.50
  • May Crude   -1.20
  • Apr Gold   -2.80

Technical Chart of the Day

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Russia Raises Interest Rates and Slows Grain Movement

Dec 16, 2014

Good Morning! Paul Georgy with the early morning commentary for December 16, 2014 at 5:30 am.

Traders Focus: Chinese contingent visiting CME, Russia move to raise interest rates and Fed meeting starting today.

Grain futures are lower on profit taking and risk-off attitude of investors. The US Dollar is down sharply as crude sets new lows.

Russia raises interest rate and cancels weekly Treasury bond auctions overnight causing the ruble to plummet against dollar. There also are reports circulating this morning that Russian ports have stopped loading wheat due to “phyto” authorities’ restriction. This development could have an impact on near term export shipment commitments. Watch headlines for more details.

There is continued talk that China will announce an agreement on the MIR-162 GMO on DDGs and corn very soon. Trade is thinking that if DDGs start flowing into China so will corn. We suggest caution when expecting US corn going to China as they have had a good crop and plenty of government corn to auction.

Update - Morning Coffee Commentary:

Processors did not process soybeans as aggressively as expected during November. Given the huge profit margin they had, the limitation was their ability to ship meal due to railcar availability. Year to date soybean crush is now 1.6% under last year. USDA’s goal for the whole year is 2.7% over last year. To meet USDA hopes we need to run 4.3% over from December through August.

Brazil's soybean crop is 96 percent planted, says AgRural, up from 92 percent a week ago and barely behind the historical average of 98 percent for this time of year. Soil moisture conditions are seen as good.

Chart watchers are pointing to the gap in March corn and 200 day moving average both crossing near 4.23. The second close above 4.01 now gives bulls confidence of that upside target. However, the overbought condition may provide some headwinds. Soybeans are consolidating with 10.55 first overhead resistance.

Join us tonight at 8:00 PM CST for our next Ag Leaders monthly webinar. Listen in as we discuss the technical picture after the recent run-up in grains, and exports/demand with USDA's Rick O'Meara. Registration is free, here.

The economic calendar has Housing Starts at 7:30 and the FOMC meeting begins today with comments being released tomorrow afternoon. Trade will be looking for any indication of when Fed will increase interest rates.

Some economists are looking for gasoline usage to go up slightly next year due to lower prices. However, the EIA projects retail gasoline prices will average $2.60/gallon next year, down from $3.37 for 2014, yet it still sees gasoline consumption falling 30K barrels/day.

Cattle showlists at central and southern plains feedlots were 7,000 head less than last week. Early thoughts are for cash cattle to trade lower this week due to weak attitude in futures. The USDA will release the December Cattle-on-Feed on Friday at 2:00 pm.

Beef values are firm as retailers prepare for post-holiday featuring. Choice is up .49 and select is up .57. The CME Feeder Index is 237.48.

Lean hog futures tried to rally against the weight from limit down action in the feeder cattle. Traders are evening up positions ahead of the holidays. The February hog contract has closed lower 10 out of the last 11 trading session with a $5.00 decline since Thanksgiving. We are looking for a bounce before traders close their books for the year. Pork cutout was up .91 tallying a higher print for the second day in a row.

Markets as of 5:30 AM CDT           

  • Mar Corn   -3 1/4     
  • Jan Beans   -6 1/2     
  • Mar Wheat   - 1/2
  • Jan Soymeal -2.10
  • Mar Dlr     -.63
  • Mar S&P   .25
  • Jan Crude   -1.52
  • Feb Gold   -2.60

Technical Chart of the Day

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Managed Money Funds Add To Long Positions

Dec 15, 2014

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

Traders Focus: Holiday markets are upon us, Will fund buying continue? And can chart breakouts follow through?

Grain futures are higher on follow-through buying after the strong weekly close. The US is higher as crude oil reverses an early session sell-off.

The corn market found strength last week on talk of China being close to accepting DDGs again. There is also the thinking the lower crude oil prices will increase demand for gasoline ultimately increasing the demand for ethanol. Money flow will be important to price directions as trade volume will be less due to traders preparing for the holidays.

Soybean traders will have the NOPA crush data released later today. Trade estimates of 165.4 million bushel would be a record large monthly usage due to the profitable margins during November. On Tuesday the Chinese delegation will be in Chicago. It is expected they will be signing a “frame contract” to purchase more soybeans.

Wheat traders will be listening for any new developments in Russia’s grain export policy. The weak ruble compared to other currencies makes Russian wheat very competitive. The question is will Russia have enough grain to meet domestic and export demand?

Join us tomorrow evening at our next Ag Leaders monthly webinar. Listen in as we discuss the technical picture after the recent run-up in grains, and exports/demand with USDA’s Rick O’Meara. Registration is free, here.

The FSA data was leaked on Friday which many are spinning as supportive to corn and soybeans. They listed fewer acres than what was expected which has many looking for large reductions in planted acres in 2014 from USDA. Rich Nelson Allendale’s Chief Strategists is concerned about taking the report at face value because all the data is not complete. This will make the January USDA report more interesting.

The CFTC Commitment of traders showed managed money funds were big buyers on Fridays report. They were net buyers of 32,855 contracts of corn, 28,749 contracts of soybeans and 8,767 contracts of wheat.

Update - Morning Coffee Commentary:

Cash hogs lost $4.05 this week while cash pork lost 14 cents. Demand is a problem for pork and beef due to the seasonal spending for the holidays. Last week’s hog slaughter totaled 2.254 million head the largest weekly number this year. This is 2.9% under last year, combined with this year’s heavier weights, the total pork production was only 0.6% less than a year ago. Pork cutout value was up 1.62 on Friday.

Cash cattle traded as much as $4.00 lower last week. Beef values also were down sharply for the week after the setback on Friday. Choice was down 2.76 and select was down 1.84. Cattle futures will be battling a negative psychology from the weak cash trade and the weak close on Friday. Watching “feeders as the leaders” as they closed Friday at prices not seen since late September. Today’s close could be very important for further guidance as holiday trade reduces volume.

Markets as of 5:30 AM CDT           

  • Mar Corn   3 1/4     
  • Jan Beans   4 3/4     
  • Mar Wheat   -1 1/2
  • Jan Soymeal 1.30
  • Mar Dlr     .17
  • Mar S&P   13.50
  • Jan Crude   .34
  • Feb Gold   -10.50

Technical Chart of the Day

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Markets React To Hopes China Is Back

Dec 12, 2014

Good Morning! Paul Georgy with the early morning commentary for December 12, 2014 at 5:30 am.

Traders Focus: Last trading day for Dec contracts, China visit next week and technical resistance.

Grain futures are higher as money flow activates buy stops. Crude oil and US Dollar are lower in overnight trade.

Talk of China relaxing the GMO issue on DDGs and thoughts that ethanol demand will ramp up domestically. Reasoning is lower gas prices will increase usage therefore with a 10% blend equates to more ethanol usage.

China delegation in town next week is keeping the demand fire fueled.

Russia continues to be the “director of wheat” prices as concerns mount that they will tighten exports. However the weak ruble provides incentive for Russia to continue to move exports. Egypt's state grain buyer, (GASC), bought 180,000 tonnes of Russian and French wheat.

NOPA’s November crush report will be released at 11:00 AM on Monday. The November crush estimate of 165.4 million bushel is 3.3% over last year and it would be a new high for any month in history.

Check out the new AM Allendale Weather format by clicking here.

The U.S. Grains Council says: Turkey is not accepting U.S. distiller's dried grains following stepped-up enforcement of its GMO laws. "As of Monday, three shipments of U.S. distiller’s dried grains with solubles have been rejected following the detection of unapproved GM events, and for the same reason at least one other vessel of U.S. DDGS has been diverted from Turkey to another buyer while on the water."

Update - Morning Coffee Commentary:

Gulf corn basis offers for Jan/Feb/Mar fell 5 cents to 75 cents over March futures, soybeans had a soft tone after weak USDA export data.

Traders' concerns about China's harvest buying have peaked as they bought only 217,200 tonnes out of the 810,300 tonnes reported sold last week.

Buenos Aires Grains Exchange said Argentine growers advanced soybean planting by a brisk 12.3 percentage points over the last seven days as rains on the Pampas grains belt helped improved conditions. They also are forecasting 53.5% of Argentina’s wheat has been harvested.

Do you have your 2015 trade strategies in place? Get them, here.

University of Illinois says current price relationship of gasoline and ethanol values suggest a dim future for ethanol processors. Ethanol is at a 3 cents premium to gas.

The monthly retail sales report showed an increase of 0.7% during November over October. Trade estimates were for a 0.4% increase. Economists suggest cheap gasoline may be the reason for better than expected rise.

Feedlots are struggling with the idea they have lost some of their power in negotiations but are not willing to give in too quickly. Last week’s $4 and $5 decline is a hard enough pill to swallow much less bids of another $2 to $3 lower this week. The CME Feeder cattle contracts closed below important technical support. A higher close is needed today to keep the long-term uptrend intact. Beef values continue to slide as choice is down 2.16 and select is down .43. The CME Feeder Index is 239.77.

The European Commission has extended health controls on imports of live pigs from the USA and Canada until October 31, 2015 because of concerns about continued cases of PEDv.

The discount of February futures to lean hog index is providing support however speculative selling continues to weigh on prices. The pork cutout values are down 1.36.

Expect livestock markets to test chart support as the weekly close will be important for next week’s outlook.

Markets as of 5:30 AM CDT           

  • Mar Corn   8         
  • Jan Beans   7 3/4     
  • Mar Wheat   6 1/2
  • Jan Soymeal 2.90
  • Mar Dlr     -.40
  • Mar S&P   -12.25
  • Jan Crude   -.59
  • Feb Gold   -.90

Technical Chart of the Day

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Russian Currency Value Weighs on Wheat

Dec 11, 2014

Good Morning! Paul Georgy with the early morning commentary for December 11, 2014 at 5:30 am.

Traders Focus: Export sales report and outside market wind down for year-end.

Grain futures are mixed with corn and soybeans higher, wheat lower. The Dollar is steady and crude is seeing some short covering. The Russian Ruble sets new lows which should make their wheat even more competitive.

Trade estimates for this mornings Weekly Export Sales data are: wheat 250,000 to 450,000 tonnes, corn 800,000 to 1,000,000 tonnes, soybeans 700,000 to 1,000,000 tonnes, soymeal 50 to 200,000 tonnes and soyoil 15,000 to 30,000. The report will be released at 7:30.

Yesterday’s Supply and Demand report was seen as friendly with USDA lowering ending stocks in both corn and soybeans more than trade was expecting. However, the real fireworks will come in January when they are likely to adjust acreage and yield.

Money flow and lack of farmer selling is the key for much of the volatility and will most likely continue into year end.

A new record weekly ethanol production was posted at 988,000 barrels per day. Production remains at a pace 5% greater than last year. USDA is expecting the whole year to be up 0.3%. On yesterday’s S&D report, USDA chose to leave its corn for ethanol production number unchanged from last month, despite our current pace.

The forecast for both Argentina and Brazil continues to show plenty of rain and very little in the way of heat as the crop matures in very good conditions. The driest areas of Argentina, the western sections, are favored for the heaviest rains later this week. Good rains continue nearly everywhere in Brazil over the next 10 days which should be beneficial for the row crops.

Spot corn basis was mixed in a quiet cash trade at country elevators, however, soybean bids were 5 cents lower in Decatur. Gulf basis was equally weak as the end-user seems to have enough supply.

Update - Morning Coffee Commentary:

Funds are estimated to have sold a net 9,000 soybean contracts, sold 4,000 in wheat, sold 3,000 in soymeal, sold 1,000 in soyoil and were net even in corn.

On Monday the FSA will update acreage data, NOPA will release numbers on Tuesday and the Chinese delegation will be in Chicago signing an agreement.

Active economic calendar today with the release of the following reports: unemployment claims, retail sales and Business inventories. Boehner still has work to do in Washington before the holiday recess.

USDA added 130 million pounds to its previous 2014 pork production estimate. That was done to reflect the fact that slaughter in the fourth quarter will be larger than expected. They also raised imports by 35 million and lowered exports by 100 million pounds. No real changes were made to the 2015 numbers. Pork production is still seen expanding by 3.6% next year and the amount of pork left for US consumer’s consumption will increase by 1.3% to 46.6 pounds per capita. Pork cutout values were down 1.16.

Cash cattle trade is developing with bids at 162 to 164 with offers at 166 t0 168. Meat at the retail counter is running into resistance from the consumer. The price of beef compared to competitive meats is the problem for consumers even with much cheaper fuel. Packer margins are over $100 in the red. Beef values are mixed with choice down .56 and select up .27. The CME Feeder Index is 240.90.

Markets as of 5:30 AM CDT           

  • Mar Corn   1/2      
  • Jan Beans   3 1/4     
  • Mar Wheat   -6 1/2
  • Jan Soymeal 1.20
  • Mar Dlr     -.04
  • Mar S&P   3.50
  • Jan Crude   .45
  • Feb Gold   -7.20

Technical Chart of the Day

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December USDA Supply & Demand Recap

Dec 10, 2014

Video Recap:

Market Gets Ready For USDA Report

Dec 10, 2014

Good Morning! Paul Georgy with the early morning commentary for December 10, 2014 at 5:30 am.

Traders Focus: USDA Monthly Supply and Demand report at 11:00 and Macro markets.

Grain futures are higher lead by the soybean complex. Traders are anticipating a friendly report with more China interest. Crude tests contract lows as the Marco markets are in a narrow trading range.

Trade average guess for USDA ending stocks for corn is 2.027 billion bushels, soybeans 427 million bushels and wheat 654 million bushels. The USDA will likely make some adjustments to demand but will wait until January to adjust production. The trade estimates for world ending stocks are expected to have minimal adjustments.

Representatives of six Chinese soybean buyers will sign agreements with U.S. exporters to buy an unspecified amount of soybeans at a signing ceremony in Chicago on Dec. 16. China has purchased 63% of total US expected soybean export sales.

Chinese soybean crush margins have slid to negative returns and the lows of 2014. The question is how long will China continue to buy US soybeans? Could the new contract signing be for 2015/16 soybeans?

Gulf soybeans were 2 to 3 cents weaker yesterday while corn and wheat were steady.

RJO Asset Class Roundtable yesterday afternoon included highlights such as: 2014 performance overall for managed fund futures most had positive returns of 13-14% vs. 11-13% in S&P and NASDAQ with best gains posted by long term and diversified trading funds. Managed funds specializing in specific commodity sectors like Ag, energy, metals, have not fared as well as diversified funds trading both capital markets and commodities. Commodity capital freed up by fund closures generally are re-entering managed futures space under control of larger traders. There is no evidence of capital shifting out of energy markets and into Ag markets.

Update - Morning Coffee Commentary:

Funds are estimated to have sold a net 6,000 wheat contracts, bought 9,000 corn and bought 4,000 soybeans contracts.

Gold is climbing after news out of India that they are lifting the import restrictions on gold and traders are moving back to solid assets from the equity market.

Congressional negotiators resolved policy disputes to reach a deal for a $1.1 trillion spending bill but still are expected to need a stop-gap extension to avoid a U.S. government shutdown.

Federal Reserve will meet next week to debate the timing of the first interest rate hike in 8 years.

Much of the activity in the hog complex has been an effort to bring down premiums that the 2015 contracts have been holding. We have a quarterly Hogs and Pigs report due to be released in two weeks. The report may now show a little bigger expansion in the industry than the September update would have suggested. Pork cutout is up .64.

Live cattle futures started their rally right on que with the seasonal patterns. A few cattle have traded at 162 in the north, however, asking prices at feedlots are 167 to 168. Packer interest is limited. Beef values are mixed with choice down 1.74 and select up .74. The CME Feeder Index is 241.71.

Markets as of 5:30 AM CDT           

  • Mar Corn   3/4      
  • Jan Beans   4 1/2     
  • Mar Wheat   -5 1/4
  • Jan Soymeal 3.60
  • Mar Dlr     -.04
  • Mar S&P   -1.50
  • Jan Crude   -1.16
  • Feb Gold   -2.50

Technical Chart of the Day

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Traders Look For the Right Positions Ahead of Report

Dec 09, 2014

Good Morning! Paul Georgy with the early morning commentary for December 9, 2014 at 5:30 am.

Traders Focus: USDA report tomorrow, technical reversals, Chinese visit and lack of farmer selling interest.

Grain futures are lower as crude oil finds bargain hunters. The Dollar is slightly lower in quiet trade.

Trade average guesses for Wednesday’s US ending stocks for corn is 2.027 billion bushels, soybeans 427 million bushels and wheat 654 million bushels. The data will be released at 11:00 on Wednesday December 10, 2014.

Registration is now open for the 2015 Ag Leaders conference.  Register now to get the 2015 grain and livestock outlooks and strategies.

News stories continue to circulate about a Chinese State bean delegation coming to Chicago next week. The talk is they will be looking to sign yet another “frame contract” for beans which is providing support. The last time they visited the US they and signed one of these deals it was for 4.8 mmt of bean and the USDA then announced over 2.0 mmt in sales on the daily announcements over the next couple of days. Watch for more details on their visit.

(Reuters) – Brazil’s 2014/15 soybean crop is 26 percent sold, up from 21 percent a month ago but still behind the historical average of 39 percent says the local consultancy AgRural. They expect a record crop of 94.9 million tonnes from Brazil.

China’s statistics bureau says the world’s second-largest corn consumer, produced 215.67 million tonnes of corn this year, down from 218 million tonnes in 2013. The area sown with high-yield corn has increased by 758,000 hectares in 2014.

Funds are estimated to have bought a net 2,000 wheat contracts, sold 6,000 corn and bought 6,000 in soybeans.

The City Council’s Finance Committee agrees to require Chicago gas stations to offer motorists a higher ethanol blend known as E15.

Update - Morning Coffee Commentary:

Corn and wheat basis values were unchanged as USDA inspection data suggests subdued exports. Could the multi-year highs in the U.S. dollar be driving world buyers away?

Monday’s count on show lists is 7,000 head more than last week. Fewer numbers were offered in Nebraska but more numbers from Kansas through Texas. Technical selling and year-end profit taking is contributing to the weakness in cattle futures. Moore Research has a seasonal buy in cattle. Call your Allendale broker for more details. Beef cutout values work lower with choice down .56 and select down 1.33. The CME Feeder Index is 242.49.

The US announced it had banned live and raw poultry imports from the Canadian province of British Columbia. It is interesting to see December, February, and April lean hog futures contracts trading within a dollar of each other. Pork cutout is up .12.

Markets as of 5:30 AM CDT           

  • Mar Corn   -2 1/4     
  • Jan Beans   -1 1/2     
  • Mar Wheat   -6 1/4
  • Jan Soymeal .10
  • Mar Dlr     -.18
  • Mar S&P   -7.50
  • Jan Crude   .82
  • Feb Gold    11.20

Technical Chart of the Day

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Grain Movement Expected to Pick Up

Dec 08, 2014

Good Morning! Paul Georgy with the early morning commentary for December 8, 2014 at 5:30 am.

Traders Focus: World weather, USDA crop report on Wednesday, outside markets, money flow ahead holidays.

Grain futures are lower on light volume in a narrow trading range. Crude has another sharp move lower while the US Dollar is higher.

International weather forecast suggests no winterkill in FSU crops as snow cover increases across the area and no hard freezes. South American weather looks to be mostly beneficial to growing crops.

Trade talk has China buying several cargoes of soybeans last week and a reason for late week rally.

US farmer selling has been light, however, mid-December is seasonally and historically a time when they begin delivering on January contracts. Basis will weaken once this process starts.

Trade estimates for Wednesday’s report is for corn ending stocks in corn to rise 15 to 20 million bushel while ending stocks in soybeans to fall 25 to 30 million bushel.

The CFTC commitment of traders report showed that as of Tuesday, managed money funds reduced long positions in corn by 9,857 contracts, sold a net 22,924 soybean contracts and bought 7,988 contract of wheat which left them short 4,115 contracts. Goldman roll continues through Thursday.

The upbeat U.S. jobs report added to the case for the Federal Reserve to raise interest rates sooner rather than later. In stark contrast, the European Central Bank is under pressure to expand its asset-buying stimulus program. While the ECB disappointed some by its inaction last week, President Mario Draghi gave his clearest signal yet that quantitative easing may be on the cards early in 2015.

Don't miss our 2015 outlooks for grains and livestock next month. Get all the details here.

The price of distillers' dried grain (DDG) has jumped 25 percent in the past month as domestic demand rose for livestock feed.

Update-Morning Coffee Commentary:

Allendale Research suggests there is a clear seasonal trend for cattle bears to run the show from Thanksgiving into the 10th of December. After that period bulls regain power to drive the trend higher into January. Technical support crosses at 164 in Feb cattle. The second close below the 50 day moving average on Friday could cause further pressure on the opening this morning. Cash cattle trade in the south at 168 on Friday which was $5.00 lower than last week. Packer demand was light with margins over $100 per head in the red. Beef cutout values were weak on Friday with choice down 1.88 and select down 3.57. CME Feeder Index is 244.82.

Hog slaughter totaled 2.236 million head last week which was 3.5% under last year. Pork production ran 3.0% under last year as weights were only 0.8% over last year at this time. Remember a year ago is when producers started putting more weight on to compensation for PEDv pig loss. Pork cutout values are down .93. Look for a steady lower opening for livestock.

Markets as of 5:30 AM CDT           

  • Mar Corn   - 1/2      
  • Jan Beans   -4 3/4     
  • Mar Wheat   -4
  • Jan Soymeal -1.30
  • Mar Dlr     .08
  • Mar S&P   -5.75
  • Jan Crude   -1.25
  • Feb Gold    4.80

Technical Chart of the Day

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Could Employment Data Impact Grain Prices?

Dec 05, 2014

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

Traders Focus: Watching weekly close, employment data, money flow and getting ready for next week’s USDA report.

Grain futures are lower as they give back some of the gains from Thursday. The Macro markets are preparing for the employment report at 7:30.

Weather is not driving values up as the forecast continues to show rains moving across the northern half of Argentina and then into southern and central Brazil. Another round of rain is due in the first half of next week across the majority of Argentina as well as most of Brazil as well. If the forecast were to play out the only area in South America that would be seeing less than normal rain would be far southwestern Argentina.

Don't miss our 2015 outlooks for grains and livestock next month. We'll have our newest price projections, trade strategies, a full-year weather outlook, and more. Get all the details here.

Oil World reported that Argentina may temporarily lower export taxes for beans meal and oil to entice farmers there to sell their remaining old crop stocks that some think could be as much as 11-13 mmt.

Corn basis bids softened around the Midwest as soybean bids were mostly steady to firm.

Yesterday wheat could not find any friends as wheat production in Canada was raised 4.5 mmt from last month which came right on the heels of Australia raising their crop by 1.7 mmt.

Update - Morning Coffee Commentary:

Goldman roll begins today and they will be moving positions out of Jan and into March.

The jobs report is out later this morning and economists expect non-farm payrolls in October expanded by 230,000 jobs. That would be an increase over the previous month’s 214,000 job growth. Unemployment is seen unchanged at 5.8%.

Canada’s Chief Veterinary Officer says the bird flu virus that killed thousands of birds on the two Canadian farms in British Columbia is the “highly pathogenic” H5N2 strain.

Russia announced it has officially banned imports of US chicken. Even after this temporary “embargo” issued on August 7 is over, they will continue their ban. They suggest USDA has not responded to almost all of their letters of violations.

Cash Cattle trade is light so far this week with a few head in the western cornbelt 263 to 265 dressed compared to last week at 267. Packers interest has been limited. Beef cutout values were weak with choice down 1.99 and select down 1.52. CME Feeder Index is 244.19.

Retail featuring going into Christmas usually supports pork demand. Pork cutout values are up 1.66. Technical support in Feb lean hogs is 85.90.

Markets as of 5:30 AM CDT           

  • Mar Corn   -1 3/4     
  • Jan Beans   -1 1/4     
  • Mar Wheat   -2 1/2
  • Jan Soymeal -1.00
  • Mar Dlr     .15
  • Mar S&P   1.50
  • Jan Crude   -.53
  • Feb Gold   -4.70

Technical Chart of the Day

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Stand Off Near Chart Support In Grains

Dec 04, 2014

Good Morning! Paul Georgy with the early morning commentary for December 4, 2014 at 5:30 am.

Traders Focus: Export sales report, technical and fund activity, and outside market direction.

Grain futures are lower as wheat takes the lead on the downside. The US Dollar is testing contracts highs while energies and gold drift lower.

Technical eyes are on the “head and shoulders” in January beans and the 50 day moving average which crosses at 9.93 ½.

Weekly export sales report this morning at 7:30. Trade estimates are: wheat 300,000 to 500,000 tonnes, corn 600,000 to 800,000 tonnes, soybeans 650,000 to 850,000 tonnes, soymeal -50,000 to 60,000 tonnes and soyoil 10,000 to 30,000 tonnes.

Stats Canada will release their harvest results at 7:30 this morning. Buyers of Canadian wheat are concerned about the quality of their abundant harvest.

Japan buys 146,600 tonnes of food quality wheat from US and Canada in regular monthly tender.

Don’t miss our 2015 outlooks for grains and livestock next month. We’ll have our newest price projections, trade strategies, a full-year weather outlook, and more. Get all the details here.

NOPA releases Nov crush on Dec 15 with trade looking for a record crush pace as crush margins were very attractive.

Goldman roll begins Friday and they will be moving positions out of Jan and into March.

Merrill Lynch’s Grain Index over the last 12 months is down 13.75% vs. a 27.3% gain in livestock and a 31.6% decline in energy. Merrill Lynch reports that 2014 YTD commodity Index investments are down $30 billion to $130 billion (-18.75%). They suggest the decline is coming from lower commodity prices rather than from investors pulling out of commodities. There is a concern more money could be pulled out of commodities in coming months due to a few key situations: Washington grid lock, slowing growth in China, and Russia moving into a recession.

Update - Morning Coffee Commentary:

Saudi Arabia, OPEC’s largest oil producer now believes oil prices could stabilize at around $60 a barrel, a level they believe they could withstand.

Russia is implementing restrictions on imports of poultry from the US because of harmful residues.

South Korea has banned imports of Canadian chicks, Hong Kong and Taiwan have imposed trade restrictions on British Columbia poultry and poultry products, and Japan has imposed trade restrictions on British Columbia chicks as well as all Canadian poultry products due to a bird flu finding. (Reuters)

Cash markets have seen very light demand in the western cornbelt with a few cattle trading at 263 to 265 which are mostly 2.00 lower than last week. Southern live trade is not established due to poor packer interest. Beef values are mixed with choice up .05 and select down 1.88. The CME feeder Index is 244.99. Futures traders are dealing with some fund liquidation and weakness due to technical selling on failure to hold moving average support.

(Denver Post) Animal-rights activists seeking to improve conditions at pig farms nationwide are rolling out undercover footage captured at a Yuma County pig farm run by Seaboard Foods.

Lean hog futures are testing the lower end of the trading range which can be found at the 86.00 level in the February contract. There is talk that more fund liquidation may be possible before end of year. Talk to your Allendale Representatives for an option strategy to lock in hog production profits.

Pork cutout values are down .20.

Markets as of 5:30 AM CDT           

  • Mar Corn   -1         
  • Jan Beans   -4 1/2     
  • Mar Wheat   -11 1/2
  • Jan Soymeal -1.00
  • Mar Dlr     .01
  • Mar S&P   1.50
  • Jan Crude -.13
  • Feb Gold   -6.10

Technical 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

Who Wants To Lead Today?

Dec 03, 2014

Good Morning! Paul Georgy with the early morning commentary for December 3, 2014 at 5:30 am.

Traders Focus: Outside markets, technical patterns and Southern Hemisphere production.

Grain futures are lower on technical and fund selling. The dollar is setting new contract highs while crude oil recovers slightly from recent losses.

Technical traders will be watching the development and potential confirmation of a textbook “Head and Shoulders” formation on the January soybean chart. A close below the 9.95 (neckline) could trigger more sell-stops. The next few sessions will be critical to a price outlook based on this technical formation. The 50 day moving average crosses at 9.92 another key support level.

Trade is waiting for the USDA Supply and demand report on Wednesday Dec 10. Historically the USDA does not change production on the Dec report. Any adjustments to production will come on the January report. However trade is expecting a mild adjustment to ethanol demand and export projections in corn. Soybeans could see a slight drop in ending stocks.

(Reuters) A Russian grain industry lobby group has asked Moscow not to introduce restrictions on grain exports, saying it would be detrimental for the agricultural sector. "Any restrictions on agricultural production exports are harmful for the economy of any country, including Russia.”

Falling oil prices and global sanctions are pushing Russia’s economy into recession. On Tuesday, the Ministry of Economic Development predicted the economy would shrink 0.8 percent next year instead of growing a previously estimated 1.2 percent. Oil and natural gas make up about 60 percent of Russia’s export earnings, and the price of crude is off by a third since June.

Update - Morning Coffee Commentary:

Argentina corn planting progress is estimated at 42% complete compared to 65% average. Soybean plantings have caught up to average at 47% complete.

Spot corn and soy basis bids rose at processors and elevator locations as weak futures prices are not encouraging farmer selling.

Australia cut its 2014/15 wheat production forecast by 4 percent as drought in key growing regions curbed output from the world's fourth largest exporter of the grain. Winter crop production has suffered from hot, dry conditions across the east and south coast, Australia's official commodity forecaster said.

On Tuesday funds were estimated to have sold a net 12,000 soybean contracts, sold 10,000 corn, even in wheat, sold 3,000 in soymeal and sold 6,000 in soyoil.

Goldman roll out of the January contract will start Friday and end Dec 11.

(Reuters) - Tests have confirmed the presence of H5 avian influenza on two farms in the western province of British Columbia, the Canadian Food Inspection Agency (CFIA) said.

Cash cattle auctions early this week are $1 to $2 lower on good runs. However the traders are expecting the direct trade to be steady due to tight supplies. Beef values were weak with choice down 1.12 and select down 1.68. The CME Feeder index was 3.49. Cash feeder cattle are strong as cheap feed and tax advantages for re-ownership come into play. Technical support in Feb Cattle is at 168 and resistance is 171.

Lean hog futures are trying to bottom on seasonal tendencies however meat supplies continue to cause headwinds. Pork cutout values are down 1.76.

Markets as of 5:30 AM CDT           

  • Dec Corn   -2 1/4     
  • Jan Beans   -7 1/2     
  • Dec Wheat   -4 3/4
  • Dec Soymeal -4.70
  • Dec Dlr     .21
  • Dec S&P   -1.00
  • Dec Crude   .36
  • Dec Gold    2.70

Technical 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

Wheat Takes Leadership Role in Grains

Dec 02, 2014

Good Morning! Paul Georgy with the early morning commentary for December 2, 2014 at 5:30 am.

Traders Focus: Funds adjusting positions in wheat and outside markets, weather forecasts for US wheat growing areas and macro market news.

Grain futures are quiet as outside markets retrace yesterday’s action. The US Dollar rallies while gold and crude oil come under pressure.

Russian winter crops are being stressed due to a poor start and lack of moisture. US HRW crop is in need of moisture however the most important time for wheat is in the spring.

US weekly export shipment inspections were good but not as good as trade was expecting. It appears we are past the peak export shipments which relieve some of the pressure to move grain to export locations.

China’s crush margin for soybeans has fallen to a level where processors are breaking even. This is a dramatic change from only a few weeks ago when China was a big buyer of US soybeans.

Cash corn and soybean bids are steady to firm around the US Midwest as the small rally yesterday failed to inspire much farmer selling. It is likely that farmers will not be moving much grain until they deliver on January contracts. Most elevators are now pricing off of the March corn contract. Soft red wheat basis was unchanged as Monday's rally generated some modest farmer sales.

Update - Morning Coffee Commentary:

The CFTC Commitments of Traders reports showed managed money increasing their net long position in corn by 20,242 contracts, soybeans by 7,086 contracts and soybean oil by 12,720 contracts while being light sellers in wheat and soybean meal.

On Monday funds bought an estimated net 13,000 wheat contracts, were even in corn, even in soybeans, sold 3,000 in soymeal and bought 3,000 in soyoil.

Top Federal Reserve policymakers said falling oil prices will help the U.S. economy even though the drop adds to concerns about low inflation. They said, as the cost of energy tumbles the average nationwide price of a gallon of regular unleaded gasoline is below $3, consumers will have more money to spend.

Fed cattle trade was at a standstill on Monday although futures prices were sharply higher. Many attribute the strength to first of month buying and a recovery in outside markets. Beef values were steady with choice up .08 and select down .51. The CME Feeder Index is 240.45.

Lean hog futures and cash markets are seasonally set to make a rally. However hog weights are heavier than a year ago and hog numbers are on the increase. Traders are watching for any sign the PEDv shows up again this winter. Pork cutout values are up .35.

Markets as of 5:30 AM CDT           

  • Dec Corn   -1         
  • Jan Beans   -1         
  • Dec Wheat   2 1/2
  • Dec Soymeal 3.75
  • Dec Dlr     .28
  • Dec S&P   2.75
  • Dec Crude   -1.02
  • Dec Gold   -19.10

Technical Chart of the Day

daily chart

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More Risk-Off Attitude Pressures Markets

Dec 01, 2014

Good Morning! Paul Georgy with the early morning commentary for December 1, 2014 at 5:30 am.

Traders Focus: Start of a new month, outside markets and technical support levels.

Grain futures are lower although soy complex has bounced off the lows. Bargain hunters are working in the energy complex.

The more than 7.00 decline in crude oil values on Friday is met with more selling overnight. The weakness in crude is pressuring soyoil values. Soybean crush margins are at near record levels which are keeping processors running wide open.

Chart support in Dec corn is 3.70 and then 3.65 to 3.62 level. Jan soybeans should find support at the 10.03 area. Wheat broke out of sideways trading range on Friday. Another strong close could change the bearish bias.

The CFTC Commitment of Traders report will be released this afternoon.

Weekend Brazil rains were less than expectations but forecast has 75% coverage for row crops to keep them well watered while Argentina enjoys a mostly open week ahead for increasing planting progress.

US Attaché in Russia has increased their total grain production by 1 million tonnes. Based on the weak Russian ruble they are expected to export 30 million tonnes of grain including 22 mmt of wheat, and 2.5 mmt of corn. By Mid-November, Russian farmers had planted 2 million more hectares of winter crops than last year.

Congressional spending bill is needed by Dec 11 to keep the US government open.

Update - Morning Coffee Commentary:

Live cattle futures with normal basis levels applied to each timeframe are suggesting cash will be $167 by the end of December, $169 in February, $169 in April, and $161 in June. On a seasonal basis there is a strong tendency for futures to post a peak on November 27 then fall sharply until December 10. Don’t be surprised to see bears take control for the next two weeks. After that low is made there is typically an equally large rally right back up at the end of the year.

US net beef sales of 11,300 tonnes last week was down 16 percent from the previous week and 6 percent from the prior 4-week average. Beef cutout values were slightly higher on Friday with choice up .27 and select up 1.85. The CME Feeder Index is 240.00.

The lean hog complex was hit with technical selling on Friday closing below the 20 and 50 day moving averages. Cash hogs are still holding previous lows at a time of year where seasonal lows are made. Packer’s profit margins are in the black and we are headed into a full work week.

Pork cutout values are up .35.

Markets as of 5:30 AM CDT           

  • Dec Corn   -5 1/4     
  • Jan Beans   - 1/2      
  • Dec Wheat   -2 1/4
  • Dec Soymeal -1.10
  • Dec Dlr     -28
  • Dec S&P   -8.75
  • Dec Crude   -.64
  • Dec Gold   -2.00

Technical Chart of the Day

daily chart

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Crude Oil Prices Plunge on OPEC Decision

Nov 28, 2014

Good Morning! Paul Georgy with the early morning commentary for November 28, 2014 at 5:30 am.

Traders Focus: Shortened session today, OPEC decision, Export sales and money flow.

Grain futures are called lower as outside markets show risk-off attitude. Crude oil and metals are sharply lower while the US dollar is sharply higher.

The head of oil research at SocGen warns "this will reverberate for years"... (via Bloomberg) OPEC decision to keep output target is "unambiguously bearish, we are entering a new era for oil prices, where the market itself will manage supply, no longer Saudi Arabia and OPEC."

Export sales report this morning at 7:30. Trade estimates: wheat 300,000 to 500,000 tonnes, corn 600,000 to 800,000 tonnes, soybeans 700,000 to 1,000,000 tonnes and soymeal 50,000 to 200,000 tonnes.

There were 40 deliveries against the December corn futures with the intention date of Feb 7, 2014.

Argentine soybean planting increased by 14.4 percentage points over the last seven days supported by good weather, now forecast to be 45 percent complete by the Buenos Aires Grains Exchange.

Update - Morning Coffee Commentary:

Russia deputy agriculture minister said they may consider imposing a floating tariff on grain exports as a measure of last resort to defend the domestic market in 2015.

Ethanol production remains strong as last week saw a record of 982,000 barrels per day which was 6% over last year during the same week. Processor margins improved and we are still running over USDA’s expected pace for the year.

On Wednesday, cash cattle in Kansas and Nebraska sold at $172 to $173 mostly steady with the bulk of last week's sales. Packer margins are estimated to be over $100 per head in the red. Beef values are higher with choice up .26 and select up .33. The CME Feeder Index is 240.72.

Hog slaughter should be big this weekend and next week as packers get back to a full work week. Retailers are expected to pick up demand as pork prices could entice some featuring. February futures closing below the 20 and 50 day moving averages could lead to further selling. First level of support crosses at 89.22. Pork cutout values are up .61.

Technical Chart of the Day

daily chart

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Markets Provide Recipe For Turkey At Thanksgiving

Nov 26, 2014

Good Morning! Paul Georgy with the early morning commentary for November 26, 2014 at 5:30 am.

Traders Focus: Thanksgiving Holiday, OPEC meeting results tomorrow and shortened session on Friday.

Grain futures are higher on limited news items and light volume this morning.

Allendale staff thanks you for your confidence in us. We hope everyone has a wonderful Thanksgiving holiday weekend with family, friends and safe travels wherever your destination.

Traders will be watching for the results of the OPEC leaders meeting tomorrow. However, if they decide to reduce oil production, “Who will believe them?”

First notice day for the December contracts at the Chicago Board of Trade is Friday.

In a quarterly update, the USDA's Economic Research Service forecast net farm income in 2014 of $96.9 billion, a sharp cut from the $113.2 billion it estimated in August.

The major Black Sea wheat producers of Russia and Ukraine are becoming concerned about the potential to harvest a record wheat crop next year due to the poor condition of their winter plantings. Soil moisture is less than normal which is hampering pre-winter development of crops.

CME Group Inc. should continue to develop strategies to detect an illegal manipulative trading practice known as "spoofing," said the Commodity Futures Trading Commission.

Congressional Budget Office (CBO) released their interoffice preliminary estimate for corn, soybeans and wheat for 2015. They have estimated on this report: 90 million acres planted to corn, 82 million acres planted to soybeans and 56 million acres planted to wheat. They do not put out their office estimate until February.

Critics of the U.S. biofuel mandate have intensified calls for reform of the program after the Environmental Protection Agency said on Friday that it would not be able to finalize targets for renewable fuel use in 2014 until next year. The targets had been due in late 2013. (Reuters)

Update - Morning Coffee Commentary:

The Commerce Department on Tuesday raised its estimate of gross domestic product to a 3.9 percent annual pace from the 3.5 percent rate reported last month, reflecting upward revisions to business and consumer spending.

Expect choppy livestock markets for the balance of trading week. Beef cutout values were a bit higher due to reduced production as choice was up 1.17 and select up 1.42. CME Feeder Index was 240.69.

Hog futures slide on technical selling ahead of the holiday weekend. The first level of support is the low made on Tuesday in the February lean hog contract. Closing below the 50 day moving average could bring out more sellers today. Pork cutout values are down 1.23.

Markets as of 5:30 AM CDT           

  • Dec Corn   3         
  • Jan Beans   1 1/4     
  • Dec Wheat   4 3/4
  • Dec Soymeal 5.20
  • Dec Dlr     .10
  • Dec S&P   2.75
  • Dec Crude   -.10
  • Dec Gold   -1.90

Technical 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

Trade Adjusts Positions Going Into Holiday

Nov 25, 2014

Good Morning! Paul Georgy with the early morning commentary for November 25, 2014 at 5:30 am.

Traders Focus: Economic Reports, OPEC meeting on Thursday, cash basis and farmer selling.

Grain futures are lower while soybeans regain yesterday’s losses.

Corn harvest is virtually complete with 94% harvested versus 92% for the 5 year average. USDA reported soybean harvest at 97% complete versus 98% average. The last wheat conditions report of the season put the crop at 58% G/E compared to last week’s 60%. The next report will be released April 6, 2015.

Railcar rates and barge rates are trending lower as it is likely we have seen the peak export demand. Historical patterns suggest a much slower demand for transportation as we move into the first quarter of 2015.

Basis levels for corn and soybeans could stay firm for a few more weeks but by mid-December farmers will start delivering on January contracts and fill near term processor demand. For un-protected corn and soybeans in storage contact your Allendale broker for option strategies.

There has been a lot of talk about what happens to the grain markets the day after Thanksgiving. Rich Nelson researched the seasonal tendencies of the corn market after Thanksgiving. Over the last 15 years there were 7 year the corn closed higher on Friday and 8 years it closed lower.

Soybeans closed higher 9 out of the last 15 years and lower 6 out of 15 years. Listen in to this week’s Strategy Session to get more of a historical look at how the markets behave around Thanksgiving.

Keep in mind that positions need to be pared to 600 contracts or less (700 in meal) in the Dec contract by the close of business on Wednesday and open interest is still very high in the Dec contracts.

Funds are estimated to have sold a net 3,000 wheat contracts, sold 9,000 corn, sold 2,000 soymeal, bought 3,000 in soyoil and were even on soybeans on Monday.

The USDA will update its farm income outlook figures today. U.S. net farm income is currently forecast for 2014 is $113.2 billion, down 13.8 percent from 2013.

Friday is first notice day for the December contracts in grains at the CBOT.

Economic Traders are waiting for the Consumer Confidence and GDP reports later this morning.

Live cattle futures traders will be struggling with a huge technical reversal on Monday and the 20 day moving average support. The tight supplies of market ready cattle and last week’s trade, now at a premium to futures, should provide support. Holiday markets is recent years have seen volatile price movements in livestock. Beef cutout values were a bit higher on fill-in buying by retailers with choice up .48 and select up .32. CME Feeder Index was 241.23.

Seasonally the cash hog market bottoms the last week in November, however, the current cash low was made a few weeks ago. Packer margins are in the black and hog numbers are on the increase. Markets will have a tough job to sort out the details during the time of historical lighter trading volume. Pork cutout values are up .02.

Markets as of 5:30 AM CDT           

  • Dec Corn   - 1/2      
  • Jan Beans   5         
  • Dec Wheat   -2 3/4
  • Dec Soymeal 3.90
  • Dec Dlr     -.01
  • Dec S&P   1.75
  • Dec Crude   .27
  • Dec Gold    3.70

Technical 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

Quiet Markets as Holiday Nears

Nov 24, 2014

Good Morning! Paul Georgy with the early morning commentary for November 24, 2014 at 5:30 am.

Traders Focus Today: Holiday markets, historical patterns around Thanksgiving and first notice day on Friday. 

Grain futures are mostly lower in a quiet overnight session.

Crop development in South America should see good weather over the next few weeks.

Last week CFTC Commitment of Traders showed managed money had little change in corn ownership however they bought 19,254 contracts wheat and sold nearly 11,000 contracts of soybeans.

Saudi Arabia purchased 345,000 tonnes of wheat from optional origins to be delivered between February and March.

The Environmental Protection Agency quietly announced on Friday that it had been unable to decide this year on a rule setting levels for the amount of biofuel it would require to be blended into conventional vehicle fuels.

Corn and soybean basis is likely to stay firm into early December as farmer’s complete harvest and crops will not be moved until next year. Midwest crushers increased soy basis Friday while spot soymeal basis remains firm.

This week’s heavy U.S. economic schedule on Tuesday and Wednesday will peak traders attention. Then focus turns to whether the holiday shopping season gets off to a strong start with Black Friday arriving late this week. Congress is back on vacation this week so there will be no progress on a spending bill by Dec 11.

Update - Morning Coffee Commentary:

A vessel is due to load around 58,000 tonnes of feed wheat in France this week for South Korea, the largest such shipment in 26 years, port sources said. (Reuters)

The Cattle on Feed and Cold Storage reports were both a little negative for beef. The number of calves and feeders starting their feedlot experience in October were 99.1% of one year ago compared to 96.0% average trade guess. The placement was the second lowest October on record at 2.357 million head verses previous October’s since 1996. Placements were larger than expected, however, the numbers were very low. Supplies of market ready cattle were very tight but high prices of beef are finding competition at the retail counter. Beef cutout values were down .17 for choice and down 1.06 for select. CME Feeder Index was 240.11.

Cold Storage was supportive for pork at 525 million lbs. which was the smallest amount in two years for the month of October. The five year average for October is a 2 million increase. To put this into perspective this was the second largest drawdown for October in our database which goes back to 1970. Pork cutout values are down .23.

Markets as of 5:30 AM CDT           

  • Dec Corn   -1 3/4     
  • Jan Beans   -7         
  • Dec Wheat   1 3/4
  • Dec Soymeal -.60
  • Dec Dlr     -.08
  • Dec S&P   3.50
  • Dec Crude   .12
  • Dec Gold   -2.60

Technical 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

How Will Grains Close Out the Week?

Nov 21, 2014

Good Morning! Paul Georgy with the early morning commentary for November 21, 2014 at 5:30 AM.

Trader's Focus Today: December option expiration, RFS announcement out of Washington, 2:00 PM CST Cattle on Feed and Cold Storage Reports.

Grains are trading slightly lower in the overnight session after seeing strength yesterday on export sales, and short covering.

Some in the soybean trade were surprised to see no cancelations of soymeal, despite the news of a cheaper product out of South America. In fact, sales were above analyst expectations of -100,000 to 100,000 tonnes, coming in at a strong 265,749 tonnes. Most analysts, however, caution some of this number was due to late reported sales, and that these sales are not expected to continue considering elevated prices in the U.S.

Corn sales were also viewed bullish yesterday coming in well above expectations at 909,000 vs. the 500,000 to 700,000 estimate. This added to the good ethanol numbers out Wednesday have provided solid demand support to corn.

Chart watchers note that with near term support recently being taken out, good demand stories will need to continue to avoid taking out the 100 day moving average (3.62 1/2) and keep corn moving higher.

The deadline for a new Renewable Fuels Standard mandate is fast approaching, leaving some to expect an announcement as early as today. Most in the trade are expecting an increase to the mandate. Keep an eye on our homepage as we'll detail any announcement there once it's made.

NOAA released their long term forecast for the month of December and temps look mostly favorable for winter wheat. They expect normal to below normal temps in the south which shouldn't cause much damage to the wheat crop. Precipitation looks normal in the plains which would provide an insulating layer of snow for the crop lying dormant in the ground.

Weather as a whole looks good for planting in South America, though parts of Argentina are reporting standing water in fields and corn planting delays. At this time the delays appear limited.

Update - Morning Coffee Commentary:

December options go off the board today which could require some position squaring. First notice day is next Friday.

Hog packers have found it more difficult than expected to move product right now. End users are trying to continually push prices but are keeping an eye on consumption. While consumers should be ready to accept more pork and less beef at these prices, we really have not yet seen much pushback against beef. Packers have cut down this week’s kill expectations with the hope for a better pork/hog margin.

A Wall Street Journal retail meat survey found beef prices 29%, and pork prices 22%, over last year’s level.

For today's Cattle on Feed report Allendale see's placements at 6% lower than last year (average guess -4%). For Cold Storage, we see beef stocks at 368, and pork stocks at 538 million pounds. See complete estimates.

Markets as of 5:30 AM CDT           

  • Dec Corn   -1 1/4      
  • Jan Beans   - 3/4    
  • Dec Wheat   -3 3/4
  • Dec Soymeal -1.10
  • Dec Dlr     .52
  • Dec S&P   12.50
  • Dec Crude   1.02
  • Dec Gold    3.30

Technical Chart of the Day

daily chart

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Fundamentals Technicals and Exports

Nov 20, 2014

Good Morning! Paul Georgy with the early morning commentary for November 20, 2014 at 4:15 am.

Traders Focus: Export data, Technical support in grains and soy complex, and option expiration tomorrow.

Grain futures are mixed in a quiet session. The dollar is higher and outside markets are mostly lower.

Meal basis is slumping as reports are being circulated that eastern processors are sellers $5 to $10 under posted prices. No confirmation yet that several cargoes of meal was switched to South America.

Chinese crush margins have eroded more than $30 since early November to a positive margin of $8.20 per tonne.

Traders are waiting for the weekly export sales data due to be released at 7:30. Estimates are: corn 500,000 to 700,000 tonnes, soybeans 700,000 to 1,000,000 tonnes, soymeal (100,000) to 100,000 tonnes, soyoil 5,000 to 20,000 tonnes and wheat 300,000 to 500,000 tonnes.

Ethanol processors were busy last week as they averaged 970,000 barrels per day compared to 946,000 barrels per day the previous week. With the bump in production, ethanol stocks declined last week.

Ethanol prices have surpassed gasoline prices in the US therefore getting some push back by blenders, however, export demand has been hot. There are rumors of 4 cargoes of ethanol coming to the US from Brazil most likely arriving in Florida in December.

The EPA is expected to release their decision on the mandate for biofuels any day, the comment period is ending today.

Lanworth, a unit of Thomson Reuters, estimated U.S. 2015/16 winter wheat plantings at 40.790 million acres, down from the U.S. Department of Agriculture's 2014/15 figure of 42.4 million. Lanworth attributed the decline to planting delays and low profitability of wheat relative to other crops.

Archer Daniels Midland Co sued seed company Syngenta AG on Wednesday over sales of a genetically modified corn variety not approved for import by China, joining more than 100 farmers and exporters in pursuing damages from the Swiss-based company. (Reuters)

Update - Morning Coffee Commentary:

Trade estimates for Friday’s Cattle on Feed report are: On-Feed 99.8%, Placed 96% and Marketed 93%. USDA will also release cold storage data on Friday.

Wednesday’s production was 106,000 head of cattle which was 4,000 under the average analyst estimate for the day. Packers are doing their best to deal with both the low numbers being marketed and their negative processing margin. Beef values were firmer on Wednesday with choice up .50 and select up .79. The CME Feeder Index is 240.10. November feeder cattle’s last trading day in today.

We have not heard of any further expansion in the H5N8 (bird flu) that has hit Britain, Germany, and the Netherlands. Keep in mind this is the low pathogenic variant. The strains that would excite the market are the H5N1 or H7N9. No humans have been infected with bird flu in the current EU outbreak.

According to China’s Ministry of Agriculture their hog inventory for Oct 2014 was down 0.2% vs a month ago and down 6.5% vs year ago; including breeding hog inventory down 1.3% vs a month ago and down 11.3% vs a year ago.

Pork cutout values were down 1.52.

Markets as of 4:15 AM CDT           

  • Dec Corn   3/4      
  • Jan Beans   3 1/2     
  • Dec Wheat   -4
  • Dec Soymeal -3.70
  • Dec Dlr     .18
  • Dec S&P   -7.75
  • Dec Crude   -.16
  • Dec Gold   -1.30

Technical 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

Traders Looking for New News

Nov 19, 2014

Good Morning! Paul Georgy with the early morning commentary for November 19, 2014 at 5:30 am.

Traders Focus: December option expiration on Friday, crush spreads in soybean complex, cash markets as farmers look for storage and holiday week ahead of us.

Grain futures are lower on technical and fund selling as cash markets deal with final stages of an abundant harvest.

The meal spreads are spotlighted as Eastern cornbelt crush margins are starting to buckle. Reports of Argentine meal trading at a $75 discount to US soymeal and Brazil trading as much as $90 per tonne discount are being heard.

The CIF soybean market from now through January has put in a carry which is suggesting pipeline has adequate inventory.

Due to the considerable premium of December and January meal contracts compared to the deferred contracts, trade is watching for adjustments. The transportation problems are subsiding and with high profit margins processors are running full speed. Crushers are now reporting 6 to 8 weeks of supply on hand which should get them through the end of the year when soybean movement is expected to pick up.

The grain crushing industry association Abiove says Brazil's soybean harvest is expected to occur later than usual this year due to a drought that has delayed planting and could tighten the local fuel market's supply of biodiesel in early 2015.

More reports out of Brazil concerning poor wheat harvest yields and quality.

A ship is expected to be loaded with 45,000 tonnes of feed wheat in France heading for the United States, which would be first large French shipment to U.S. in 12 years.

Ethanol prices have recently climbed to a premium to gasoline, threatening to curb demand from wholesale fuel refiners. The main driver has been robust ethanol demand.

Ethanol processor have boosted bids for corn in the western cornbelt as farmer selling came to a halt due to cold weather and lower futures prices.

The Dairy Farmers of America and a Chinese company say they are planning a $100 million plant in Kansas to produce milk powder. (AP)

Trade estimates for Friday’s Cattle on Feed report are: On-Feed 99.8%, Placed 96% and Marketed 93%. USDA will also release cold storage data on Friday.

Update - Morning Coffee Commentary:

Temps in the plains should be warming up and could relieve some of the excitement futures traders have concerning cattle. Beef values rise as retailers prepare for post-holiday featuring. Choice is up .02 and select is up 1.23. The CME Feeder Index is 240.09.

Hog futures rallied in recent days on the idea that cash hogs posted an earlier than expected seasonal bottom and were ready to start their increase into December. However cash hogs are just a $1.09 over last week’s low when using the IA/MN data series and wholesale pork is up only 37 cents over last week’s low. Pork cutout value is down 1.43 on Tuesday.

Markets as of 5:30 AM CDT           

  • Dec Corn   -3 1/2     
  • Jan Beans   -9 1/2     
  • Dec Wheat   -6
  • Dec Soymeal -2.10
  • Dec Dlr     .05
  • Dec S&P   -1.00
  • Dec Crude   -.08
  • Dec Gold    3.10

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Soybean Strength Supports Grains

Nov 18, 2014

Good Morning! Paul Georgy with the early morning commentary for November 18, 2014 at 5:30 am.

Traders Focus: Option expiration, weather conditions in US and South America and Holiday markets approaching.

Grain futures are being led higher by the strength in soybean complex. Outside markets are showing a risk-on attitude as metals and energies are higher.

US corn harvest is 89% complete which has now exceeded the 5 year average of 88%. Soybeans are 94% complete compared to 90% last week and 96% for the 5 year average.

The National Oilseed Processors Association said that U.S. members crushed 157.960 million bushels of soybeans during October. It was the biggest crush on record for October.

Barge grain movement reports as of November 8 show 803,000 tons of soybeans on barges in transit compared to only 458,000 tons a year ago. There was only 244,000 tons of corn on barges compared to 308,000 tons in 2013.

Weekly export shipments were a record for soybeans, however, history suggests it may be the high for the season.

December option expiration is Friday.

Japan is now officially in a recession after the release of economic data showing a contraction for the second straight quarter.

Average new home prices in China's 70 major cities fell 2.6 percent in October from a year earlier.

Manitoba hog industry is suffering a shortage of hogs as producers there have not built new building and improved herd size due to government regulations on manure.

There has been an outbreak H5N8 strain of bird flu in Europe as the UK and Netherlands have reported cases in recent days. Germany reported cases earlier this month.

Update - Morning Coffee Commentary:

Early Cattle on Feed estimates are coming in around 99.8% On Feed, 92.2% Marketed, and 94.8% Placed.

The average slaughter weight of cattle is now nearly 30 pounds heavier than a year ago while total beef production was 4.09% below the same week a year ago. Beef values find support on retail interest for post-holiday featuring. Choice is up 2.11 and select up 1.74. The CME Feeder Index is 239.19.

December lean hog futures is now $5.00 above the CME cash index and futures closed above the 50 day moving average on Monday. Pork cutout value is down .34.

Markets as of 5:30 AM CDT           

  • Dec Corn   1/4      
  • Jan Beans   2 3/4     
  • Dec Wheat   -3 3/4
  • Dec Soymeal 4.50
  • Dec Dlr     -.36
  • Dec S&P   -2.25
  • Dec Crude   .32
  • Dec Gold    18.20

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US Harvest Near Completion

Nov 17, 2014

Good Morning! Paul Georgy with the early morning commentary for November 17, 2014 at 5:30 am.

Traders Focus: Ukraine situation intensifies, NOPA crush and option expiration on Friday.

Grain markets are lower after a very choppy start this week. The Dollar is higher and energies are lower.

ADM delivered a fresh 279 contracts of soybeans against the expired November contract with an additional 65 redelivered. ABN AMRO was the stopper of 292 contracts. The good deliveries may suggest crushers have bought more than adequate supplies of soybeans on the recent rally. Meal is the big issue as there is still talk of switching additional export sales to South America. Soybean crushers are now reporting that they have 6 to 8 weeks of ownership and there is also more farmer selling of corn as harvest comes to an end.

October NOPA crush will be released today at 11:00 AM CST. Trade estimate is 150.8 million bushels and a 127 million pound decline in soyoil stocks for the month of October.

Weather forecast tends to be a little wetter as US farmers try to finish row crop harvest.

The CFTC commitment of Traders report showed managed money increased their long position is corn by 23,134 contracts and increased their long positions in soybeans by 22,656. They were net buyers in meal and sellers in soyoil. They remained short 31,135 contracts of wheat which had little change.

On Friday funds were estimated to have bought a net 5,000 wheat contracts, sold 2,000 corn, sold 11,000 soybeans, sold 6,000 soymeal and bought 2,000 soyoil contracts.

(Reuters)-- President Obama edged closer to describing Russia’s military incursions in Ukraine as an invasion, saying on Sunday that the Western campaign to isolate Moscow would continue, though additional sanctions were unnecessary for now.

Update - Morning Coffee Commentary:

Packers had to pay $3.00 to $4.00 higher for cattle late on Friday. Product is not keeping up with the value needed to improve packer margins. Beef cutout values were mixed with choice up .81 and select down .64. CME Feeder Index is 239.83.

Lean hog futures were up last week while hogs weights are running above a year ago. Hog slaughter last week was less than a week ago due to the Veterans Day holiday however weights are still above last year. We expect a big slaughter this week ahead of Thanksgiving. Pork cutout is down .31.

Markets as of 5:30 AM CDT           

  • Dec Corn   -2         
  • Jan Beans   -3 1/2     
  • Dec Wheat   -2 1/4
  • Dec Soymeal -4.00
  • Dec Dlr     .14
  • Dec S&P   -6.00
  • Dec Crude  -.52
  • Dec Gold   -4.20

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Closing Prices Today Impact Bias Next Week!

Nov 14, 2014

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

Traders Focus: Export sales data, Fund buying, Meal spreads, November contract last trading day and “end of week” technical patterns.

Grain markets are giving back some of this week’s gains while the Dollar is testing contract highs and crude oil is steady.

As of yesterday's close, Dec corn is up 19 cents for the week, Jan soybeans are up 17 cents, and Dec wheat is up 40 cents. One can search for changes in fundamentals to justify the strength in futures and come-up empty. However, the gains have to be attributed to money flow, could it be money leaving the energy complex moving into grains?

Funds are estimated to have bought a net 7,000 contracts of wheat, bought 14,000 corn, bought 4,000 soybeans, sold 3,000 soymeal and sold 1,000 soyoil contracts on Thursday.

The volatility in soybean complex suggests uncertainty and chart watchers will be looking for the weekly close to set the stage for next week. Corn is set to have the highest close since mid-July.

On Monday’s USDA Supply and Demand report, the corn for ethanol estimate was raised by 25 million bushels to 5.150 billion bushels which would be 0.3% increase over last year. Since the start of the 2014/15 marketing year which began September 1 the pace is 4% over last year. Processing margins for ethanol plants are still positive suggesting the reason for the strong pace.

Weekly Export sales data will be released this morning at 7:30. Trade estimates are: corn 400,000 to 600,000 tonnes, soybeans 1,100,000 to 1,300,000 tonnes, soymeal -100,000 to 100,000 tonnes, soyoil 10,000 to 20,000 tonnes and wheat 250,000 to 400,000 tonnes.

Update - Including Export Sales Results:

On their November report, the FSA acreage numbers are typically 96.8% of the NASS total in corn, 98.3% for soybeans, and 95.3% for wheat. This year's FSA November numbers are 94.5% for corn, 96.7% for soybeans, and 94.1% for wheat of the acreage numbers USDA used on their latest Supply and Demand Report. Watch for more revisions in January.

(Reuters) - Farmland values in the central U.S. Plains held mostly steady in the July-September quarter compared to a year ago, with land prices and loan demand generally tracking commodity price trends, the Federal Reserve Bank of Kansas City said on Thursday.

Rail shipments of oil and petroleum products in the U.S. rose 13.4% in the 10 months through October from the year-earlier period, according to the U.S. Energy Information Administration.

“According to very preliminary information, around 30 percent of crops are in the risk zone. These are crops that were sown too-late, in the second half of October,” says the head of agriculture at Ukraine’s state run weather center.

Canadian pig farmers will not be able to resume meat supplies to Russia after the food embargo is lifted as Rosselkhoznadzor, the Russian Federal Service for Veterinary and Phytosanitary Supervision, is imposing a ban on Canadian pork imports from 14 November, privately-owned Russian news agency Interfax reported, adding that US poultry suppliers may soon share the same fate.

Livestock traders should take a look at the indirect relationship between live cattle futures and crude oil futures. Call your Allendale Representative if you would like to see a chart.

A few cattle have traded in IA at $167 but in general the feedlots are waiting for packer buyers to come looking for cattle. Packer margins have improved slightly but are still deep in the red. CME Feeder Cattle Index is 240.38. Beef values struggle to find strength with choice down .09 and select up .18. Pork cutout values were up .96 at 96.24.

Markets as of 5:30 AM CDT           

  • Dec Corn   -2         
  • Jan Beans   -11 1/4    
  • Dec Wheat   -2 1/2
  • Dec Soymeal -5.80
  • Dec Dlr     .25
  • Dec S&P   .50
  • Dec Crude   -.07
  • Dec Gold   -8.40

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Chart Patterns Signal Caution

Nov 13, 2014

Good Morning! Paul Georgy with the early morning commentary for November 13, 2014 at 5:30 am.

Traders Focus: Spreads in soymeal, Technical reversal in soybeans, outside markets reaction and export sales.

Grain markets are mixed as soybeans find support off of the strength in soymeal. The US Dollar is range bound and energy markets drift lower.

Was Wednesday a blow off top in the soybean complex? The proof will be in what happens the next 2 sessions. Yesterday’s close of 40 cents off the highs in the January soybean contract and settling near the trading range low makes it very important for the bulls to hold their ground going into the weekend. The meal spreads had a huge price swing and settling near session lows, are also showing signs a correction could be possible. Stay in touch with your Allendale Broker for trade ideas.

November soybean futures contract expires tomorrow.

Processors are reporting they now have enough inventories for 4 to 6 weeks of production. Transportation issues are still a concern however the panic seems to be subsiding.

Weekly export sales report is delayed until Friday morning because of Veterans Day holiday.

NOPA Crush data will be released on Monday and trade is expecting to see a significantly lower soybean usage during October due to the transportation problems.

Cash corn and soybean basis bids for spot deliveries were mixed around the Midwest on Wednesday on limited farmer selling.

Informa updates 2015 planting area from prior forecasts of 87.77 corn, 88.51 beans and wheat 56.43 mil acres versus USDA 2014 area of 90.88 corn, 84.18 soybeans and 56.82 mil acres of wheat.

(Reuters) - Soaring prices for U.S. soymeal and slow movement of product domestically has sparked talk of buyers turning overseas at a time when U.S. supplies were expected to dominate the market due to a record harvest. Four shipments of Argentine soymeal are headed to the United States, according to a Buenos Aires-based grains industry source.

In recent weeks Russia has negotiated deals to supply energy to China. It is now believed Russia is in talks with China to supply them grain.

Strategie Grains is forecasting the 2015 EU soft wheat harvest to fall below the 2014 crop by as much as 6.3 mmt.

NATO’s supreme allied commander confirmed The Daily Beast’s report on Wednesday of Russian military tanks, artillery, and combat troops entering eastern Ukraine over the past two days.

Update - Morning Coffee Commentary:

USDA reduced projections for pork production next year by 305 million pounds (-1.3%) which leaves pork output up 4.2% compared to 2014 levels and above 2013 levels. USDA lowered its forecast for beef production in 2015 by 125 million pounds and currently pegs beef output for next year at 23.736 billion pounds, down 3.2% compared to 2014 levels.

The feedlot trade is still a waiting game for packers to come to the market. Their margins are deep in the red and they are willing to be patient. Auction sales of fed cattle are a little higher this week with decent runs. The product is finding support due to the reduced slaughter in recent weeks. Choice beef was up 1.47 and select was up .32. The CME Feeder Index is 240.86. Pork cutout values are down .32.

Markets as of 5:30 AM CDT           

  • Dec Corn   3         
  • Jan Beans   3 1/4     
  • Dec Wheat   -1 1/4
  • Dec Soymeal 5.70
  • Dec Dlr     -.13
  • Dec S&P   6.25
  • Dec Crude   -.32
  • Dec Gold    1.70

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Watch the Money

Nov 12, 2014

Good Morning! Paul Georgy with the early morning commentary for November 12, 2014 at 5:30 am.

Traders Focus: Margin requirements, new CFTC Residual Interest Rule and technical targets

Grain markets are higher on follow through and technical buying.

The CME raised margin requirements on December meal by 25% and traders now have to decide to “put up or get out”. The meal complex has had both spec and hedge positions caught short because of unforeseen logistic issues at a time where processors should be crushing new crop soybeans. No one knows how long it will take to work through this situation.

NOPA Crush data will be released on Monday and trade is expecting to see a significantly lower soybean usage during October due to the transportation problems.

The CFTC Residual Interest Rule comes into effect on Friday November 14th. This rule decreases the time margin requirements have to be met. The Futures Clearing Merchant must capitalize delinquent margin collection which increases the incentive for margin clerks to push the issue of “put up or get out.”

Technical traders are looking at Tuesday’s price action as a breakout and are now setting sights on the $11.00 area in soybeans. However a close below $10.50 in January soybeans could cool the bull’s enthusiasm. The November soybean contract goes off the board on Friday.

Brazilian planting is estimated to be approximately 60% completed compared to 65% this time last year. CONAB pegged Brazilian corn production between 77.3 to 78.9 mmt while USDA currently is estimating 75.0 mmt. CONAB estimates Brazilian soybeans production to be 90.5 mmt compared to USDA at 94 mmt.

US Soft Red Winter wheat crop is at risk due to the early drop in temperature across the Midwest.

The Ukrainian agricultural ministry says farmers have sown 6.3 million hectares of wheat for 2015 which exceeds their earlier forecast by 100,000 hectares.

Update - Morning Coffee Commentary:

Tuesday’s slaughter production of 394,000 head was a little under the analysts guess of 401,000. The lower production is likely due to the Veteran’s Day observance. That gave wholesale pork a little bounce on the afternoon meat report. The question is whether a plant or two trimmed hours due to the snows in the upper Midwest. Pork cutout values were up 1.81 to 95.60.

This week’s cold snap in the Central US has reminded the cattle industry that winter is here. Each winter we typically get two extreme storms between December and February which can set back weight gains. Cattle can deal with gradual declines in cold temperatures but abrupt changes in temperatures can be a problem and even worse when accompanied with freezing rains or heavy snows. Garden City, Kansas saw highs of 79 degrees on Monday which was 20 degrees above normal. Tuesday’s high was 30 degrees below normal. Product is still struggling at the retail counter even with reduced production. Choice beef was up .83 and select was down .72. The CME Feeder Index is 241.21.

Markets as of 5:30 AM CDT           

  • Dec Corn   2 3/4     
  • Jan Beans   12        
  • Dec Wheat   6
  • Dec Soymeal 8.10
  • Dec Dlr     -.12
  • Dec S&P   -7.00
  • Dec Crude   -.64
  • Dec Gold    .80

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First Winter Storm Creates Concerns

Nov 11, 2014

Good Morning! Paul Georgy with the early morning commentary for November 11, 2014 at 5:30 am.

Traders Focus: First winter storm, soymeal basis, crush margins, technical patterns and fund activity.

Grain markets are mixed in quiet trade while the US Dollar continues its march higher.

Harvest progress is 80 complete in corn and 90% complete in soybeans which are in line with trade estimates and the 5 year average.

The USDA surprised trade on yesterday’s report with a national average corn yield of 173.4 bushels per acre which was lower than last month when analysts were expecting an increase. Harvested acres were kept the same as October but when adding in the yield adjustment and making minor increases in demand the US corn ending stocks for 2014/15 were still over 2.0 billion bushel.

The USDA increased yield to 47.5 bushel per acre from 47.1 and increased domestic and export demand which left ending stocks for soybeans at 450 million bushel.

Wheat ending stocks for 2014/15 were lowered by 10 million bushel when USDA reduced harvested acres.

The next report the trade will be waiting for is the NOPA crush data which should confirm slow meal production during October which ignited soymeal basis. Current crush margins are returning double of what processors can expect when calculating results using May soybean futures.

China's consumer price index (CPI) held at 1.6% over a year-ago in October, unchanged from September and the lowest reading since January 2010. China's producer price index (PPI) came in at 2.6% under year-ago last month, the 32nd straight month of lower producer prices than the previous year.

AgRural a consultancy group in Brazil is projecting their soybean planting through Nov 7th was 46% complete versus 59% last year and 29% last week.

Update - Morning Coffee Commentary:

Argentina’s soybean planting remains behind with estimates of 7% of the crop planted vs. 15% normal.

Rains are seen across the northern half of Argentina as well as the majority of Brazil this week before things dry out a bit over the weekend into early on next week. This should be nearly a perfect blend for allowing planting to move along as well as helping the early development of the areas that are already planted. The longer term maps continue to point toward rains returning once again across both Argentina as well as Brazil therefore no threat of dryness taking hold in South America.

Crude Oil continues its downtrend after testing the $80 level in the nearby contract. The US Dollars next resistance is last week’s highs of 88.13.

Cattle futures are reacting to the early season snow forecast for South Dakota and MN which could impact already tight feeder cattle supplies. Beef cutout values are getting some support from the forecast of below normal temps moving into central US. Consumers were stocking up on food supplies over the weekend. Beef values are higher with choice up .03 and select up 1.08. The CME Feeder Index is 241.69.

Allendale’s research is looking for hog supplies to reach their peak seasonal supplies by the end of December however heavier weight will likely push pork production over a year ago level. Lean hog index has now fallen to levels not seen since January 2014. Pork product was down .95 on Monday.

Early calls may suggest a steady higher opening.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   - 3/4      
  • Jan Beans   - 3/4      
  • Dec Wheat   -3 1/4
  • Dec Soymeal 2.60
  • Dec Dlr     .08
  • Dec S&P   2.00
  • Dec Crude   -.22
  • Dec Gold   -4.10

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USDA Supply & Demand Analysis

Nov 10, 2014

For complete analysis on the USDA report, check out our USDA report page.

Trade Prepares for USDA Report

Nov 10, 2014

Good Morning! Paul Georgy with the early morning commentary for November 10, 2014 at 5:30 am.

Traders Focus: USDA November Supply and Demand at 11:00 AM.

Grain markets are quiet on light volume ahead of USDA Report. The US Dollar is giving back some of last week’s gains and crude oil bounces to near $80.00 a barrel.

History suggests the USDA will increase corn and soybean yields on this report. The question traders are struggling with is how much?

The following table is traders estimates for U.S. corn and soybean production put together by Reuters.

            Avg Est.     Est. Range      USDA OCT

CORN

Production    14.551  14.242-14.842       14.475    

Yield        175.233    171.4-178.6        174.2

SOYBEANS

Production     3.967    3.903-4.064        3.927

Yield         47.608      46.8-48.7         47.1 

-------------------------------------------------

USDA 2014/15 U.S. grain and soybean ending stocks

      Average of     Range of    USDA Oct.

       analysts'    analysts'      2014/15

       estimates    estimates   end-stocks

Wheat      0.660  0.634-0.682        0.654 

Corn       2.135  1.850-2.282        2.081

Soybeans   0.442  0.403-0.513        0.450

The USDA Weekly crop progress is out this afternoon. Corn harvest expected to be 80% complete compared to 79% average while soy harvest could be 93% complete vs. 92% average.

Weather forecasst keeps snow possibilities to the north and open harvest conditions for most of the cornbelt this week.

Meal basis is hanging tough although barge and rail lease rates seem to be eroding.

Barclays Capital says total global commodity assets under management fell to $286 billion at the end of October from $295 billion at the end of September.

Last week managed money funds were big buyers in the grains and oilseeds. They increased their positions in corn by 21,885 contracts to 163,673 net long. They increased net longs in soybeans, soymeal and soyoil by 10,000 to 14,000 contracts. They reduced short positions in wheat by 11,763 contracts.

Update - Morning Coffee Commentary:

Cash cattle ended the week 1.00 to 2.00 lower than last previous week in the Southern Plains and dressed trade was 2.00 to 3.00 lower in NE. Beef values were mixed with choice down 1.41 and select up .82. Beef demand at the retailer counter is being pushed back by the cheaper pork and poultry. The CME Feeder Index is 240.54.

Hog slaughter last week was the largest since mid-January. Slaughter ran 2.4% under last year but due to higher weights pork production was only 1.3% smaller. Pork cutout values are down .56. December lean hog resistance crosses at the 20 day moving. Support is last week’s low.

Early call is steady higher based on follow through from Friday.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   -1         
  • Jan Beans   3 1/2     
  • Dec Wheat   -1 1/2
  • Dec Soymeal 3.60
  • Dec Dlr     -.34
  • Dec S&P   2.25
  • Dec Crude   1.05
  • Dec Gold   -.08

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Soymeal Logistics Takes Center Stage

Nov 07, 2014

Good Morning! Paul Georgy with the early morning commentary for November 7, 2014 at 5:30 am.

Traders Focus: Fund activity in meal, weekend harvest progress, Monday’s Supply and Demand Report and Unemployment data this morning.

Grain markets are mixed with soybean complex higher, corn and wheat lower.

The soybean crush margin is leading soybean demand as harvest winds down. Currently crush margins are very lucrative for processors. However moving the product is still a logistical nightmare. The great margins are allowing soybean bids to stay strong even with harvest winding down. Is this a gift for making cash sales? Call your Allendale Broker to find least cost ownership methods.

Corn futures are gaining support from the soybean complex and technical patterns.

Traders are making some final adjustments to positions ahead of the USDA November supply and demand report due to be released on Monday at 11:00 am.

Trade average estimate for corn production on Monday’s report is 14.551 billion bushel compared to USDA last month of 14.475 billion bushel. Soybean production average estimate is 3.967 billion bushel compared to 3.927 billion bushel from the USDA’s October report.

The corn yield average trade estimate is 175.23 verses USDA’s last estimate of 174.2. Trade is expecting the soybean yield to increase about .5 to 47.6 bushels per acre from the USDA’s October estimate of 47.1 bushels per acre.

Traders are expecting corn ending stocks to rise compared to last month while soybean ending stocks are expected to decline.

Argentina cabinet chief Jorge Capitanich said they have authorized the export of 8 million tonnes of corn and 1.5 million tonnes of wheat and wheat flour.

US exporters now have sold 43% of USDA's whole-year goal for corn posted on their October supply and demand report. Normally we have 47% of the goal sold by now. The US has sold 77% of USDA's whole-year export goal for soybeans. The normal pace is 66%. USDA will likely increase exports on Monday’s monthly supply/demand report. Soybean meal had net cancellations yesterday but we have sold 58% of USDA's whole-year goal when the normal pace is 41%. Wheat is right at normal sales pace to reach USDA’s goals.

The U.S. Climate Prediction Center on Thursday projected a 58 percent chance of El Nino developing during the Northern Hemisphere winter, reducing its outlook for the likelihood of the weather phenomenon in its monthly report.

Update - Morning Coffee Commentary:

Wendy’s, the hamburger chain on Thursday reported a lower-than-expect profit for its third quarter, noting that beef costs were "much higher than our initial projections."

Packer bids are slow to develop this week as their margins remains well over $100 per head in the red. The battle between tight supplies of market ready cattle and the demand for beef at the retail counter will play out over the holiday season. Cheaper energy prices should provide more spendable income however early indications are that money will go to holiday shopping instead of beef. Product values are mixed with choice down .72 and select down .87. The CME Feeder Index is 240.36.

Lean hog futures and the lean hog index continue to work closer together. Pork product is seeing increased featuring at retail stores simply because of its price advantage. Pork cutout values are down .59.

We will call the livestock steady to higher this morning.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   -2         
  • Jan Beans   8         
  • Dec Wheat   -4 3/4
  • Dec Soymeal 2.50
  • Dec Dlr     -.02
  • Dec S&P   -.50
  • Dec Crude   .23
  • Dec Gold    2.20

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Bulls Looking For Big Exports

Nov 06, 2014

Good Morning! Paul Georgy with the early morning commentary for November 6, 2014 at 5:30 am.

Traders Focus: Fund activity, export sales and position adjusting ahead of Monday’s report, and harvest progress.

Grain markets are lower ahead of export sales data. Traders will be watching for meal cancelations or switching due to current logistics issue on today’s report.

Weekly export sales data will be released at 7:30 this morning. Trade estimates are: for wheat 325,000 to 525,000 tonnes, corn 600,000 to 800,000 tonnes, soybeans 900,000 to 1,000,000 tonnes, soymeal 100,000 to 250,000 tonnes and soyoil 5,000 to 30,000 tonnes.

As producers see the possible end to harvest they are looking for storage or places to go with extra bushels. The recent decline in futures has seen farmer selling come to a halt with hopes of a better price next year. We recommend talking to your Allendale representative and working on a plan for your least cost ownership.

Trade average estimate for corn production on Monday’s report is 14.551 billion bushel compared to USDA last month of 14.475 billion bushel. Soybean production average estimate is 3.967 billion bushel compared to 3.927 billion bushel from the USDA’s October report.

The corn yield average trade estimate is 175.23 verses USDA’s last estimate of 174.2. Trade is expecting the soybean yield to increase about .5 to 47.6 bushels per acre from the USDA’s October estimate of 47.1 bushels per acre.

Traders are expecting corn ending stocks to rise compared to last month while soybean ending stocks are expected to decline.

Chinese traders are trying to downplay the potential problem with bird flu going into the winter. There also are reports that China is going to import 5 mmt of canola this year which would compete with soy demand. Their soybean crush margins have deteriorated over the last few weeks.

Funds rolling positions out of the Dec 14 contract could impact spreads over the next 10 days. The Deutsche Bank Index roll is from Dec 14 to Dec 15 contracts while the Goldman Index roll is from Dec 14 to Mar15 contracts.

Funds are estimated to have bought a net 9,000 corn contracts, 6,000 soybeans and sold 4,000 wheat contracts on Wednesday.

Update - Including Export Sales Results - Morning Coffee Commentary:

Macro markets are waiting for the Initial Jobless Claims today at 7:30 and the Unemployment data tomorrow morning at 7:30 am.

The values of pork and beef exports are again exceeding last year’s level with the beef export value gaining almost 25% in September. Total pork exports were 10.8% less than September of last year.

Retailers are expected to begin featuring pork at the expense of beef. Pork supplies are increasing and product prices have fallen. Holiday featuring of turkey and hams will eat into beef demand.

This week fed cattle at auction barns are $3.00 to $4.00 lower than last week. Packer margins are still in the red which is forcing them to hold out as long as possible before bidding. Beef values are mixed with choice up 1.10 and select down .37. The CME Feeder Cattle Index is 239.99.

In China the domestic pig price has declined to below RMB14.0/kg and feeding margins are now below the breakeven in some areas despite lower corn prices. Increasing hog numbers the US and heavier weights continue to fuel further fund liquidation. Pork Cutout value is up .22.

Livestock futures early call would be steady to lower.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   -1 1/2     
  • Jan Beans   -6 1/2     
  • Dec Wheat   -2 1/4
  • Dec Soymeal -1.50
  • Dec Dlr     -.21
  • Dec S&P   -2.50
  • Dec Crude   -.31
  • Dec Gold   -.03

Technical Chart of the Day

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Dollar Rallies On US Election Results

Nov 05, 2014

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

Traders Focus: Election results, changes in weather forecasts, Fridays employment data and trade estimates for Monday’s USDA report.

Grain markets are lower on harvest pressure and strong dollar. The hopes of easing Washington gridlock has traders support the US currency and equities this morning.

Allendale Inc.’s soybean yield estimate is 48.0 bpa compared to the USDA’s 47.1 on the October report. Despite higher new crop soybean production we have lower ending stocks than USDA. All categories of demand will end better than USDA’s October estimate.

Allendale will leave our corn yield estimate of 175.7 bpa unchanged from last month, the USDA in Oct used a yield of 174.7. We expect feed/residual to be 25 million bushel higher than USDA on the October report. Though exports are behind the pace needed to hit USDA’s October estimate we assume they will end 25 million bushel higher.

Informa’s estimate is 176.4 bushels per acre for corn and 48.4 bushels per acre for soybeans.

Spot corn and soybean basis bids were steady to higher around the Midwest on Tuesday due to slow farmer selling following a steep drop in futures prices.

(Reuters) - Delays planting Brazil's soybean crop this year could result in a reduction of the country's corn harvest and lead to traffic and loading jams at ports, farm and trade representative said on Tuesday, even if they have little impact on final soy output.

As of Friday, Brazilian farmers had planted only 29 percent of their expected soy acreage, after a period of dry weather, according to AgRural, a Brazil-based agricultural consultancy. A year earlier farmers had planted 48 percent.

China's crackdown on agricultural smuggling has uncovered 487 cases with a tax evasion value of 7.1 billion yuan ($1.16 billion), a rise of 71 percent in the past year, said the central government in a report on its website (www.gov.cn).

Update - Morning Coffee Commentary:

An indefinite strike over the use of non-union workers has begun at a Cargill soy-crushing plant in Argentina's Rosario grains hub, halting a daily crushing rate of about 12,000 tonnes of beans.

Macro traders are looking for a 230,000 job gain on Friday’s employment report versus a 236,000 job gain in September.

Goldman roll officially starts on Friday and will run for 5 days.

Hong Kong imports of live chicken from the mainland China are being strictly monitored and the government is greatly concerned about H7N9 bird flu, the health secretary said after a third human H7N9 case was reported by mainland health authorities.

Retail demand for meat is expected to run into some resistance as retailers begin to feature turkey as the Thanksgiving holiday approaches. Beef values are under pressure due to slow retail demand and possible product backup at some stores. Choice is down .59 and select is down .91. The CME Feeder Index is 240.17. Futures contracts are consolidating as traders wait for cash sales.

Lean hog futures can’t put a rally together as hog runs increase, weights are heavier and the fund long liquidation seems to be continuing. Pork cutout values are down 2.27.

Livestock futures early call would be steady to lower.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   -4         
  • Jan Beans   -12        
  • Dec Wheat   -4 1/4
  • Dec Soymeal -3.10
  • Dec Dlr     .49
  • Dec S&P   7.00
  • Dec Crude   -.35
  • Dec Gold   -.23.7

Technical Chart of the Day

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Harvest Progress Moves Toward Normal

Nov 04, 2014

Good Morning! Paul Georgy with the early morning commentary for November 4, 2014 at 5:30 am.

Trader's Focus: Election Day results (be sure to cast your vote), meal spreads, Funds rolling out of December contracts and crude oil weakness.

Grain markets are lower lead by harvest progress and risk-off attitude in outside markets.

Last week’s weather allowed farmers to increase soybean harvest by 13% to 83 complete versus the average of 83%. Indiana and Ohio are still running behind average although made great progress last week. Corn harvest went from 46 to 65% complete in one week, however, is still behind the average of 73%. Producers are saying it is taking longer because they have to deal with finding storage for the extra bushels as well as handling the large volume of grain. Winter Wheat planting progress has now reached 90% which is normal for this time of year.

The weekly export inspections showed large soybean shipments last week of 2,770,977 tonnes compared to 2,247,207 tonnes last year. Corn export shipments were 425,856 tonnes versus a year ago for same period of 796,414 tonnes.

Update - Morning Coffee Commentary:

Allendale will release their production estimates for next Monday’s USDA report later this morning. FC Stone’s estimate put corn yield at 178 and soybean yields at 48.4. Informa is expected to release their numbers at 10:30 today.

Ethanol producers struggle with profit margins as crude oil price fell and corn rallied during October. An index compiled by ISU shows ethanol's operating margins have shrunk from over $2 a gallon briefly this spring to less than 20 cents.

The US Dollar set new highs and the commodity index is at the lowest level in 5 years.

There is talk that last week’s grain market rally was fueled by a hedge fund blowing out of their short positions and possibly commodities altogether but no confirmations. The Goldman Roll starts this week which means they will be moving position out of the Dec contracts at CBOT.

On Monday, funds were estimated to have sold a net of 8,000 contracts in soybeans, 4,000 in corn and bought 4,000 wheat contracts.

Cattle futures are starting the week with ideas cash will trade higher. Cattle showlists were down 16,000 head this week. However, packers are resisting the higher feeder prices because their profit margins are projected in the red by more than $100 per head. Beef cutout values are mixed with choice down .47 and select up.77. The CME Feeder Index is 240.25. Chart watchers will be looking at Mondays low in cattle as support, a close into new lows could trigger more selling.

Lean hog supplies are expected to be increasing as the year end approaches. Pork production will likely exceed year ago levels. As colder weather approaches, traders will be waiting for news of any PEDv case increases. Expect more sideways trade in the pork complex. Pork cutout values are up .43.

Livestock called steady lower based on risk-off attitude of outside markets.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   -5         
  • Nov Beans   -9 1/2     
  • Dec Wheat   -4
  • Dec Soymeal -1.90
  • Dec Dlr     -.14
  • Dec S&P   -3.25
  • Dec Crude   -2.11
  • Dec Gold    2.70

Technical Chart of the Day

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Strong Dollar and Profit Taking Stalls Grain Rally

Nov 03, 2014

Good Morning! Paul Georgy with the early morning commentary for November 3, 2014 at 5:30 am.

Traders Focus: Soymeal premiums, crop production estimates for next week’s report, harvest progress and first of month fund buying.

Grain markets are lower on profit taking and harvest progress. The Macro markets are creating headwinds for grains as the dollar is up sharply.

Weather doesn’t appear to be an issue with harvest in the US or for row crops in South America.

The problem in meal is not on the production side but rather the lack of transportation to get it to where it is needed. This problem will works itself out, however, the debate is how long it will take. More talk of meal being switched to Argentina where values are cheap enough. There are also calculations that suggest Argentina meal could be brought into the US.

Trade is looking for corn harvest to be 58 to 60% complete verses 46% last week and 73% average. Soybean harvest is expected to be 80% complete verses 70% last week and 85% average. Brazil soy planting advances to 22% completed verses 46% average with Mato Grosso at 41% versus 55% average.

Private forecasters will be releasing their estimates on crop production for the Nov 10th USDA report. FC Stone is expected this afternoon after the close and Informa is expected out tomorrow morning.

The CFTC Commitments of traders report showed managed money funds were big buyers last week which should not be too much of a surprise. They added 14,836 contracts to their corn position, 24,719 to soybeans to make them net long 8,069 contracts, and they were net buyers of 7,767 contracts in wheat.

Update - Morning Coffee Commentary:

Macro markets will be watching the results of the US elections on Tuesday.

Each month the Bureau of Economic Analysis releases various statistics about consumer behavior. In the meat world we look at the Personal Income and Outlays data with a fine tooth comb. Last Friday’s release of data for the month of September came with some mixed findings. Their data indicated per capita disposable income ran 1.8% over September of last year’s. This was a slight drop from the 2.0% year over year growth reported for August.

Cash cattle were actively traded on Friday at $168 which is $2 lower than last week. That would be considered a disappointment considering trade talk was for steady to a $2 increase. Packers cut production last week as the run was 11% lower than last year but weights were up which lead to a net beef production of 9% less than last year. Packer’s margin has been deep in the red during the month of October with beef values dropping further on Friday. Choice was down 2.15 and select was down .78. The CME Feeder Index is 239.95.

Last week’s hog slaughter production was 2.183 million head, the largest this fall. Slaughter was 3.8% under last year and pork production was down only 1.9% from last year due heavier weight. Pork cutout values were down .33 on Friday.

Early calls for livestock would be steady lower.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   -2 1/4     
  • Nov Beans   -7 3/4     
  • Dec Wheat   -3 1/2
  • Dec Soymeal -4.30
  • Dec Dlr     .26
  • Dec S&P   -1.25
  • Dec Crude   .22
  • Dec Gold    .20

Technical Chart of the Day

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End Of Month Positioning Sets Stage For Volatility

Oct 31, 2014

Good Morning! Paul Georgy with the early morning commentary for October 31, 2014 at 4:50 am.

Traders Focus: Soymeal spreads, outside markets such as dollar, harvest progress in US, weather in South America and end of month book squaring.

Grain markets are mostly higher lead by meal in the soybean complex. Dollar surges higher to test early October highs.

Over the past few weeks, the meal shortages due to congestion on the nation's rail lines, had some end users double booking (both train and truck) deliveries of meal in the hope that at least one would arrive on time.

After yesterday’s trade many were thinking the problem in meal may have run its course.

However, U.S Gulf soybean basis were higher on Thursday afternoon as China and domestic processors continue to compete for newly harvested soybeans. Midwest basis was steady for soybeans while corn basis was lower at a few locations. Farmers are still resisting selling as they fill bins and look for storage.

Funds were estimated to have bought a net 2,000 wheat contracts, sold 4,000 corn, sold 9,000 soybeans, sold 6,000 in soymeal and bought 2,000 in soyoil.

Weather conditions in South America suggest the majority of the growing areas will get significant moisture over the next 7 to 10 days. Some are trying to spin this as positive to the market as it will delay planting. However, our observers are looking at this pattern as helpful for crop production.

Update- Morning Coffee Commentary:

Safras e Mercado says as of Oct. 1, Brazilian farmers had sold only 12% of the projected 2014-15 soybean crop down from the average of 31% sold at this time over the last five years.

Fall Crop Insurance Discovery Price (Average of Dec corn and Nov beans during Oct):  Corn: $3.50, Soybeans:  $9.66.

After a volatile week a few key chart points for the Macro markets: the Dec Dollar has resistance at the early October high of 86.87. A close above that level could trigger more buying and have a potentially negative effect on agricultural markets. The Dow futures set new all-time highs overnight. Key support in Dec crude oil comes in at 79.44.

Reminder: the October contract of live cattle stops trading today at 12:00 today. The trading limit today for the October contract is $5.00. All other contracts trading limits remain the as is $3.00.

USDA reported eggs set in the latest week at 102% of a year earlier with chicks placed 104% of last year, up from 102% last week.

Cattle bulls are very happy with the slew of good news on the economy released as the Consumer confidence and the FOMC news indicated continued economic recovery. The first guess of the past quarter’s GDP numbers came in better than expected at a 3.5% year/year growth (3.0% expected).<