The Allendale Wake-Up Call

Good Morning! Paul Georgy with early morning comments for May 23, 2012 at 5:10 am. Thanks to all who attended the Ag Leaders Webinar Live! If you have any unanswered questions give us a call or email. Corn and soybean futures are mostly lower led by wheat. Rains in Russia and strength in the dollar seem to be the catalyst for lower prices this morning. Weather models turned wet for next week in the Midwest and the dome of heat disappeared in the 10 to 15 day model runs. The heat this weekend will last only a few days. The fact that various models are agreeing on good moisture coverage of the Corn Belt that far out is providing selling pressure from the trade. Yesterday grain traders were hit with unconfirmed rumors such as China possibly canceling or rolling purchases of corn and possibly a large fund liquidating positions and shutting down. China will auction 600,000 tonnes of reserve soybeans on Thursday. We are starting to hear HRW yields out of TX and OK which are termed as good. Next week harvesters should get into southwest KS where yields are expected to be poor. There are reports coming out of Brazil putting next year’s bean production at 80 mmt vs. 65 mmt this year for Brazil. Several grain contracts closed below major moving average support levels. A strong close will be needed today negate the trend. The macro market is very concerned about the Euro situation as government leader’s change and austerity plans come into jeopardy. We should be in for more volatility through the balance of the week especially with a holiday on Monday and markets will be sensitive to weather forecasts. Boxed beef values were mixed on Tuesday, choice was down .31 and select was up .57. Fill-in buying for holiday featuring by retailer should be complete and likely will pressure beef values for balance of the week. Cash cattle markets are still at a standoff as packers will need fewer cattle next week. Cold storage numbers were larger than expected for beef and pork. Check out detailed analysis in yesterday’s livestock report. Pork cutout values were down 2.09. Check out the Allendale "Morning Coffee" on YouTube at 8:00AM.

 

Tuesday’s failure below the 5/16/12 $12.82 ¼ low opens up the prospect for an epic collapse in pricing in the weeks and months ahead. With no technical levels of substance coming in to play to support this market until the double bottom that was created in late November early December at $11.15 ¾ and $11.19 1/2 . If producers have not begun to price Nov. Beans action should be taken immediately.

In the first crop rating of the year, USDA indicated 77% of the nation’s corn crop was rated as either good or excellent. That was far above the average guess of 70% among analysts. Corn planting is virtually complete at 96%.

Contact Allendale: 800-262-7538 research@allendale-inc.com www.allendale-inc.com

 

Good Morning! Paul Georgy with early morning comments for May 22, 2012 at 5:10 am. Corn and soybean futures are lower on crop progress and profit taking. Tonight is Allendale’s Ag Leaders Webinar. Rich Nelson, Mike Kavanaugh and Frank LaPlaca will examine dry weather’s effect on crop conditions, grain acreage shifts and chart pattern price projections. You must register HERE to join meeting! The USDA gave us the 5th highest corn good to excellent conditions rating in the last 26 years. In the four years where we started with better conditions than this year there was an even split on yields above and below trend at year end. Planting progress in soybeans were 76% complete compared to 68% expected by trade. Weather forecasts are expected to dominate headlines and direction of futures as we approach the long weekend ahead. World Weather Inc.: "The bottom line leaves pressure on rainfall potentials for next week in the Midwest, Delta and southeastern states where the need for rain will be great after this week’s net drying. Some relief is most definitely anticipated, but how significant the rain is next week will be debated for a while..." Elevators are struggling with cash bid posting as settlement prices at CME are from 1:15 and markets trade until 2:00 pm. Reports that ag option traders are lobbying CME to extend option trading times from 7:20 am to 1:15 pm. The next USDA monthly supply and demand report is due to be released at 7:30 am on June 12. We hope things get settled by then. EU tensions have cooled off  but Merkel’s party in Germany is losing ground in upcoming elections. Cash cattle buyers will be looking at the short week ahead and will not need as many head. Fill-in buying for Memorial Day supported choice beef on Monday as prices were up 2.08 with select down .09. Pork cutout values were up .21. Hog futures were hit with bear spreading as firmer corn prices reduce profitability for producers. Check out the Allendale "Morning Coffee" on YouTube at 8:00AM.

 

Monday’s trade in July Wheat fell short of taking out the 10/11/11 high of $7.30 1/2.  A close above the $7.30 ½ high creates a scenario in which the cap that has been on July Wheat for the past 7 months. A close below $6.60 would be needed to break the uptrend.

Between May 8 and May 15, Managed Money made the follow position changes in contracts…corn -34,656, soybeans -12,240, wheat -3,870, hogs +1,776, and cattle +1,334. Official stats for the move since last Tuesday have yet to be released.

Contact Allendale: 800-262-7538 research@allendale-inc.com www.allendale-inc.com

 

Good Morning! Paul Georgy with early morning comments for May 21, 2012 at 5:10 am. Corn and soybean futures are mostly higher but well off the overnight highs. Memorial Day is normally known as the kick-off for cookout season and with the action in grain prices on Friday and overnight we have officially begun weather market season. World Weather Inc. said in last evening’s report, "the bottom line remains one of building concern over dryness in the southern and eastern Midwest during the next two weeks. Much pressure will be on the next week’s mid- to late-week rain event and because it is so far out in the forecast it must be viewed cautiously. Crop moisture stress is already an issue in southeastern Missouri, southern Illinois, extreme southwestern Indiana, Kentucky and areas southward into the Delta. Rainfall this week will be minimal in the region and that will likely maintain a need for significant rain. Some partial relief from dryness is possible today and Monday as scattered showers and cooler air move into the drier areas, but the relief will be quite limited and stress will be back again later this week and last into next week." The USDA will gives us the first crop conditions for corn this afternoon which will be watched closely by the trade. CFTC Commitment of Traders Report released on Friday showed funds liquidated another 38,000 corn contracts to put their lowest net longs to level not seen since 2010. The Greek elections will not be held for about a month but the Euro situation remains tense. Cattle on Feed report on Friday should support cattle futures this morning. Choice beef was up 1.41 and select was up .73 on Friday. Pork cutout values were down 1.20. Look for steady higher open for livestock. With the volatility in the Grain markets there is plenty of reason to attend the Ag Leaders Webinar  tomorrow evening, May 22. Join Rich Nelson, Allendale's Director of Research, as he examines potential grain acreage shifts and their impact on supply and futures ahead of USDA's big Grain Stocks report in June. We also will have Mike Kavanaugh, Agronomy Manager of AgriGold, to examine crop conditions and their corresponding yield potential. Frank LaPlaca will examine chart price projections. Register HERE!

 

Check out the Allendale "Morning Coffee" on YouTube at 8:00AM.

 

Friday’s impressive trade in the Dec. Corn has created a base and reversal environment. While still capped by the down trendline these levels should be used to price further unprotected production.

Weather is now at the forefront of trade discussion. As noted above, no significant rain will be seen in most areas. Combined with above normal temps, we’re starting to see a weather story which helps counter trader uncertainties tied to Greece and the Euro.

 

 

Contact Allendale: 800-262-7538 research@allendale-inc.com www.allendale-inc.com

 

Good Morning! Paul Georgy with early morning comments for May 18, 2012 at 5:10 am. Corn and soybean futures are lower. Watch for export sales announcements from USDA at 8:00 am. As we close out the week there are many factors driving market volatility in grains. Weather is dry in Russia and the western portion of the Southern US plains. Macro markets are very much on edge with Greece and the Euro situation. The NATO meeting in Chicago has traders reducing position size and some may not come to work on Monday. The option volume in the pits on the CBOT trading floor is still very important for market liquidity. The CME is still working on starting the expanded hours on Sunday but there is a greater probability it will begin on Sunday June 3. We will be waiting for an official announcement sometime today. Technical traders want a strong close for the week above key moving averages. Headline excitement will be needed to continue feeding the rally. Cattle futures have put together a string of positive days as traders expect cash markets to trade higher this week. Choice beef was up .12 and select was up .73. Pork cutout values were up 0.75. Cattle futures will likely see some two sided trade today ahead of "Cattle on Feed" report at 2:00 pm. Don’t forget to sign up for the Ag Leaders Webinar on May 22, 2012. Join Rich Nelson, Allendale's Director of Research, as he examines potential grain acreage shifts and their impact on supply and futures ahead of USDA's big Grain Stocks report in June. We also will have Mike Kavanaugh, Agronomy Manager of AgriGold, to examine crop conditions and their corresponding yield potential. Frank LaPlaca will examine chart price projections. Register HERE!

 

Check out the Allendale "Morning Coffee" on YouTube at 8:00AM.

 

Thursday’s strong close in the wheat market above the $6.55 ½ cluster high and down trend line that has capped the wheat market for the past 8months. Has created a base and reversal environment in which a neutral stance is advised in the near term. A close above the $6.80 ½ cluster high would confirm a new uptrend.

The government’s weather group, NOAA, gave its monthly update on long term weather this morning. Their previous forecast, for May – July called for normal temps and normal precip. The new forecast, for June – August, calls for normal temps for the main growing regions and normal precip.

Contact Allendale: 800-262-7538 research@allendale-inc.com www.allendale-inc.com

 

Good Morning! Paul Georgy with early morning comments for May 17, 2012 at 4:10 am. Comments are a little early this morning as I have to catch a flight to New York for the day. Corn and soybean futures are lower. Spreading old crop versus new crop and weather has taken the bite out of the bear. Large volume of spreads was done in corn beans and wheat yesterday. Dry conditions in Russia and Kazakhstan are becoming more serious as well as the western portion of the southern plains in the US. Large traders have been heavily short wheat. Until rains arrive, expect more short covering. Grains have been separating themselves from the chaos in the EU. Watch the headlines for further downgrades in investor confidence. CME grain trading hours will not change on Sunday. The CME withdrew the request for 22 hrs. sessions and will likely ask for a 21 hrs. session starting at 5:00 pm running through 2 pm the following day. Weekly export sales estimates for this morning are soybeans 1.0-1.3 mmt, soymeal 150-200 tmt and soyoil 30-50 tmt. Corn export sales are expected to range from 800 tmt-1.2 mmt. Wheat sales estimate is 450-750 tmt. Cattle on Feed report due to be released on Friday afternoon at 2 pm. Trade average estimates are for on feed to be 100.3%, placed 88% and marketed 98.4 of a year ago. Boxed beef values were lower and trading of cash cattle remain at a standstill. Choice beef was down .63 and select was down 1.98. Pork cutout values were lower by .31 on Wednesday. Trader will be further adjusting positions ahead of Friday’s report. Don’t forget to sign up for the Ag Leaders Webinar on May 22, 2012. Join Rich Nelson, Allendale's Director of Research, as he examines potential grain acreage shifts and their impact on supply and futures ahead of USDA's big Grain Stocks report in June. We also will have Mike Kavanaugh, Agronomy Manager of AgriGold, to examine crop conditions and their corresponding yield potential. Frank LaPlaca will examine chart price projections. Register HERE!

 

Check out the Allendale "Morning Coffee" on YouTube at 8:00AM.

 

Wednesday’s continued strength in the US Dollar is a direct reflection of the panic in the Euro Zone. The steepness of the uptrend shows the flight to safety from the Euro to the US Dollar.

The China National Grains and Oils Information Centre expect corn production this year to total 197.5 million tonnes. This would surpass USDA’s estimate of 193 mmt and last year’s 191.75. Soybean production is seen at 13 mi. This is right on USDA’s 13.1 estimate and little changed from last year’s 13.5. Wheat production is expected at 120.3 mmt that is right on USDA’s 120.0 and a little above 117.92 last year.

 

Contact Allendale: 800-262-7538 research@allendale-inc.com www.allendale-inc.com