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.
 

 

Pre-Holiday Profit Taking Strikes Grains

Dec 19, 2014

Good Morning! Paul Georgy with the early morning commentary for December 19, 2014 at 5:30 am.

Traders Focus: Holiday trading, stock market, and outside market investor attitude.

Grain futures are lower on pre-holiday profit taking. The Dollar, crude and stock indices are all higher this morning.

Russia continues to tighten exportable supplies of wheat in an effort to control internal inflation. However with the recent price rally in wheat other countries should be able to fill the worlds demand.

The USDA's Office of the Chief Economist estimated that corn plantings would come in at 88.0 million acres in the 2015/16 marketing year, down from 90.9 million the previous year. Soybean acreage was seen falling by 200,000 to 84.0 million acres. Should not have much influence on markets as these are baseline projections used for budget projections.

Argentina's agriculture ministry raised its 2014/15 wheat harvest forecast to 13.2 million tonnes from an earlier estimate of 12 million tonnes due to better-than-expected yields.

Elevators and processors have ample corn and soy inventories while farmer selling is light.

River bid in Illinois for soybeans fell by 10 cents a bushel and some Indiana elevators dropped bids 5 cents a bushel.

Update - Morning Coffee Commentary:

Get a complete 2015 weather outlook and get a head start on next season at our Ag Leaders Conference Series. Get access, here.

Funds were estimated net buyers of 5,000 contracts of wheat, 5,000 corn, 3,000 soymeal and 2,000 soyoil and 5,000 soybeans contracts.

The average price of Iowa farmland slumped 8.9 percent in 2014, the largest annual decline since 1986 as crop prices fell, according to the Iowa Land Value Survey.

Near term beef fundamentals are going to remain sloppy as the remainder of cash cattle trading that still needs to be done will be traded at $157 this week. However an important factor for futures traders is the change in psychology evidenced by the price action on Thursday. Beef were weaker with choice down .46 and select down .81. The CME Feeder Index is 231.42.

It was great to see lean hog futures rally yesterday. From a fundamental viewpoint we can certainly agree that futures are undervalued now. The lean hog index is at $85 and February futures are at $81 implying cash will be sliding farther over the next two months or futures need to rally. Pork cutout values are up .14.

Markets as of 5:30 AM CDT           

  • Mar Corn   -4         
  • Jan Beans   -5 1/2     
  • Mar Wheat   -15 1/4
  • Jan Soymeal -2.0
  • Mar Dlr     .14
  • Mar S&P   3.00
  • Jan Crude   .78
  • Feb Gold    2.40

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

Russia Cuts Loadings, USDA Releases Report Early

Dec 18, 2014

Good Morning! Paul Georgy with the early morning commentary for December 18, 2014 at 5:30 am.

Traders Focus: Export Sales data, USDA long range S D’s, outside markets, and headlines regarding Russia.

Grain futures are higher as Russia decides to cut railway loadings of grain for export. The US Dollar is slightly lower while bargain hunters buy energies.

USDA will post online S/D tables for major crops/livestock through 2024 today at 10 AM central time, rather than waiting until Feb 11. The USDA feels the report is timelier since the numbers are based on the November WASDE report.

Weekly export sales data is due to be released this morning at 7:30. Traders are estimating: corn 650,000 to 850,000 tonnes, soybeans 600,000 to 800,000 tonnes, soymeal 0 to 100,000 tonnes soyoil 5,000 to 20,000 tonnes and wheat 250,000 to 450,000 tonnes.

Get a complete 2015 weather outlook and get a head start on next season at our Ag Leaders Conference Series. Get access, here.

“A full-blown currency and financial-crisis scenario seems to be unfolding in Russia in what was supposed to a quiet week as we head into the holiday season,” said deputy head of research, of Ural Sib Capital a unit of a bank that is the 13th largest consumer lender in Russia.

US Agriculture Secretary has received word that the Chinese government has approved imports of genetically modified Agrisure Viptera corn and two varieties of biotech soybeans.

EIA data shows strong ethanol production again last week. Year to date production is 5% over last year while USDA’s estimate for the whole-year is only 0.3% higher than last year. Current ethanol producer’s profit margins are positive but projections a month out suggest negative returns.

Funds bought an estimated net 12,000 wheat contracts, bought 4,000 corn, were even in soybeans and soymeal and sold 1,000 contracts in soyoil.

President Obama announces a move to normalize relations with Cuba and break down the 50 year trade barrier. This could have a positive impact on agricultural exports however some Democratic Senators are not excited about the idea.

Fed meeting comments showed they were on track to raise rates sometime next year. This proved to be supportive to the dollar and stock market after the announcement.

Live cattle and feeder cattle futures are being hit with heavy selling pressure lead by the feeders. Money flow out of the long side of livestock has left the January feeder contract limit down 5 days in a row. Traders close to the market have differing opinions on whether the feeder will trade today or Friday. Cash cattle traded in moderate volume yesterday at $7.00 to $8.00 lower than last week. Most cattle traded in the 156 to 157 range in the cornbelt on the live basis and 250 to 252 dressed. Beef values are lower with choice down .47 and select down 3.12. The CME Feeder Index is 234.69.

Lean hogs futures are selling off in sympathy with the cattle complex and overall attitude of investor money flow. The discount of futures to cash index is expected to provide support once the smoke clears. Pork cutout values are down 1.74.

Markets as of 5:30 AM CDT           

  • Mar Corn   4 3/4     
  • Jan Beans   5 1/4     
  • Mar Wheat   15
  • Jan Soymeal 2.5
  • Mar Dlr     -.14
  • Mar S&P   22.25
  • Jan Crude   1.56
  • Feb Gold    13.4

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

Focus Remains On Russian Exports

Dec 17, 2014

Good Morning! Paul Georgy with the early morning commentary for December 17, 2014 at 5:30 am.

Traders Focus: Russia financial crisis, livestock futures liquidation, FOMC meeting result and holiday trading volume.

Grain futures are slightly higher as focus is on Russia's ability to meet export shipments. Crude oil is lower as US Dollar is higher.

Aggressive selling in livestock futures could carry over into grains as funds adjust positions and equity going into the end of the year.

Chinese contract signing was a bit disappointing compared to trade expectations. They signed agreements to buy just over 1 million tonnes of soybeans when some in the trade were touting possible sales of 4 million tonnes.

Our newest price projections, trade strategies, and outlooks for grains and livestock will be available here very soon!

Dalian Commodity Exchange in China will extend their trading hours to be open when the CME in Chicago is open starting Dec 26. Some traders believe this move could bring more volatility to US exchanges.

Russia's Veterinary and Phytosanitary Surveillance Service (VPSS) has restricted grain export certificates for some countries, three trade sources told Reuters. If this move becomes more wide spread it would likely benefit EU exports more than US.

Funds were estimated to have bought 5,000 wheat while selling 5,000 corn, 6,000 soybeans, 2,000 soymeal and 2,000 soyoil on Tuesday.

Update - Morning Coffee Commentary:

Ukraine wants at least $10 billion in aid to stave off a default as its economy shrinks under the strain of spending cuts and a separatist conflict. Vice-president Biden has pledge to help Ukraine’s President divert a default.

Brazil's vegetable oil association Abiove stood by its forecast for a 2014-15 soybean crop of 91 million tonnes, after the Brazilian government hiked its estimate to 95.8 million tonnes and USDA expects 94 million tonnes.

Chinese officials informed some U.S. seed industry officials that they approved Syngenta AG's genetically modified corn Viptera, according to reports from Agri-Pulse and Bloomberg. However, a US government official said they have not received official notification from China.

FOMC Meeting results at 1:00 pm today.

With futures under pressure cash cattle trade is at a standstill. Liquidation by funds has accelerated the momentum to the downside in live cattle and feeder cattle futures. Synthetic option premium suggests another sharply lower opening this morning. Beef values under pressure on Tuesday with choice down 2.64 and select down .42. The CME Feeder Index is 235.27.

February Lean hog futures traded within .25 of the low price set in January of this year. Hog futures are at a sizeable discount to the cash index which should provide support in the nearby contract. Pork cutout value was down 4.48 on Tuesday.

Look for lower opening in livestock this morning.

Markets as of 5:30 AM CDT           

  • Mar Corn   2         
  • Jan Beans   0         
  • Mar Wheat   6
  • Jan Soymeal .01
  • Mar Dlr     .17
  • Mar S&P   9.25
  • Jan Crude   -.98
  • Feb Gold    4.80

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

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

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

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

daily chart

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

Markets 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

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

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

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

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

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 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

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

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

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

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

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

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

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

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

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

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

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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

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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

Technical Chart of the Day

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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

Technical Chart of the Day

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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

Technical Chart of the Day

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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

Technical Chart of the Day

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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

Technical Chart of the Day

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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

Technical Chart of the Day

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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

Technical Chart of the Day

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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

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

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

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

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

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

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

daily chart

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

Harvest 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

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

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

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

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).

Trade will be waiting to see active cash trade at higher money this week. Beef values continue to struggle even with reduced production. Choice was down .28 and select down .36. Packer margins are in the red about $100 per head. The CME Feeder Index is 239.30.

Hog futures are getting no help from increasing slaughter and weights. Pork cutout values were down 1.51. Dec futures closed below support at 88.00 with August lows the next downside target.

Expect a steady lower opening in livestock.

Markets as of 4:50 AM CDT                                                                     

  • Dec Corn   1/2      
  • Nov Beans   9
  • Dec Wheat   -2
  • Dec Soymeal 6.00
  • Dec Dlr     .45
  • Dec S&P   23.25
  • Dec Crude   -.54
  • Dec Gold   -24.40

Technical Chart of the Day

daily chart

For more on the current technical outlook for corn and soybeans, listen in to the recording of this week's Ag Leaders Webinar, here.

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

Dollar Rallies On QE News

Oct 30, 2014

Good Morning! Paul Georgy with the early morning commentary for October 30, 2014 at 4:50 am.

Traders Focus: Squeeze in soymeal, export sales data and end of QE3.

Grain markets are higher as traders prepare for supportive export sales. The Macro market adjusts after Fed’s announcement to stop QE3 on November 1.

The inability of processors to fill meal export contracts remains the supportive factor for grains. Month end demands by margin clerks is also creating some shorts exiting the market while new selling stands on the sideline. Look for choppy trade today.

Export sales to be released at 7:30 am are estimated for wheat at 300,000 to 375,000 mt, corn 700,000 to 900,000 mt, soybeans 1,000,000 to 1,500,000 mt, soymeal 150,000 to 300,000 mt and soyoil 10,000 to 30,000 mt

Funds are estimated to have bought a net 16,000 soybean contracts, 10,000 corn and 8,000 soymeal yesterday.

ADM Germany estimates the European Union is likely to harvest 73.6 million tonnes of corn in 2014, up from 64.3 million tonnes in 2013.

Update - Morning Coffee Commentary:

USDA Attaché in Moscow pegs 2014/15 Russian wheat production at 57.5 million tonnes, below USDA official estimate of 59.0 million; exports cut to 21.0 million vs USDA official at 22.5 million

The Federal Reserve on Wednesday ended its monthly bond purchase program and signaled confidence the U.S. economic recovery would remain on track despite signs of a slowdown in many parts of the global economy.

October feeder cattle contracts last trading session today and the October live cattle contract’s last day is tomorrow.

The lighter production of beef is supporting cutout values as choice is up 2.07 and select is up .67. The CME Feeder Index is 238.83. Cash cattle trade is still at a standstill as packers are reluctant to pay new all-time highs when their margins have been in the red for more than a month.

Lean hog futures will likely test chart support this morning as outside markets provide more headwinds. Early calls for livestock are steady to lower.

Markets as of 4:50 AM CDT                                                                     

  • Dec Corn   2         
  • Nov Beans   4 3/4
  • Dec Wheat   4 1/4
  • Dec Dlr     .30
  • Dec S&P   -7.50
  • Dec Crude   -.82
  • Dec Gold   -20.00

Technical Chart of the Day

daily chart

For more on the current technical outlook for corn and soybeans, listen in to the recording of last nights Ag Leaders Webinar, here.

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

Soymeal Is The Star

Oct 29, 2014

Good Morning! Paul Georgy with the early morning commentary for October 29, 2014 at 4:50 am.

Traders Focus: Transportation problems, cash market demand for meal, first notice day and farmer selling.

Grain markets are higher as soybean meal leads the charge. Marco markets wait guidance from Fed on QE3 this afternoon.

Traders battle the logistic issue in soymeal against the large production of US grains. This is an advantage to farmers who need to price grain as harvest heads to the final stretch.

Meal basis is still very strong as movement by rail is causing delivery issues. Stay alert to price action in bean crush and meal spreads as it can alert us when a top is near in flat price meal and ultimately soybeans.

If you missed our October Ag Leaders Webinar, you can still access all the great information on the recent market moves and how high this rally could take us, plus a cash grain and acreage discussion with our special guest, Chip Flory. Get the Recording

Weather conditions in US and South America should not be a factor as farmers will be back in fields today and Brazil and Argentina are getting well needed rains.

Wheat futures are getting support from worries about global supplies, with Russian winter wheat off to a poor start and the reductions in Australian crop estimates.

Update - Morning Coffee Commentary:

Tuesday's rally in corn and soybeans drew some farmers selling in the US and Argentina. Spot corn and soybean basis was weaker as the rally and a pickup in farmer movement.

First Notice day is Friday morning for soybeans which is causing reduction in holdings of the November contracts.

Funds are estimated to have bought 4,000 wheat, 2,000 corn, 4,000 soy oil, and sold 3,000 meal contracts on Tuesday.

(Reuters) - Barring a sudden pile-up of grain across Western Canada in the next five weeks, Ottawa will lift requirements that railways move minimum volumes of crops, Agriculture Minister Gerry Ritz said in an interview.

Dec hogs remain an $8 discount to the cash index verses the 5-year average of $1-$2.00. While this may seem extreme, if USDA pork production forecasts calling for the smallest decline in 4th to 1st quarter production in 17 years are realized, the discount may be justified. The pork cutout value is down 2.39.

Fed cattle asking prices are $2 higher than last week’s record price, however, no bids as of yet. The reduction in beef production this week by packers is providing underlying support to beef product values. Choice is up 2.36 and select is up 3.11. The CME Feeder Index is 238.51.

Look for a steady to higher opening.

Markets as of 4:50 AM CDT                                                                     

  • Dec Corn   3 1/4     
  • Nov Beans   10 1/4
  • Dec Wheat   2 1/2
  • Dec Dlr     .02
  • Dec S&P   1.00
  • Dec Crude   .43
  • Dec Gold   -1.00

Technical Chart of the Day

daily chart

For more on the current technical outlook for corn and soybeans, listen in to the recording of last nights Ag Leaders Webinar, here.

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

Fundamental vs Technical And The Winner Is?

Oct 28, 2014

Good Morning! Paul Georgy with the early morning commentary for October 28, 2014 at 4:30 am.

Traders Focus: Weather in Brazil, China Demand, Strong crush margins and lack of farmer selling.

Grain markets are sharply higher lead by strength in meal and soy complex.

Don't miss tonight's Ag Leaders Webinar. We'll discuss today's market move and how high this rally could take us, plus have a cash grain and acreage discussion with our special guest, Chip Flory. Register Here.

US corn harvest advances from 31% to 46% complete verses average of 65%. The states of WI, IN, IA, MI, and Dakota’s are will behind normal. Soybean harvest increases 17% in one week to 70% verses an average of 75%. Winter wheat planting is 84% complete.

Some of the weather models have reduced the rains starting in northwest Brazil from 1.5 to 3 inches down to .75 to 1.5 inches for the upcoming weekend. However, all areas in Brazil and Argentina should get some rain over the next 10 days.

China continues to be a buyer of US soybeans as they have booked almost 75% of their total demand estimated by USDA. They want beans as their crush margins are a positive $26 per mt.

US crush margins are also enticing processor to be aggressive buyers of soybeans. Current margin estimate for US crushers is $1.74 per bushel. Meal demand remains strong but processors are having trouble getting railcars to load. Meal values in the US are now well above values that last week caused meal cargos to be switched from US to South America.

Trade is also worried about the lack of availability of synthetic amino acid used to improve digestion of meal by pork producers. This is causing speculation that we could see increased soymeal demand.

Trading volume picked up on Monday as markets tested or set new recent highs. Funds are estimated to have bought a net 11,000 soybeans, 9,000 corn, 2,000 wheat and 12,000 soymeal contracts.

Basis at the gulf was steady to weak after a rally on light farmer selling. Farmers remain focused on harvest.

FOMC meeting starts today and will be watched closely to measure the end of QE in the US.

Update - Morning Coffee Commentary:

Livestock markets reopen this morning at 8:00 in the electronic trade and the pit opens at 9:05.

Beef values found strength on Monday as choice was up 1.79 and select was up 3.28. The light slaughter and retail demand is offsetting the increased carcass weights. Last week beef carcass weights were up 21 pounds from last year. The CME Feeder Index is 238.20. The December contract is defining support at 166.25 and resistance at 170.00.

Monday slaughter was estimated by USDA at 432,000 head which is the largest weekday of the fall. It is likely we will see another 3 weeks of rising supplies. Pork cutout value was up 1.86 on 277 loads. Early calls for livestock would be steady better.

Markets as of 4:30 AM CDT                                                                     

  • Dec Corn   6         
  • Nov Beans   20 1/4
  • Dec Wheat   5 3/4
  • Dec Dlr     .17
  • Dec S&P   10
  • Dec Crude   -.08
  • Dec Gold   -1.60

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

Will Funds Be Buyers This Week?

Oct 27, 2014

Good Morning! Paul Georgy with the early morning commentary for October 27, 2014 at 5:30 am.

Traders Focus: Presidential elections in Brazil and Ukraine, harvest progress, cash meal demand and money flow by funds.

Grain markets are starting the week lower as weekend harvest showed good progress. Dollar is lower as crude oil trades near $80 per barrel.

Harvest progress last week is estimated by trade to be 42% for corn compared to 21% last week and 62% average. Soybean harvest is estimated to be 62% complete compared to 53% last week and 77% average.

We'll be talking with Chip Flory tomorrow night at 8:00 PM CDT about harvest, basis, 2015 acreage and much more in our next Ag Leaders Webinar. It's free - register here.

Goldman roll starts today as they will be rolling out of the December contract to the March.

US meal basis still holding firm despite the pickup in US soybean harvest. Currently it is the processors advantage to keep basis as strong as possible. When the basis breaks it will be sharp and furious.

Weather models are trimming back some of the moisture in the forecast for Tuesday across the Midwest. Northwest Brazil received rain this weekend with more on the way.

As of last Tuesday Managed Money funds increased their long positions in corn by 38,284 contracts. They had minimal change in soybeans but decreased short positions in wheat by 9,016 contracts.

Brazil’s Rousseff remains as president stays committed to fiscal discipline.

Update - Morning Coffee Commentary:

New trading hours for the livestock begin today. On Mondays, the market will open at 9:05 a.m. CT and close at 4:00 p.m. CT. Tuesday through Thursday the markets will trade between 8:00 a.m. CT and close at 4:00 p.m. CT. The trading day is shorter on Fridays, opening at 8:00 a.m. CT and closing at 1:55 p.m. CT. Open-outcry trading hours for livestock futures and options remain unchanged.

Cattle on Feed Report results: COF: 99.5% (Est. 99.7%), Placed: 101% (Est. 101.4%), Marketed: 99% (Est. 99.2%). The results of the report were neutral which will leave traders looking at technicals and beef demand for direction. Beef cutout values were sharply lower on Friday with Choice down 2.02 and select down .83. The CME Feeder Index is 239.55.

Cash hogs last week were down 9.00 and the cash pork value was down 13.00.Total pork production was 3.6% less than same week a year ago. Pork exports continue to struggle as the US and EU battle remaining buyers for sales due to the Russian ban. Fund money managers have reduced long position by 6,893 contracts last year. Pork cutout continues to slide on Friday with values down 2.29.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   -4 1/2     
  • Nov Beans   -7 1/4
  • Dec Wheat   -3
  • Dec Cattle  Steady-Higher
  • Dec Hogs    Steady-Higher
  • Dec Dlr     -.11
  • Dec S&P   -5.25
  • Dec Crude   -.25
  • Dec Gold   -.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

Huge Option Open Interest at $10.00

Oct 24, 2014

Good Morning! Paul Georgy with the early morning commentary for October 24, 2014 at 5:30 am.

Traders Focus: Weekend hedge pressure, cattle on feed report, and November option expiration.

Grain markets are higher as funds and spec exit short positions ahead of option expiration.

The November CBOT options expire today which could cause more fireworks. There is almost 33,000 open interest at the 10.00 strike and 20,000 open interest in the 9.80 strike in November soybeans. Those who were expecting 9.80 to 10.00 calls to expire worthless are not so sure and scrambling to save their positions. This is creating short option covering and last minute repositioning for the option holders. We would also expect some pre-hedging late in the session today.

Domestic meal basis is a key driver behind the current rally in soybeans and is not showing signs of easing with eastern cornbelt basis levels $45 to $50 over Dec futures.

A USDA official said the surprisingly large weekly export sales of soybeans were correct, but a sizeable share should have been posted on daily reports.

Major weather pattern change is taking place across Latin America that will produce an abundance of rainfall for northern and western Brazil. The main soybean producing state of Mato Grosso is forecasted to see up to 4 inches of rain over the next 2 weeks. However it may come too late for the early plant crop and will require some replanting.

Mexico’s corn crop is being upgraded from 22.5 mmt to 23.0 mmt due to favorable weather and an increase in planted acres.

The Brazilian Presidential run-off is this weekend and the Real is weak, touching 2.5 Reals per Dollar. If Brazilian currency continues to weaken it could provide a negative issue for the soy complex.

On next Monday’s Report we expect soy harvest to approach 70% and corn harvest to hit 40-45%.

Daily price limits for most Chicago Board of Trade grain and oilseed futures will narrow starting in November following a semi-annual review, the CME Group said on Tuesday. Under new rules announced in March, the CBOT resets daily limits for grains in May and November of each year. The new limits will go into effect on Sunday, Nov. 2, for the Nov. 3 trade date. For corn, the daily limit will move to 25 cents per bushel, from the current limit of 35 cents. For soybeans, the daily limit will narrow to 70 cents per bushel, from the current limit of $1. The limit for CBOT wheat will narrow to 35 cents, from the current 45 cents, and the limit for K.C. hard red winter wheat will narrow to 40 cents, from the current 50 cents.

New trading hours for the livestock begin on Monday October 27. On Mondays, the market will open at 9:05 a.m. CT and close at 4:00 p.m. CT. Tuesday through Thursday the markets will trade between 8:00 a.m. CT and 4:00 p.m. CT. The trading day is shorter on Fridays, opening at 8:00 a.m. CT and closing at 1:55 p.m. CT. Currently, electronic trading takes a one hour break from 4 p.m. CT to 5 p.m. CT Monday through Thursday. The market closes early (1:55 p.m. CT) on Friday and opens late (9:05 a.m. CT) on Monday. Open-outcry trading hours for livestock futures and options remain unchanged.

Update - Morning Coffee Commentary:

Cattle on Feed Estimates for Friday’s Report: COF: 99.7%, Placed: 101.4%, Marketed: 99.2%.

Feedlots sold cattle for 168 in NE and 166 in KS this would be 1 to 2 higher than last week. Supplies remain in strong hands as feeding cattle heavier is more efficient than replacing them. Packers need numbers to meet demand although margins are negative and beef values are reluctant to work higher due to competitive meats. Choice is down 1.57 and select is down 1.53. The CME Feeder Index is 239.34.

Hog markets continue to be pressured by ideas supplies are increasing. Pork cutout values are down .62.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   3 1/2     
  • Nov Beans   6 3/4
  • Dec Wheat   8 1/4
  • Dec Cattle  .30
  • Dec Hogs    -.30
  • Dec Dlr     -.03
  • Dec S&P   -7.75
  • Dec Crude   -.77
  • Dec Gold    3.10

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

Can Exports Inject A Boost?

Oct 23, 2014

Good Morning! Paul Georgy with the early morning commentary for October 23, 2014 at 5:30 am.

Traders Focus: Export data, harvest progress and option expiration.

Grain markets are higher in a light volume session. Macro markets are higher in the equities and steady in the dollar.

Traders are looking for confirmation of talk yesterday that some meal demand was being switched to Argentina. This could cause the meal pipeline to fill rather quickly.

Bean harvest has kicked into full swing and producers are reporting very good yields across most of the Midwest. An example in central MO, 190 acres had average yield of 81 bushels per acre, another producer in north central NE, average 67 bushels per acre across his entire soybean acres. However, not all are getting the super yields, our customers in central MN are harvesting 45 to 50 bushel soybeans when they normally get 60 bushels per acre.

Good harvest weather should continue into next week which will boost soybean harvest on Monday’s progress report. The wet season is expected to start across all of North and Central Brazil late this week with totals of 2.00 to 5.00 inches.

Weekly export estimates for this morning’s report are: Corn 800,000 to 1,000,000 MT, soybeans 800,000 to 1,000,000 MT, soymeal 150,000 to 250,000 MT, soyoil 10,000 to 50,000 MT and wheat 350,000 to 500,000 MT.

As we transition away from supply concerns our focus now deals with what to do about this large corn crop. Allendale has addressed in recent reports the issue that neither exports or ethanol is going to help work through the supplies.

USDA’s current corn for ethanol goal is 5.125 billion bushels which is virtually unchanged from the 5.130 last year. Though we started out with good ethanol production rates in early September, that has fallen now that margins are tightening and production is now equal to a year ago pace at 896,000 barrels per day.

The Chinese government is adding another 40 million tonnes of corn to their reserve in the 2014/15 marketing year. When adding to the inventory increases over the last 2 years they will replenish the government stocks to 100 million tonnes.

Update - Morning Coffee Commentary:

The US Dollar is quiet as it holds gains from Wednesday.

Eggs set were up 3% compared to last year while chick placements were up 1%.

The weakest links in the pork market remains the loins and butts as pork cutout value was down $2.88. Lean hog futures gave us a reversal yesterday out of an oversold condition. The discount of nearby futures to cash hog index is providing some support.

Cattle on Feed Estimates for Friday’s Report: COF: 99.7%, Placed: 101.4%, Marketed: 99.2%.

Beef values were higher with choice up $1.16 and select up $.14. The CME Feeder Index is 240.80.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   1 1/2     
  • Nov Beans   4
  • Dec Wheat   2 1/4
  • Dec Cattle  .20
  • Dec Hogs    -.30
  • Dec Dlr     -.02
  • Dec S&P   7.25
  • Dec Crude   .25
  • Dec Gold   -6.00

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

Funds Find Bargains in Grains

Oct 22, 2014

Good Morning! Paul Georgy with the early morning commentary for October 22, 2014 at 5:30 am.

Traders Focus: Money flow, technical and computer trade signals, harvest weather and demand.

Grain markets are mostly higher lead by the soy complex.

The strength in the soymeal in recent days has been a major catalyst providing support to the soy complex. The wet weather and reduced harvest progress has crushers caught with meal commitments and can’t crush the beans fast enough. Once the pipeline is filled there should be a plentiful supply due to the bountiful harvest.

Producers are focusing on harvest and trying to figure out what to do with the crop as they weigh selling to storing alternatives.

Money flow and short covering is also a factor. Computer activated buying could trigger even more buying if overhead resistance is broken.

The forecast is virtually unchanged from Monday. The US Corn Belt looks to see only light scattered showers over the next 10 days which should allow rapid harvest progress. South American weather forecast is for wide spread moisture for northern Brazil (the dry area) in coming days.

Oil World estimates Brazilian new crop bean production at 89 mmt, down 3 mmt from previous estimate and 5 mmt below USDA’s latest production estimate.

USDA’s said at the trade data users meeting in Chicago that they had 35% of their soybean field plots harvested for the October report verses 89% for corn. They relied heavily on a farmer survey for the October report and thus many believe that soybean production has much more room to the upside based on yield reports we are hearing.

(U of IL Ag Econ) Lower prices are resulting in lower gross revenue projections for both 2014 and 2015. These lower projections will require lowering or eliminating capital purchases, lowering fertilizer and seed costs, lowering cash rents, and reducing other cash flows.

Update - Morning Coffee Commentary:

Hog weights remain above a year ago although not as dramatically as in recent months. This time a year ago, it became more profitable to feed hogs to a larger size. Slaughter numbers are increasing and pork values continue to slide. Retailers are buying “hand to mouth” as we approach the holiday season. Pork cutout values were down another $2.42.

US Cattle on Feed report for Sept to be released Friday at 2 PM CST. Trade is expecting On Feed at 99.7%, Placed at 101.9% and Marketed during Sept. at 99.1%.

Steer weights have gone from 875 a year ago to 896 last week. There is no question the economics works to feed cattle longer and larger rather than replacing them with lighter feeders. Therefore is the current tight supply of market ready cattle due to lack of numbers or due to cattle being fed longer? Beef values are mostly steady as choice was unchanged and select down $.24. The CME Feeder Index is 240.80.

Markets as of 5:30 AM CDT                                                                     

Dec Corn   0        
Nov Beans   9 1/2
Dec Wheat   1/2
Dec Cattle  .07
Dec Hogs    -.15
Dec Dlr     .21
Dec S&P   -5.00
Dec Crude   .17
Dec Gold   -4.90

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

Soybean Harvest Slowest Since 2009

Oct 21, 2014

Good Morning! Paul Georgy with the early morning commentary for October 21, 2014 at 4:30 am.

Traders Focus: Harvest progress, harvest weather and demand.

Grain markets are slightly higher, China’s GDP release had minor impact on Macro markets.

The USDA says as of Sunday we are 31% harvested in corn compared to 33% expected by the trade and 53% average. Soybean harvest is 53% complete compared to trader estimates of 53% and 66% average. This is the slowest soybean harvest since 2009. Winter wheat planting is 76% completed which is very close to normal.

Brazil soybean planting was put at 10% by AgRural compared to 19% last year and 20% average.

Export sales are being watched closely as corn sales need to run 12% above a year ago to meet the USDA’s target. Soybean sales are running well ahead of last year and current levels could give reason for increasing USDA’s estimate.

November option expiration is on Friday.

Weather forecast suggests clear conditions for the balance of the week in the Midwest where we should see aggressive harvest progress. South American weather is getting rain where needed.

Ahead of the next weeks FOMC meeting Fed officials are chattering that QE3 will end as scheduled.

China’s GDP grew 7.3% in the third quarter which was down from the 7.5% growth in the second quarter. This is the weakest growth rate since early 2009. Thursday China will release their PMI updates that could provide a glimpse of global growth.

Update - Morning Coffee Commentary:

The World Trade Organization has rejected US rules requiring labels on packaged steaks, ribs and other cuts of meat identifying where the animals were born, raised and slaughtered. In a ruling Monday, they said the requirements put Canadian and Mexican livestock at an unfair disadvantage.

Last week steer carcass weights increased to 896 pounds compared to 875 pounds last year. Beef production remains 6.2% below last year even with this increase.

Cold storage data will be released on Wednesday and trade is expecting stocks in cold storage to drop 24% from last year to 338 million pounds.

Beef values remain firm with choice up .68 and select up .39. The CME Feeder Index is 241.84.

Live hog weight difference is starting to narrow compared to last year but that does not translate into a positive. At this time last year, hog weights began to increase. Hog movement could be a bit lighter as farmers focus on field work. Pork cutout values continue to slide as they were down another 4.55 on Monday.

Markets as of 4:30 AM CDT                                                                     

  • Dec Corn   1/4 
  • Nov Beans   4 3/4
  • Dec Wheat 1 1/4
  • Dec Cattle  .30
  • Dec Hogs    -.20
  • Dec Dlr     .02
  • Dec S&P   2.00
  • Nov Crude   .48
  • Dec Gold    7.10

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

Harvest Progress Should Improve This Week

Oct 20, 2014

Good Morning! Paul Georgy with the early morning commentary for October 20, 2014 at 5:30 am.

Traders Focus: Harvest progress report this afternoon and weather forecast this week.

Grain markets are lower as the dollar and energies are quiet.

Grain traders are drawing their proverbial line in the sand as the bears continue to focus on the big carryover in 2015, increased harvest pace and improving growing conditions in South America. The bulls are pointing to slow farmer selling, slow planting pace in Brazil and immediate demand for meal. There is a demand for soybeans to meet the near term crush as a lot of boats need to be loaded. Crush margins are firm and it is likely going to take some time to fill the pipeline.

The Midwest was mostly dry over the weekend and dry weather should continue until some light rains start across the Plains and into the far western section of the WCB late this week.

The weather maps for South America are showing rains in the 6-10 day portion for Argentina of .25-1.0 with heavier rains noted across the eastern half of Argentina, while La Pampa (the southwest) is seeing less than .25 inch.

Trade is looking for corn harvest to be near 33% verses average 52% and 23% last week. Soybean harvest is expected to be near 50% verses an average of 65% and 40% last week.

The CFTC’s Commitment of Traders Report showed funds reducing short and increasing long positions. They added nearly 15,000 to the long corn contracts and reduced their short positions in soybeans by 7,500 contracts and wheat by 8,000 contracts.

Update - Morning Coffee Commentary:

 

Economic Data out of China this week will be anxiously watched. Tomorrow they will release Q3 GDP and September retail sales.

Last week was a tough one for hog prices. December futures lost $4.00, cash pork lost $9.00. The weekly slaughter wrapped up at 2.180 million head which was the largest kill since the week ending January 26.

The cattle market story is one of tight supplies but now more moderating demand expectations. The hog story shows increasing supplies, both seasonally and compared with last year, and also now more moderate concerns over demand. Pork cutout values were down 2.71. Beef values were mixed with choice up .24 and select down .14. The CME Feeder Cattle Index is 243.32.

Livestock futures expected to have a mixed opening.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   -3 3/4     
  • Nov Beans   -9 3/4
  • Dec Wheat   -8 1/4
  • Dec Cattle  Steady-Lower
  • Dec Hogs    Steady-Firm
  • Dec Dlr     .02
  • Dec S&P   2.00
  • Nov Crude   -.01
  • Dec Gold    2.90

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

Markets Show Money Managers Anxiety

Oct 17, 2014

Good Morning! Paul Georgy with the early morning commentary for October 17, 2014 at 5:30 am.

Traders Focus: Money movement by fund managers is a major factor affecting commodity pricing.

Grain markets are higher. The US Dollar is quiet, however, equities and energies are sharply higher.

Slow soybean harvest and low crush usage during September are creating a lag in refilling the pipeline for the aggressive soymeal export demand. This is causing basis to be volatile in some areas as processors have meal commitments to make.

The rain is expected to move out of the Midwest today with several days of harvest weather ahead. News wires are starting to write about the dryness in northern Brazil which is stressing some of their early planted soybeans. More attention will be paid to Brazil weather in coming weeks.

Weekly export sales are to be released at 7:30 today. Trade is estimating corn sales at 800,000 to 2,000,000 MT, soybeans 700,000 MT, wheat 350,000 to 550,000 MT, soymeal at 200,000 to 400,000 mmt and soyoil 15,000 to 30,000 MT.

Ethanol production in the latest week was 885,000 barrels per day which is 2% higher than last year. This seems great as USDA’s whole-year goal is for no change, however, we have serious concerns about future production levels.

Macro Market news: traders will be waiting for the Housing Starts data later this morning.

The USDA reported broiler egg set in the latest week at 104% of a year earlier, down from 105% last week and compared to 102% in the week ended September 27th. Broiler chicks placed were 103% of a year earlier, up from 102% last week and compared to 102% two weeks ago.

Update - Morning Coffee Commentary:

Average beef prices in grocery-store advertisements continued to moderate this week, declining for a second consecutive week after a prolonged rise, according to the latest Wall Street Journal retail-meat survey. The 15-cut average for beef prices this week was $5.16 a pound, down from $5.77 a pound last week, but still lofty compared with the $4.59-a-pound average in the same period a year earlier. The five-cut average for pork rose after posting a decline a week ago. The average price was quoted at $3.79 a pound in the latest period, up 12 cents from $3.67 a pound last week, and well above the $2.74 a pound average at the same time last year. The average price for chicken in the latest week was up to $2.10 a pound, after last weeks decline to $2.04. The average a year-ago price was $1.91.

Beef values are weak with choice down 1.57 and select down .52. The CME Feeder Index is 243.81. Pork cutout values are down another 3.27.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   1 3/4     
  • Nov Beans   1 1/4
  • Dec Wheat   3 3/4
  • Dec Cattle  -1.22
  • Dec Hogs    -.92
  • Dec Dlr     -.06
  • Dec S&P   -26.50
  • Nov Crude   1.68
  • 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

Crude Oil Slide Impacts Grains

Oct 16, 2014

Good Morning! Paul Georgy with the early morning commentary for October 16, 2014 at 5:30 am.

Traders Focus: Outside market volatility, Weather forecast for US harvest, and fund activity.

Grain markets are slightly lower as dollar rallies and crude oil retests the $80 level.

Weekly export sales data will be released tomorrow due to the recent government holiday.

Producers should return to the field today in the west and tomorrow in the eastern cornbelt. The weather forecast is suggesting open weather into early next week. Harvest is behind normal and producers are trying to deal with the wet conditions and the large crop in much of the Midwest.

With all the movement in the equities and financial markets on Wednesday the funds were estimated to have sold 12,000 contracts and 9,000 soybean contracts while be even in wheat.

Rosario Grain exchange is expecting farmers in Argentina to plant 20.6 to 20.9 million hectares this year up from 20.2 million hectares last season.

Strategie Grain Group raises EU wheat and corn production compared to last months estimate.

NOPA Crush data showed US Processors used the lowest amount of soybeans since August 2004. The tight ending stock and slow start to harvest were the reasons for low usage.

The 0.3% September retail sales drop, an October Empire State plunge to 6.17 from 27.54, and a lean 0.2% August business inventory rise combined caused economic analysts to trim our GDP forecasts to 2.6% for third quarter and to 3.0% for fourth quarter. This news caused investor panic around the world.

Update - Morning Coffee Commentary:

President Dilma Rousseff and her pro-business challenger Aecio Neves are still running neck and neck ahead of the Oct. 26 runoff to Brazil's presidential election, a new poll showed Neves gaining ground.

Hall Commodities LLP, a London-based $100 million hedge-fund firm run by Tony Hall and Arno Pilz, told clients it’s shutting down at the end of the month citing poor performance.

Pork production is expected to drop only 140 million pounds from the 4th to 1st quarter, which would match the smallest decline in 17 years.

Hogs have the same problem as beef on the demand side. This market had been artificially supported in the past three weeks on the expectation of very good consumer demand. However unlike beef, supplies are increasing more rapidly. Hogs are being hit by fund liquidation caused by nervousness in outside markets. Pork cutout value is down .24.

The economic news yesterday has exacerbated the problem concerning beef demand. Will consumers support the historically high beef values? Cash cattle traded at 163 to 164 which would be down 1.00 from previous week. Beef values were mixed with choice up 1.08 and select down .64. The CME Feeder Index is 244.04.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   -1 3/4     
  • Nov Beans   - 1/4
  • Dec Wheat - 3/4
  • Dec Cattle  .40
  • Dec Hogs    -1.12
  • Dec Dlr     .18
  • Dec S&P   -16.50
  • Nov Crude   -1.31
  • Dec Gold   -1.50

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

Does Crop Size Really Matter?

Oct 15, 2014

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

Traders Focus: Harvest progress, improving weather in US, rains in Brazil, technical signals and money flow.

Grain markets are lower as dollar firms. Crude oil tests $80 level.

Harvest progress for soybeans was 40% compared to trade estimate of 31% and 5 year average of 53%. Corn harvest is 24% complete verses trade estimate of 25% and the 5 year average of 43%. Winter wheat planting is 1% higher than the 5 year average of 67%.

The northern states of ND, SD, MN, WI and IA had excellent harvest progress last week.

The December corn contract broke the 50 day moving average and tested the 62% retracement from the August highs. The next level of resistance should cross at 3.69 then 3.80 in the December contract.

November soybeans has technical resistance near 9.75 and then at 10.00. The 50 day average crosses at 9.94 today.

This wet weather could hang around for a few more days in the eastern cornbelt but by the weekend the Midwest should be drying out and harvest should get back to full swing. South American weather conditions are looking great for Argentina. Brazil has some dry areas but rain is on the way.

Traders are talking about the funds moving money out of crude oil and the stock market in to the corn and soybean complex. They appear to be buying historically cheap grains and selling the high priced livestock. On Tuesday funds bought an estimated net 10,000 corn contracts, 8,000 soybeans contracts and 4,000 soymeal contracts. They were estimated to be flat wheat and sold a net 3,000 soyoil contracts.

US soybean crush margins are phenomenal. For every one bushel that a soybean crushing plant buys from a farmer they are receiving an extra $2.01 over the soybean cost due to the current value of soyoil and soymeal sales (estimate based on futures prices with plant costs). The chart using futures is conservative as the IL Department of Ag shows using their cash price method $3.16 per bushel plus margin.

8:00 AM Update - Morning Commentary:

The National Oilseed Processors Association's monthly soybean crush data is scheduled for release at 11:00 am should show the U.S. crush for September at 107.553 million bushels. If realized, that would be the lightest crush since September 2009, when processors crushed 107.379 million bushels.

(Reuters) - Shortages of hogs and packing plant workers in Canada, exacerbated by recent government restrictions, may severely cut hog processing and pork exports, helping to keep North American retail pork prices near record highs.

The December Lean hog futures found support as the October contract expires due to its deep discount. Pork cutout was down 4.34.

Cattle traders are concerned about beef demand at the retail counter. Competitive meats are becoming more plentiful, however, cheaper gas prices should improve consumers spendable income. Packer margins are in the red as beef values have not kept up with live cattle prices.

Beef values were mixed with choice up 1.10 and select down .33. The CME Feeder Index is 243.49.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   -3 1/2     
  • Nov Beans   -3 3/4
  • Dec Wheat   -4 3/4
  • Dec Cattle  .60
  • Dec Hogs    -.95
  • Dec Dlr     .09
  • Dec S&P     -2.50
  • Nov Crude   -.98
  • Dec Gold   -11.00

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

Money Flow Supports Grains

Oct 14, 2014

Good Morning! Paul Georgy with the early morning commentary for October 14, 2014 at 4:30 am.

Traders Focus: US currency relationships, harvest delays, other commodity trends and short covering.

Grain futures are mixed as US dollar bounces off of lows. Energies are lower, metals are higher.

US DollarThe value of the US Dollar is having a big impact on the US export price competition. As an example, the US Dollar has gained 58% on the currency of Ukraine, 45% on Argentina and 24% on the Russian Ruble year over year. This is the reason our customers for corn and wheat have went elsewhere in recent months.

Corn exports sales are 1% above normal when we need a 9% increase to meet USDA’s goal.

Ethanol processors estimated profit margin is 3 to 5 cents per gallon. Weak corn prices have not been able to offset the drop in ethanol values resulting in the sharp profitability decline.

Allendale is looking ahead to the November WASDE report and we expect USDA to add 1 to 1.5 bpa to their corn yield just released. It is likely they will add .5 bpa to the soybean yield (Big crops keep getting bigger).

Harvest progress will be released today due to the Columbus Day Holiday in Washington. Trades early estimate is for 30% to 32% of soybeans harvested compared to 57% average. Corn harvest could be running 10% to 12% behind the normal of 38%.

Soybean imports by China during September came to 5.03 mmt. That was down from 6.03 mmt in August. This was a 7% increase over last year in the same period which ends their old crop marketing year, Oct 2013 – Sep 2014, with 70.366 mmt of imports. USDA was only expecting 69 mmt.

China will suspend weekly state soybean sales from this week as its harvest starts. The China National Grain and Oils Information Center (CNGOIC) said Beijing has started monitoring domestic soy prices and the suspension would help avoid interruption of domestic prices. The government has set a target price for soybeans this year and will subsidize soy farmers when domestic market prices fall below its target price.

Update - Morning Coffee:

 

This week’s hog slaughter will show another increase as Smithfield’s Tar Heel, NC plant, the biggest in the nation, will return to a full five day work week instead of the four day. Monday’s 427,000 head run is the biggest start to the week since March. Pork cutout was down 1.06 on Monday.

In cattle, the average basis (cash to futures relationship) during the last week in October normally has cash premium of 1.86 over futures. At Monday’s October futures price it would suggest cash cattle would be at 169 at the end of October. Last week cash cattle averaged 164. The trade is asking the question; Are futures too high or is cash too low? Beef values are firm with choice up .64 and select up 1.67. The CME Feeder Index is 242.58.

Markets as of 4:30 AM CDT                                                                     

  • Dec Corn   – 1/4      
  • Nov Beans   6 1/2
  • Dec Wheat   -3 3/4
  • Dec Cattle  -.15
  • Dec Hogs    -.22
  • Dec Dlr     .11
  • Dec S&P     .25
  • Nov Crude   -.99
  • Oct Gold    6.60

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

 

Better Harvest Weather Late In Week

Oct 13, 2014

Good Morning! Paul Georgy with the early morning commentary for October 13, 2014 at 5:30 am.

Traders Focus: After report analysis, money flow and outside market direction.

Grain futures are recovering after a lower opening as corn and soybeans are slightly higher and wheat just below unchanged.

Harvest progress will be released on Tuesday due to the Columbus Day Holiday in Washington. Trades early estimate is for 30% to 32% of soybeans harvested compared to 57% average. Corn harvest could be running 10% to 12% behind the normal of 38%.

The weather forecast is favorable for harvest in the US the last half of the week. South American weather is being watched closely as some areas are drier than normal. However, futures will not be getting much support from current forecast.

Market analysts are already expecting the USDA to add another 1 to 2 bushels to their 174.2 bpa on the November report. Traders also believe they will add at least another bushel to the soybean yield of 47.1.

Yields from harvest results continue to come in higher than expected. Although North central Iowa soybean yields are being reported less than average due to too much rain.

Managed futures reduced long positions in corn by 11,993 contracts to a net long position of 73,093. In soybeans they increased their short position by 9,243 contracts to 24,457. Money managers bought 3,331 contracts of wheat but are short 67,970.

Russian President Vladimir Putin has ordered approximately 17,600 troops to return home from Rostov, a southern region that borders east Ukraine, where pro-Russian insurgents have been battling government troops since April.

China is ready to allow 8 more companies to supply pork to Russia following Russia's embargo on products from the EU, the U.S., Canada and Australia.

8:00 AM Update:

 

"If foreign growth is weaker than anticipated, the consequences for the U.S. economy could lead the Fed to remove accommodation more slowly than otherwise," said a Fed official over the weekend. His comment is affecting investor confidence in the US Dollar.

The U.S. government on Friday raised its pork production forecast for the calendar year ending September 2015 that shows pork surpassing beef for the first time since 1952. In the monthly World Agriculture Supply and Demand Estimates (WASDE), the U.S. Department of Agriculture raised the commercial pork production forecast for 2015 to 23.9 billion pounds.

The pork numbers are a 2.6 percent increase revision from last month's data, a 5.0 percent production increase over 2014. USDA projected 2015 beef output at 23.8 billion pounds, with a marginal upward revision from the September report and a 2.3 percent decline versus last year's production.

The December contracts of cattle and hogs are near levels that should find technical support.

Beef values were mixed on Friday with choice up .61 and select down .11. The CME Feeder Index is 239.35. Pork cutout values were down .82.

Early calls would have to be steady-lower for the opening.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   1/4      
  • Nov Beans   2 1/4
  • Dec Wheat   -1 3/4
  • Oct Cattle  Steady-Lower
  • Oct Hogs    Steady-Lower
  • Dec Dlr     -.40
  • Dec S&P     4.00
  • Nov Crude   -1.15
  • Oct Gold    6.50
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

Risk Off Attitude On Report Day

Oct 10, 2014

Good Morning! Paul Georgy with the early morning commentary for October 10, 2014 at 5:30 am.

Traders Focus: USDA Reports at 11:00 AM and outside market selling.

Grain futures are lower as crude oil sets new contract lows and the equity markets extend sell-off.

The data released by USDA later this morning will likely have something for everybody. Some of the key points are:

  • The average yield for corn and soybeans
  • Total US production of corn and soybeans for the 2014/15 crop year
  • Adjustments to planted and harvested acres in corn and soybeans
  • How the USDA adjusts usage in the 2013/14 marketing year for soybeans to arrive at a 92 million bushel carryover
  • Total export projections for 2014/15 in soybeans
  • Soybean and corn production in southern hemisphere
  • Spring wheat production
  • World wheat production and ending stocks

Allendale is looking for the soybean yield to come in at 48 bpa. It should be noted that the average increase from Sept to October report is 4.4% when they raise yields which would suggest the yield could come in at 48.7. The average trade guess for bean yields is 47.589 bpa. Call your Allendale Representative to discuss last minute strategies going into the report.

Egypt's General Authority for Supply Commodities (GASC) set a tender on Thursday to buy an unspecified amount of wheat from global suppliers for shipment from Nov. 11 to 20.

(Reuters) - The European Commission has raided ethanol companies in two EU countries as part of investigations into alleged price-fixing. The Commission, which acts as the competition watchdog in the 28-member bloc, said on Thursday it had concerns that companies may have colluded in submitting price information used to set industry benchmarks for trading in Europe and globally.

Russia was the top buyer of Brazilian beef last month, purchasing 35,122 tonnes worth $153 million, Abiec said in a statement. That was an increase of 13-percent in volume to Russia from a year earlier and 25-percent in value.

Update -

 

After several days of rallying livestock, traders went to bank some profits and found willing buyers were limited yesterday especially in the cattle complex. Beef values have risen to levels that packers could pay up for cattle this week. However the sharp reversal in live cattle and feeder cattle futures may open the feedlot gates today, we have heard of cash trading at $164 in KS. Choice beef is up .51 and select is up .37. The CME Feeder Cattle Index is 238.72.

Technical traders will be concerned about a lower close today after large outside day range on Thursday. Key technical support in the December cattle is 165.05.

The strong uptrend in the cash hog index is providing underlying support to lean hog futures. The discount of October and December contracts have traders bull spreading. Traders believe there are greater hog supplies on the horizon but are concerned about the strong product demand. Pork cutout is down 1.09 but packer margins are estimated at over $100 per head on integrated operations.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   -3         
  • Nov Beans   9 1/4
  • Dec Wheat   -2 1/4
  • Oct Cattle  .67
  • Oct Hogs    -.02
  • Dec Dlr     .16
  • Dec S&P     -11.50
  • Nov Crude   -1.25
  • Oct Gold   -7.60
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

Dollar Drops on Feds Concern

Oct 09, 2014

Good Morning! Paul Georgy with the early morning commentary for October 9, 2014 at 5:30 am.

Grain futures are mixed as dollar sees further correction.

Traders Focus: USDA reports and outside market reactions to Fed Policy.

Weekly export sales will be released this morning at 7:30. Trade estimates are: corn 550,000 to 750,000 tonnes, soybeans 500,000 to 900,000 tonnes and wheat 400,000 to 600,000 tonnes (results will be posted here after 8:00 AM).

USDA’s Monthly Supply and Demand report tomorrow will give us a new fundamental base from which to trade.

FOMC Meeting Minutes raised concern over the strength in the US Dollar and its impact on world economy causing a sell-off in the US currency. This reaction is providing support to soybeans and livestock futures

CONAB will issue its first projection of next year’s Brazilian corn and soybean production later this morning.

Lanworth, a unit of Thomson Reuters, raised its U.S. corn yield estimate to 175.5 bushels per acre from 174.9 on Sept. 29. The firm pegged U.S. corn production at 14.647 billion bushels, above its previous forecast of 14.596 billion, and a record high if realized.

Ethanol production rose last week. We should expect this to continue as new crop supplies surge into the pipeline and cash prices fall. Production is running 6% higher than last year due to the strong September pace. USDA expects the year to end with no change compared to 2013/14.

The fall in ethanol prices has more than offset the falling corn prices. Allendale’s Plant Profitability Model shows a net loss now that corn is off its lows. Additionally, we remain concerned about crude prices which are at the lowest level since June 2012.

8:00 AM Update:

 

Argentina will use “all the tools” at its disposal to end financial speculation by grain producers and exporters, Cabinet chief Jorge Capitanich said on Wednesday. Soy producers in Argentina, the world’s No. 3 soybean exporter, have been holding onto the oilseed in view of low global prices and financial uncertainty at home, depriving the cash-strapped government of critical tax revenue from export charges.

Reports of Canadian idle farrowing barns that were taken out of production three years ago are starting to come back into production.

The World Organization for Animal Health said that an animal-feed supplement suspected of spreading a deadly pig virus is not likely to transmit the disease if manufacturers follow proper safety measures.

Cash hogs have traded lower in six of the past eight days. Cash pork has been down in the past two days. The market may finally be reacting to the higher supplies hitting the market. This week’s kill is about 20,000 head over last week. Pork cutout values are down .22.

Cattle futures continue to move higher in anticipation of firmer cash prices. Trade is now thinking cash cattle could trade this week at $164-$165 in the south and $254-$256 in the north. Beef product strength has increased packer margin to near breakeven. Choice is up 2.67 and select is up 2.22. The CME Feeder Cattle Index is 238.01.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   -1 1/4     
  • Nov Beans   3 1/4
  • Dec Wheat   -6 1/2
  • Oct Cattle  .60
  • Oct Hogs    .87
  • Dec Dlr     -.21
  • Dec S&P     4.25
  • Nov Crude   -.04
  • Oct Gold    19.60
daily chart

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

Can We See More Fund Short Covering?

Oct 08, 2014

Good Morning! Paul Georgy with the early morning commentary for October 8, 2014 at 4:30 am.

Grain futures are mostly steady ahead of reports.

Traders Focus: USDA report, fund activity, direction of the US Dollar and weather forecast for the weekend in US and Brazil.

Trade is beginning to hone in on dry conditions in Brazil. We had the same concerns last year at this time and went on to produce a record crop in Brazil. US weather has heavy moisture falling across the cornbelt starting later today through next week. The amounts are yet to be determined and will be a concern to soybean harvesting.

The Chinese are back from a week holiday which could bring more volatility ahead of Friday’s report.

Lack of export demand and a large harvest has river basis falling.

Funds were estimated to have bought a net 8,000 wheat contracts, 13,000 corn contracts, and were even in soybeans on Tuesday.

U of IL - “Weekly estimates from EIA indicate that ethanol production in September 2014 was about 6.5 percent larger than in September 2013. The large increase, however, reflects the relatively low level of production in September 2013 so that rate of expansion will not likely be maintained.”

US Attaché comments on Argentina: Production costs have increased and commodity prices are down, but farmers view production as less a function of these variables and more a function of the exchange rate and government export policies. With this logic, farmers are not producing soybeans per se but rather hedging as best they can on future currency devaluation(s).

8:00 AM Update:

Eco calendar has the September FOMC Meeting minutes being released today. Trade will be looking for any indication when the Fed will cease QE.

Hog supplies are building and weights are heavier than a year ago. Wholesale pork since mid-September is up $15. The question is who is buying pork? August pork exports were 13% under last year. With the continued advancement in the value of the US dollar, which hurts exports, we doubt that the export situation has improved which leads us directly to the US consumer. Has the lower price of pork compared to beef caused the consumer demand to pick up sharply over the past three weeks? Gas pump prices have declined in recent weeks which are providing more dollars for food. Pork cutout value is down .70.

Beef product values jump again on Tuesday with choice up 2.74 and select up 3.09. The CME Feeder Index is 237.57.

Markets as of 4:30 AM CDT                                                                     

  • Dec Corn   -1         
  • Nov Beans   2
  • Dec Wheat   1/2
  • Oct Cattle  .15
  • Oct Hogs    .07
  • Dec Dlr     .06
  • Dec S&P     .50
  • Nov Crude   -1.01
  • Oct Gold    6.20
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

What is Cheap to Importers of US Grains?

Sep 22, 2014

Good Morning! Paul Georgy with the early morning commentary for September 22, 2014 at 5:30 am.

Grain futures are mostly lower as corn and soybeans set new lows and wheat finds support on Ukraine’s quality issues.

Traders Focus: USDA Crop Progress report this afternoon, weather forecast a bit warmer, September 30th Stocks report, and waiting for new sales announcements from USDA due to low prices.

South American Weather, Grain Stocks, and Small Grains Summary are topics that will be discussed on Tuesday, September 23rd at 8:00 PM CDT at the next Allendale Ag leaders Webinar, Sign up Now!

Harvest numbers should improve on this afternoons report in corn to 15% and soybeans to 3% to 4%.

Weather forecast looks warmer and drier which could allow for dry down and further harvest progress.

China buys 200,000 tonnes of corn from Bulgaria due to price and ongoing GMO problems with US corn. They also bought corn from Ukraine last month.

Reports out of Ukraine suggests the quality of their wheat crop will produce 13% less milling-quality wheat than last year.

Managed Money Funds increased long positions in corn by 5,579 to 87,045, they increased short positions in wheat by 5,380 to a net short position of 67,266 and they were net buyers of 6,057 soybeans to be net short 33,729.

Other Analysts are adjusting their crop yield estimates: Informa puts U.S. 2014 corn production at 14.024 billion bu based on yield of 171.8 bu/acre, they put U.S. 2014 soybean crop at 3.857 billion bu based on yield of 46.5 bu/acre.

Pro Farmer confirms it has raised its estimate of the U.S. corn yield to 172 bu/acre from 169.3 on Aug. 22, after its annual crop tour. They trimmed their corn crop estimate to 14.063 billion bushels from 14.093 in August. For soybeans, they raised production estimate to 3.884 billion from 3.812 billion in August on a yield of 47.0 bu/acre compared to 45.35 in August.

Financial markets will be looking for a reaction to the outcome of the weekend G-20 meeting of finance ministers and central bankers in Australia. President Obama will be in New York City this week on Thursday for the UN Climate Summit and various other meetings. Congress has now adjourned until after the November 4 elections.

Cattle-on-Feed report was very slightly bearish for February and April. The placement number was 97.1%, while analysts were expecting August placements at 96.0% of last year. Beef value continues to be pressured by slow retail demand. Choice was down 1.17 and select was down 2.48.

Wall Street Journal retail meat survey showed the 15-cut average for beef prices last week was $5.73 a pound, up from $5.70 a pound last week and higher than the $4.45-a-pound average in the same period a year earlier. The five-cut average for pork prices was $3.37 a pound last week, up 2 cents from an average of $3.35 a pound in the previous week. A year earlier it was $2.99 a pound. The two-cut average for chicken prices declined, falling to less than $2 a pound after a one-week gain last week. The average in the latest week was $1.93 a pound, compared with last week's average of $2.29 a pound and $2.03 a pound in the same period last year.

Lean hog futures were sparked by rumor china had made a large purchase of pork which pushed prices into technical buy points. There has been no confirmation as of yet which could cause for a lower opening. Livestock futures called lower for the opening.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   -1 1/2     
  • Nov Beans   -14 1/2
  • Dec Wheat   5
  • Oct Cattle  Lower
  • Oct Hogs    Lower
  • Dec Dlr     -.04
  • Dec S&P     -6.50
  • Oct Crude   -.19
  • Oct Gold   -2.80

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

Can Frost Put Bears To Sleep?

Sep 12, 2014

Good Morning! Paul Georgy with the early morning commentary for September 12, 2014 at 5:30 am.

Grain futures are mixed on short covering and waiting for official low temperature reports.

Traders Focus for today: Trade analysis of yesterday’s USDA Report, temperature reports from western cornbelt and social media’s pictures of crop damage.

Hat’s off! To the farmers that participated in the Allendale Yield Survey and the staff that compiled and processed the data. The USDA's result for corn yield was 171.7 bushels per acre (bpa) and the Allendale estimate was 171.9 bpa. USDA's Soybean yield was 46.6 bpa and the Allendale survey September estimate was 46.4 bpa. Thanks to all for an outstanding job.

Daily technical chart for October Hogs. Click for larger view.

Get all the weather info you need by checking with Ryan Martin’s comments at www.Allendale-Inc.com.The weather forecast is for late October temps to move across the northern Midwest over the next 48 hours. We should be seeing the coldest temps over the next hour. Expect to see pictures on social media reporting damage from frost. Will the damage be widespread enough to activate an extended rally in corn and soybeans?

The major take away from yesterday’s supply and demand report is that it is likely the USDA will increase yields and production into the January 2015 report.

Harvest reports from customers: Lee County IA producer first field on sand averaged 200 and another producer on first field harvested 220. Most corn yields are running 20 to 40 above average.

Moultrie County IL harvested 251 acres that average 220 dry. Producer was a little disappointed with the results.
Soybean harvest in Central IN has resulted in 75 to 80 bpa which is well above normal.

Algeria bought 400,000 tonnes of EU origin wheat and France has bought 100,000 tonnes of milling from Germany.

Update - Morning Coffee Commentary:

 

Cash cattle are establishing trade at steady prices with last week. Futures trader’s ideas of $2.00 to $3.00 higher are now waning. Beef values continue to find resistance as wholesalers have inventory to clean up and retailers do not want extra inventory at current prices. Choice beef was up .08 and select down 1.83. The CME Feeder Index is 226.98.

Chart watchers should be aware of the potential double top in October cattle which a weak weekly close could accelerate selling pressure.

Lean hog futures had spreaders trading volume impact prices again on Thursday. Hog supplies are trending higher with weights still running 10 to 12 pounds above a year ago. Pork cutout values are up 1.38. High prices of competitive meats are supporting pork at the retail counter. Grocery stores are also accumulating pork in preparation for October "Pork Month".

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   - 3/4     
  • Nov Beans   +3
  • Dec Wheat   -4 3/4
  • Oct Cattle  -.02
  • Oct Hogs    -1.10
  • Dec Dlr     -.02
  • Dec S&P     -.25
  • Oct Crude   +.50
  • Oct Gold   -1.30

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

Can Grains Rally After The Report?

Sep 11, 2014

Good Morning! Paul Georgy with the early morning commentary for September 11, 2014 at 5:30 am.

Grain futures are lower as traders prepare for a bearish report. Results from today’s USDA Supply and Demand report are available here.

Traders Focus for today: Export sale data at 7:30am, USDA Supply and Demand report at 11:00 am with an eye on yield and old crop ending stocks. After the report the focus will switch to frost fears over the next 3 days.

Trade estimates for weekly export sales last week: wheat 250,000 to 450,000 mt, corn 450,000 to 650,000 mt, soybeans 750,000 to 1,000,000 mt, soymeal 100,000 to 200,000 mt and soyoil 0 to 20,000 mt.

Update - Morning Coffee Commentary

 

The weather forecast and actual temps will determine yield loss and play into market action shortly after the USDA report. Make sure to read Allendale’s Meteorologist Ryan Martin’s Blog this morning and listen to his audio broadcast at midday to stay in touch with weather probabilities.

Our Friends at World Weather Inc. have the following thoughts: The surge of cold expected in the Canadian Prairies, northern Plains and upper Midwest Thursday into Sunday will result in widespread freezes in in Canada. Most of the crop damaging cold will only affect areas outside of key grain and oilseed areas in the U.S. Midwest. Very few corn or soybean production areas will be threatened by temperatures near or below 28 degrees Fahrenheit and that should minimize the potential for production losses.

A study performed by Allendale’s Research suggests the USDA will not give us the full yield increase on the September report and use this report as a stepping stone to the final number in January.

Trade Average guess:

                      Corn                  Soybeans                                                                          

            Production     Yield     Production    Yield

Avg estimate    14.288     170.7          3.883     46.2

U.S. ending stocks     2013/14               

                    Corn     Soy       

Avg estimate       1.191   0.136  

U.S. ending stocks   2014/15     

              Wheat        Corn         Soy

Avg estimate  0.667       2.012       0.453

We'll have a full analyis  of the report after it's release at 11:00 am CDT. 

An observation which you must be aware of is that the grain markets are oversold technically and market psychology is bearish going into an expected bearish report. Will the concern over frost give us enough reason for a short covering rally? Talk to your Allendale Brokers about strategies to protect hedges.

Chinese soybean crush margins are running at a 2 year low while US crushers are profitable and are looking for soybeans to fill the gap before harvest.

Ethanol production last week averaged 927,000 bpd vs 921,000 bpd the previous week. Cheap corn and strong crush margins drive processor incentive to produce more ethanol.

The Rosario exchange estimated farmers in Argentina plant 3.7 million hectares (9.1 million acres) of corn, down 700,000 or 16 % from the 2013/14 season due to high inflation pushing up production costs.

Light cattle trade in cash market at steady with last week. Cutout values have not kept up with fed cattle values putting packer margins at near breakeven. Tight supplies in feedlots are the driver and should provide support to nearby futures. Beef values are mixed with choice up .38 and select down .50. The CME Feeder Index is 226.38.

Spreaders dominated the trading volume in the lean hog futures on Wednesday. It was thought to have been liquidation of bear spreads by a few large players which drove deferred contracts to near limit down. Hog supplies should trend higher into fall with weights still running 10 to 12 pounds above a year ago. Pork cutout values are up .87.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   -1 3/4    
  • Nov Beans   -3 3/6
  • Dec Wheat   -3 1/4
  • Oct Cattle  -.30
  • Oct Hogs    -.07
  • Dec Dlr     -.04
  • Dec S&P     -3.50
  • Oct Crude   -.60
  • Oct Gold   +.30

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 Many Bushels Could Be Lost To Frost This Weekend?

Sep 10, 2014

 Good Morning! Paul Georgy with the early morning commentary for September 10, 2014 at 5:30 am.

Grain futures are mixed in a narrow trading range overnight.

Traders Focus for today: USDA S+D Report Thursday at 11:00, forecasts verses actual temps for this weekend and money flow from outside influences.

Thanks to all who attend the Allendale Ag Leaders Webinar last night. If you were unable to listen in live, the recording is available now, here.

The discussion on frost and its impact on production were very informative and specific. Ryan Martin discussed the factors affecting a frost formation: cloud cover, soil temperatures, wind speed, moisture and vegetation/heat transfer. Listen to last evening’s webinar and get all the details. Bottom line he is expecting cold air moving in to upper Midwest but not expecting very much damage to crops. Rich Nelson addressed the potential corn production loss and the impact on soybeans.

Update - Morning Coffee Commentary:

 

The USDA National Yield for corn and soybeans will be important in projecting overall supply and ending stocks. The study performed by Allendale’s Research suggests the USDA will not give us the full yield increase on the September report and use this report as a stepping stone to the final number in January.

Trade Average guess:              Corn                       Soybean

                        Production      Yield       Production      Yield

Average trade estimate      14.288    170.743            3.883     46.293

Trade is expecting an increase in ending stocks for both corn and soybeans for 2014/15 marketing year compared to USDA’s August estimate.

Allendale’s customer early harvest yields are coming in: east central IN, first 24 acres, 311 dry bushels per acre. Central IL short season corn averaged 241 bushel per acre, 23.5 to 28.6% moisture. You can forward any harvest results to me at pgeorgy@allendale-inc.com.

Brazilian farmers have equipment ready to go to the field on September 15. This the first day they are allowed to plant soybeans. They are preparing for a third consecutive year of record soybean production. An early start to soybean planting gives them the opportunity to double crop corn after harvest.

Grain warehouse workers in Argentina will strike for 24 hour starting today. These stoppages will slowdown loadings at the busiest time of the year.

The stronger US Dollar is driving investors out of commodities. The CRB Index set new lows yesterday. Watch for a change in investor attitude which could provide support to grains even with a record crop.

Cash cattle are expected to trade higher this week. Futures prices continue to work higher as tight market ready supplies and tight feeder cattle supplies support buying frenzy. Demand for light weight calves has been aggressive with corn prices dropping. Beef values are not keeping up with cash cattle. Choice beef is down .31 and select is up .84. The CME Feeder Index is 225.95.

The recent drop in lean hogs and pork product is providing a benefit as retailers feature the lower priced meat. Pork cutout values are up 1.74. Larger supplies of market ready hogs are expected to hit the market as we move into October. However, the overall demand for meat has been good due to some exporter and retailer need of inventory.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   - 3/4     
  • Nov Beans   +1
  • Dec Wheat   -2 1/2
  • Oct Cattle  +1.65
  • Oct Hogs    +.27
  • Dec Dlr     -.11
  • Dec S&P     +.50
  • Oct Crude   +.15
  • Oct Gold   +5.70

Chart of the Day

daily chart

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

Traders Jittery Over Potential Frost

Sep 09, 2014

Good Morning! Paul Georgy with the early morning commentary for September 9, 2014 at 4:30 am.

Grain futures are lower as traders wait for USDA’s September Supply and Demand report on Thursday.

Traders Focus for today: Upcoming USDA report, price movement of the US Dollar Index, any changes in frost forecast and the oversold condition based on technical indicators.

Tonight we’ll discuss the September 11th USDA Supply & Demand report, taking into account the newest corn and soybean yield projections from our yield survey. We’ll also have meteorologist Ryan Martin on hand to discuss frost potential and harvest delays. Register Here.

Observations from the Allendale Strategy Session yesterday afternoon:

—The September USDA report is a stepping stone for increasing yields. In the past 20 years the USDA increase yields by 2% or more only twice. The trade average estimate at 170.7 or a 2% increase.

—The export sales of new crop corn on the books is close to average and not record sales which would be expected with a record crop.

—Old crop soybean exports and crush are seen 20 and 10 million higher than USDA’s August report respectively. We do not expect USDA to make those changes on this report. It is likely they hold from adjusting the old crop balance sheet until the Sep 30 Grain Stocks report. That report will likely show a higher revision for the 2013 production. For new crop the 25th annual survey suggested yields of 46.4 for the September report.

You can get more details by contacting your Allendale Broker and find out the similar year projection date of the seasonal lows in corn.

Update - Morning Coffee Commentary:

 

Corn ratings were unchanged at 74% good to excellent. These are incredible conditions for this time of year (best since 1994). Dent increased from 35% to now 53% which is just behind the five year average of 59%.

Soybean ratings were unchanged at 72% good to excellent. There are only two other years, in the 28 year ratings history, with better conditions for this week. Soybeans dropping leaves has been seen on 5% of ground which is near the 7% five year average.

Wheat, corn and soybeans shipment inspections on Monday were lager than trade was expecting.

Due to the increase in soybean acres in Brazil local trade groups are estimating this year soy production at 95.1 mmt compared to USDA at 91.0 mmt.

(Reuters) U.S. policymakers and bankers had feared a repeat of the 1980’s break in farmland values this year, but instead, U.S. farmland prices are already up 8 percent as of Aug. 1 according to the U.S. Department of Agriculture (USDA).

Livestock markets are very choppy as tight supplies of market ready cattle and feeder cattle support cash markets. Product values of beef try to keep up with last weeks rally in cash cattle. Choice is up 2.72 and select is up 1.59. The CME Feeder Index is 225.41.

Russia has eased its ban on imports of some U.S. meat products, including chicken and turkey liver, heart and gizzards and pork liver, heart, kidneys and pork fat, according to USDA’s Food Safety and Inspection Service. Pork cutout values are up .38.

Markets as of 4:30 AM CDT                                                                    

  • Dec Corn   – 3/4     
  • Nov Beans   -2 1/2
  • Dec Wheat   -2 1/2
  • Oct Cattle  +.50
  • Oct Hogs    +.42
  • Dec Dlr     +.14
  • Dec S&P     -1.75
  • Oct Crude   +.55
  • Oct Gold   +2.30

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

Major News Event Needed To Change Trend

Sep 08, 2014

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

Grain futures are mixed as short covering provides support.

Traders Focus for this week: The USDA crop conditions report this afternoon, frost jitters for late this week, USDA supply and demand report on Thursday, cease-fire in Ukraine, possibility of further sanctions against Russia and economic data affecting US dollar index.

File you early yield results by emailing me at pgeorgy@allendale-inc.com.

The Managed Money Funds increased longs in corn by 12,523 while increasing short positions in soybeans by 3,634 and in wheat by 5,062. The chart below is an example of the COT charts available in Allendale Advisory Report.

Crop conditions this afternoon are expected to be steady to better which would be record highs for this week in September. With the crop beginning to mature the seasonal tendency would lean toward lower good/excellent numbers.

Going into Thursday’s September Supply and Demand Report has traders focused on national average yield for corn and soybeans.

Check Allendale Meteorologist Ryan Martin’s weather comments and follow his chances of frost. The models are pushing the chance of cold weather further north and putting more rain in the forecast for the northern cornbelt. Traders are worried about the crop maturing in time for a high quality harvest. Listen in to our webinar tomorrow night about yields, the Supply and Demand Report, and frost potential. This event is no cost to you – register here.

Update - Morning Coffee Commentary:

 

NATO estimates more than 3,000 Russian troops with tanks are inside Ukraine and their numbers are growing, and NATO supreme military commander Philip Breedlove said Russian President Putin’s peace offer "lacks credibility" and is a ploy to take control over rebel-held Ukrainian territory.

Mid-Autumn Festival in China today therefore all of their markets are closed. China’s August CPI report on Wednesday night is expected to ease to +2.2% from +2.3% in July.

US Congress gets back to work in Washington with the job of keeping the government open past the October 1 deadline.

Early harvest yields are rolling in out of the southern cornbelt. Some yield descriptions are: this is a whooper crop, have never seen anything like this in my lifetime and dry bushels are 45 bushels higher than average.

The National Animal Health Laboratory Network (NAHLN) reports 63 positive accessions out of 731 tested at nine veterinary diagnostic labs for the week ending 30 August, according to the American Association of Swine Veterinarians (AASV). For the most recent week (week of 23 August), the state reporting the most new positive tests was Iowa with 11, followed by Minnesota with nine and Illinois with seven. Also reporting one or more positive results were California, Indiana, Kansas, Michigan, Missouri, North Carolina, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Wisconsin and Wyoming.

Beef values were firm on Friday with choice up .55 and select up 1.56. The CME Feeder Index is 224.28. Pork cutout values are down .32. Livestock futures are expected to open steady lower but look for two sided trade.

Markets as of 5:30 AM CDT

  • Dec Corn   -2 1/4    
  • Nov Beans   +1 1/4
  • Dec Wheat   -2 3/4
  • Oct Cattle  Steady-Lower
  • Oct Hogs    Steady-Lower
  • Sep Dlr     +.19
  • Sep S&P     -3.50
  • Oct Crude   -.77
  • Oct Gold   +.01

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 Struggle To Rally As Record Harvest Starts

Sep 05, 2014

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

Grain futures are higher on short covering after post-holiday selloff. Nearby contracts in livestock add more strength.

Traders Focus Today: Direction of the US Dollar, oversold condition of grain futures, Ukraine/Russia talks and next week’s USDA reports.

We have been drawing attention to the US dollar Index in recent days. Yesterday’s strength in the dollar was triggered by the European Central Bank interest rate cut from a negative .1% to negative .2%. The following chart depicts the dollar’s negative correlation to the CRB Index (or commodity prices).

090414-us dollar and commodity prices

The USDA weekly export sales report will be released later this morning at 7:30.The following trade estimate have be gather by Reuters.

                          2013-14                 2014-15

Wheat                        N/A          250,000-450,000

Corn           (-100,000)-100,000         550,000-750,000

Soybeans             (-150,000)-0       900,000-1,100,000

Soymeal                 0-100,000         100,000-300,000

Soyoil            (-5,000)-10,000                0-15,000

The weather models have been disagreeing on frost potential for mid next week. However, the use of the frost word is not enough to support the grain futures. The rains across the Midwest are slowing maturity and could cause some harvest problems later in the season.

China’s cornbelt has received rain easing crop stress from drought. They sold 27% of the corn offered at this week’s state auction.

Yield reports are coming in are much bigger than normal and have many producers in awe about the size of their crops. If you are harvesting corn, beans or wheat and want to share your results you can email them to me at pgeorgy@allendale-inc.com.

EIA ethanol production remains strong coming in at 921,000 barrels per day compared to 913,000 last week.

Update - Morning Coffee Commentary:

Cash soybeans have been extremely choppy as processors need soybeans on any given day. Decatur, IL beans basis went from 3.50 over Nov to 2.50 over Nov late yesterday.

Ukraine/Russia peace talks continues while NATO leaders prepare to force Russia back to its borders.

Economic calendar for today: Retail Sales and Business Inventory at 7:30.

Livestock futures have been extremely volatile in recent session. There are many reasons influencing this movement such as: the strength in dollar which limits export competitiveness, the release of the vaccine for PEDv will increase pig production for deferred contracts and current tight supplies of market ready cattle and hogs provide support for October contracts.

Average beef prices in weekly grocery-store advertisements showed 15-cut average for beef prices this week was $5.51 a pound, up from $5.39 a pound last week and well above the $4.41-per-pound average in the same period a year earlier.

The five-cut average for pork prices dropped to $3.24 a pound from $3.54 last week, pushed lower by discounts on bacon in cities like Los Angeles and Kansas City, Mo. The five-cut pork average price was $3.01 a pound.

Beef values were higher with choice up .54 and select up .75. The CME Feeder Index is 222.91.

Pork cutout values are up 1.89.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   +1 1/2    
  • Nov Beans   +3 1/4
  • Dec Wheat   +4
  • Oct Cattle  +1.20
  • Oct Hogs    +1.35
  • Sep Dlr     -.05
  • Sep S&P     -7.50
  • Oct Crude   +.24
  • Oct Gold   -.50

Chart of the Day

daily chart

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

Can This Market Rally Before Harvest?

Sep 04, 2014

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

Grain futures are mixed led by short covering in corn and soybeans. Wheat remains under pressure as the Ukrainian situation cools-off.

Traders Focus Today: More yield estimates, actual harvest results, and changes in weather forecast.

The USDA weekly export sales report will be released tomorrow morning at 7:30 due to Monday’s holiday.

Informa is expected to release their yield and production estimates today at 10:30.

Crop forecaster Lanworth on Wednesday lowered its forecast for the U.S. 2014 corn yield to 173.7 bushels per acre (bpa) from 174.5 previously. For soybeans, they left their forecast at 46.7 bpa and estimated soybean production at 3.852 billion bushels, down from 3.855 billion previously.

Everyone should have received the results of Allendale’s 25 Annual Yield Survey by email yesterday morning. Thank you for all your help on making this year’s survey a success.

Update - Morning Coffee Commentary:

Chinese Delegation will be in Chicago next week. Trade expects them to sign a purchase agreement for soybeans as they have done in the past on their annual visits.

Funds were estimated to be sellers of 8,000 wheat, 10,000 corn, 5,000 soybean, 4,000 soymeal and 2,000 soyoil contracts on Wednesday.

The world’s largest refinery that will take corn residue and turn it into ethanol began production in Emmetsburg, IA. There were dignitaries from around the world present at the opening ceremonies yesterday. This $250 million project is a venture between POET and a Netherlands bio-tech company. The goal is to produce 25 million gallons of ethanol a year.

Argentina’s AFIP is requiring farmers to provide the location where they are storing soybeans, and corn. There are still about 27 mmt of soybeans from this year’s record harvest being held by farmers in silo bags. Farmers are worried that GPS data will be used to force them to sell grains as government needs revenue from exports.

Zoetis Inc., the world's largest animal-health company, has received a conditional license from the U.S. Agriculture Department for its vaccine against a deadly piglet virus PEDv and will begin selling it this month in the United States.

Pork product values are getting cheap enough for retailers to feature pork again. Seasonal tendencies are for hog futures to rally in September. However, increasing slaughter numbers could keep a lid on prices. Pork cutout values are down .85.

Cash cattle are set to trade steady to higher this week. Tight supplies of feeder cattle and cheap grain prices are providing some support. Beef values are stronger with choice up 1.47 and select up .11. The CME Feeder Index is 221.35.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   + 3/4     
  • Nov Beans   - 1/2
  • Dec Wheat   -3 1/4
  • Oct Cattle  +2.65
  • Oct Hogs    +1.35
  • Sep Dlr     +.02
  • Sep S&P     +2.75
  • Oct Crude   -.40
  • Oct Gold   +2.90

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

Soybean Conditions Improve Against Seasonal Odds

Sep 03, 2014

Good Morning! Paul Georgy with the early morning commentary for September 3, 2014 at 5:30 am.

Grain futures are lower due to counter seasonal crop conditions results.

Traders Focus Today: Weather forecasts, World political events, Allendale’s Survey Results and technical support/resistance points.

Allendale's 25th Annual Yield Survey results are available now. Get the results here.

082914-aldl survey historyThe track record of this survey has been very close to the final USDA number.

Crop conditions for soybeans improved 2% last week to 72% good/excellent. The seasonal trend is for conditions to be declining at this time of year as crops mature. 95% of the soybean crop is setting pods which is in line with the 5 year average of 95%. 5% of the crop is dropping leaves compared to 7% average.

The huge soybean yields of 65-90 bu/acre coming out of the delta have some in the trade talking about some enormous national average yields.

The trade was looking for corn conditions to decline due to normal seasonal maturation. However the USDA said the corn crop improved by 1% to 74% good/excellent vs. 73% last week. Corn in the dough stage was 90% vs. 89% on average while corn dented was at 53% vs. 59% and corn mature was at 8% vs. 16%. The concern of frost will be on the traders mind for a few more weeks.

The only real threat of frost/freeze is seen in the middle of the month in northern regions of the Canadian growing regions. However the models disagree with that forecast as the GFS is the colder model calling for a freeze north of a line from Edmonton to just north of the northern edge of Lake Winnipeg. The Euro keeps the freezing temps a good 200 miles farther north.

The Russian/Ukrainian situation is being closely monitored by the trade. There have been no shipping disruptions yet as both Ukraine and Russia are exporting as fast as they can to move grain to the ports. The Russian separatists did seize a port town over the long weekend. Look for volatility to continue even with bearish fundamental news for wheat supplies.

"The investment binge in U.S. agriculture funds has ended as record crops and the promise of improving meat supplies send prices plunging. After taking in more money than precious metals or energy funds during the first five months of 2014, exchange-traded products backed by agriculture had a net outflow for the year of $57.7 million as of Aug. 29, down 2.9 percent, data compiled by Bloomberg show."

The US Dollar is slightly lower after yesterday’s sharp rally. Factory Orders data will be released at 9:00 am.

Update - Morning Coffee Commentary:

Cattle show lists are estimated to be slightly higher than last week. Early calls for the cash cattle market this week is steady higher. Currently offers are 158 to 159 with no packer bids. Beef values continue on their slide with choice down .19 and select down .56. The CME Feeder Index is 221.07.

Hog futures are firmer as product demand shows some improvement. Hogs have a strong seasonal suggesting higher trending prices from early September into October. Pork cutout values are up .72.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   -2 3/4    
  • Nov Beans   -5 3/6
  • Dec Wheat   -6 3/4
  • Oct Cattle  +.77
  • Oct Hogs    +.95
  • Sep Dlr     -.11
  • Sep S&P     +7.75
  • Oct Crude   +.79
  • Oct Gold   +3.20

Chart of the Day

daily chart

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

Crop Maturity Now A Concern To Trade

Sep 02, 2014

Good Morning! Paul Georgy with the early morning commentary for September 2, 2014 at 4:30 am.

Grain futures are higher on short covering and beginning of the month buying.

Traders Focus Today: Weekend rains, crop conditions report this afternoon and world political unrest.

Allendale's 25th Annual Yield Survey results will be released tomorrow at 7:30 am.

Weekend rains across the Midwest are adding yield questions to both corn and soybeans. The warmer temps in the forecast should allow for seasonal maturation.

Some early harvest reports from 3rd hand sources are seeing corn yields of 225+ bu per acre in Southern IL. Eastern KS yields are 190 bu per acre.

The International Grain Council has increased world corn production by 4 million tonnes and raised total wheat production to 713 mmt from 702 mmt.

Update - Morning Coffee Commentary:

 

Russian domestic wheat prices have risen due to aggressive export shipments. In August they shipped 4.5 mmt of grain to world buyers. The Russian Ruble fell to an all-time low against the US dollar. This is giving the advantage to Black Sea wheat verses US origin.

The EU and US are considering more aggressive sanctions against Russia for moving troops into Ukraine.

Managed Money Funds increased long positions in corn by 2,874 contracts and reduced short positions in wheat by 3,870 contracts. They increased short positions in soybeans by 9,354 contracts last week.

November soybeans have established a trading range between 10.20 and 10.36. Watch for a move in the direction of the breakout.

The US Dollar index closed out the month of August at new highs for the move. The dollar strength is impacting US product competitiveness in world trade.

Talk of China needing more pork by the end of the year had hog traders covering short positions last week. The question that will be discussed for weeks is whether China will import pork or feed products. Pork cutout value on Friday was up 1.10.

South Korea has lifted a ban on the use of animal feed additive zilpaterol in beef, opening the door to imports containing the growth enhancer.

Beef values closed out the month of August weak with choice down .59 and select down .88. The CME Feeder Index is 218.51.

Markets as of 4:30 AM CDT                                                                    

  • Dec Corn   +1 3/4    
  • Nov Beans   +5 3/4
  • Sep Wheat   + 1/4
  • Oct Cattle  Steady-Higher
  • Oct Hogs    Steady-Higher
  • Sep Dlr     +.22
  • Sep S&P     +3.75
  • Oct Crude   -.74
  • Oct Gold   -9.80

Chart of the Day

daily chart

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

Allendale’s Yield Survey Results On Wednesday

Aug 29, 2014

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

Grain futures are mixed with corn lower, soybeans and wheat are higher. The volume is light and markets have been in a narrow trading range.

Traders Focus Today: Russian forces in Ukraine, SDS in soybeans and possibly too much rain for WCB. Traders will also be adjusting positions before the long weekend.

Today is the last day to input your farms yields to be counted in the Allendale 25th Annual Yield SurveyThe results of the survey will be released on September 3rd at 7:30 am.

Randy Melvin from the Allendale Branch office in Buffalo, ND says his clients are finding high levels of deoxynivalenol (DON) in the harvested spring wheat crop. Most early planted spring wheat is coming in at 3-7ppm. Many elevators are discounting about 40-60 cents for a DON of 4-5 ppm. There is also some concern about wheat sprouting in the head with the weather we are having. Wheat harvest is not progressing at a very fast pace due to cool cloudy and wet weather.

Update - Morning Coffee:

Valero Renewable Fuels has resumed production at an ethanol plant in the Port of Indiana-Mount Vernon along the Ohio River that was shut down more than two years ago by its previous owner.

Today is first notice day for the September grain contracts. We should be getting that data any minute.

Americans are more anxious about the economy now than they were right after the Great Recession ended despite stock market gains, falling unemployment and growth moving closer to full health. Seventy-one percent of Americans say they think the recession exerted a permanent drag on the economy, according to a survey being released Thursday by Rutgers University.

We still have plenty of chances for rain across the Corn Belt today through midweek next week. Total rains can easily be half to 2" additional over what we have seen already. Coverage will be around 80%. There can be some embedded thunderstorms that create some locally higher amounts, but those will be the exception rather than the rule…Continue reading weather

Weekly Egg sets were up 2% from the same week a year ago while Broiler placements also came in up 2% from a year ago.

EU plans storage aid for butter, skimmed milk powder and certain cheeses to alleviate the impact of Russian restrictions on imports of EU dairy products, the European Commission says today.

August Cattle contract expires at noon today.

Beef values remain under pressure ahead of the holiday. Choice is down .52 and select is down 2.33. The CME Feeder Index is 218.23.

Pork cutout values are up .44. Futures traders are short covering before long weekend and hopes of good clearance at the retail counter due to its competitive value with beef.

Livestock markets open at 9:05 on Tuesday.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   -1 1/4    
  • Nov Beans   +3 1/4
  • Sep Wheat   +3 3/4
  • Oct Cattle  +.17
  • Oct Hogs    +.92
  • Sep Dlr     -.04
  • Sep S&P     +4.25
  • Oct Crude   +.41
  • Oct Gold   -4.60

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

 

 

Low Prices Wake-Up World Buyers

Aug 28, 2014

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

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

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

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

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

Update - Morning Coffee Commentary:

 

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

(Reuters)      

         Trade estimates for     Trade estimates for

                     2013-14                 2014-15

Wheat                    N/A         300,000-500,000

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

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

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

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

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

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

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

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

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

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

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

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

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

Markets as of 5:30 AM CDT                                                                    

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

Chart of the Day

daily chart

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

Harvest Yields Start To Roll In

Aug 27, 2014

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

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

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

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

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

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

Update - Morning Coffee Commentary:

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

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

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

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

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

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

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

Markets as of 5:30 AM CDT                                                                    

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

Chart of the Day

daily chart

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

Crop Conditions Remain Near All-Time Highs

Aug 26, 2014

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

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

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

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

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

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

Update - Morning Coffee Commentary:

 

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

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

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

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

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

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

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

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

Markets as of 4:30 AM CDT                                                                    

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

Chart of the Day

daily chart

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Demand For Old Crop Soybeans Provides Support

Aug 25, 2014

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

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

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

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

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

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

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

Update - Morning Coffee Commentary:

 

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

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

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

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

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

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

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

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

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

Markets as of 5:30 AM CDT                                                                    

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

 

Chart of the Day

daily chart

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Can Grains Rally as Tour Week Comes to a Close?

Aug 22, 2014

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

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

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

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

Morning Coffee Commentary:

 

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

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

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

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

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

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

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

Markets as of 5:30 AM CDT                                                                    

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

Chart of the Day

daily chart

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

 

 

Bounce in Grains While Livestock Remain Weak

Aug 21, 2014

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

Grain futures are higher on short covering ahead of the weekly export sales report.

Traders Focus Today: Traders will be waiting for NOAA forecasts and key data releases from Canada and USDA.

Allendale’s 25th Annual Yield Survey is underway. You can add your farms information by going to www.allendale-inc.com. We will be taking data through August 29th and will release the finds on September 3rd.

Weather forecasts will be watched closely today as NOAA will be updating their outlook for September and the 90 day outlook later this morning.

The ProFarmer tour puts the IL yield at 196.96 compared to 170.48 last year. Western IA corn yields were estimated at 177.48 to 180.90 compared to last year’s 160.12 to 175.65.

Update - Morning Coffee Commentary:

Weekly export sales estimates gather by Reuter’s news service are:

          Trade estimates for      Trade estimates for

                      2013-14                  2014-15

Wheat                     N/A          350,000-500,000

Corn                0-150,000          650,000-850,000

Soybeans            0-100,000        850,000-1,050,000

Soymeal        50,000-125,000          150,000-250,000

Soyoil               0-10,000                 0-10,000

Ethanol outpaces last week with average daily production of 937 thousand barrels per day. Cheaper corn prices are supporting excellent profit margins. Currently total ethanol production for the year is 11% higher than last year and USDA goal is 10.1%.

Statistics Canada will give us their estimates on wheat and oil seed production at 7:30 this morning.

China sold 24.3% of their weekly soybean reserve offerings. That rate is a little higher than last week’s rate of 23.07%.

Argentine farmers are expected to cut the planting area of corn by 10 percent to 3.2 million hectares in the 2014/15 season due to low international prices for the crop and high sowing costs, the Buenos Aires Grains Exchange said.

Friday is option expiration of September contracts of grains and oilseeds.

From this morning’s weather blog: Warm and humid air expands across the Corn Belt over the next few days, as cooler air starts to move into the northern plains and the western plains. We see plenty of thunderstorm action firing off in the warm sector through the weekend, but action will be very hit and miss, as thunderstorms usually are….continue reading weather.

Russia has stopped trucks that were hauling US poultry through Kazakhstan. India is offering beef supplies to meet the needs for Russian Far East Market.

Cattle on Feed report will be released Friday at 2:00 pm. The trade is looking for 97.4% on feed, 90.9 placed and 92.5% marketed.

August cattle futures are now pricing in $149 cash at the end of the month and September and October prices are suggesting $147/$148. Cash this week is expected to be $151 to $152 which is $3 to $4 less than last week.

Beef values are weak with choice down 1.36 and select down .84. The CME Feeder Index is 219.46

Hog futures remain under pressure for the re-occurring reason of too much pork and too high of price. Pork cutout values are down 2.41.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   +2 3/4    
  • Nov Beans   +7
  • Sep Wheat   +4
  • Oct Cattle  -.27
  • Oct Hogs    -1.05
  • Sep Dlr     +.01
  • Sep S&P     +3.50
  • Oct Crude   -.63
  • Oct Gold   -11.6

Chart of the Day

daily chart

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Watch the Dollar Index And Headlines

Aug 20, 2014

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

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

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

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

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

Update - Morning Coffee Commentary:

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

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

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

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

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

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

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

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

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

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

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

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

Aug 19, 2014

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

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

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

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

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

Update - Morning Coffee Commentary:

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

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

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

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

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

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

Stats Canada will release their production numbers on Thursday.

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

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

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

Markets as of 4:45 AM CDT

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

 

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Headlines Will Add Excitement This Week

Aug 18, 2014

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

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

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

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

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

Update - Morning Coffee Commentary:

 

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

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

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

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

Stats Canada will update their 2014 production on Thursday.

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

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

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

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

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

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

Markets as of 5:30 AM CDT

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

 

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Can Corn Closeout Week With Largest Gain In 4 Weeks?

Aug 15, 2014

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

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

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

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

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

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

Update - Morning Coffee Commentary:

 

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

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

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

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

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

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

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

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

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

Markets as of 5:30 AM CDT

Dec Corn    – 1/4

Nov Beans   -5

Sep Wheat   +1 3/4

Oct Cattle+.05

Oct Hogs+.37

Sep Dlr     -.04

Sep S&P     +4.50

Sep Crude   +.01

Oct Gold    +2.10

Chart of the Day

daily chart

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Markets Quiet Overnight

Aug 14, 2014

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

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

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

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

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

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

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

Get the export sales results in our Morning Coffee update:

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

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

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

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

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

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

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

Markets as of 5:30 AM CDT                                                                    

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

Chart of the Day

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Dealing With Record Crops

Aug 13, 2014

Good Morning! Paul Georgy with the early morning commentary for August 13, 2014 at 5:30 am.

Grain futures are up slightly on short covering. Technical indicators are showing oversold although rallies will be met with selling after USDA’s record crop projection.

Traders Focus Today: Reality of a record corn and soybean production. And the expectation of further yield increases on the September Report.

Update - Morning Coffee Commentary:

 

The USDA increased yield in by 2 bushels per acre to 167.4. The increase puts total production at 14.032 billion bushel of corn.

Soybean yields were raised by .2 of a bushel to 45.4 bushels per acre which projects total production at 3.816 billion bushel. Ending Stocks estimate for the 2014/15 crop year is 430 million bushel.

US wheat production was raised by 38 million bushel but offset in the balance sheet by an increase in exports.

The USDA raised the Russian wheat crop by 6 mmt and the Ukraine wheat crop by 1 mmt.

The average farm price was lowered by 10 cents in new crop corn (3.55-4.25) and 15 cents in new crop soybeans (9.35-11.35).

Looking past the USDA report the trade will have to bide its time until next month’s report. The concern over an early frost due to cool temps and slow maturity of crops is on trader’s minds.

Weather models are putting a little more moisture in the 6 to 10 day forecast for the Midwest. Temperatures are trending a little warmer for the 6 to 15 day timeframe.

The US attaché in China says the soybean crop is expected to be 1.6% less than last year.

The drought in central China is the worst in a decade but not expected to have a huge impact on total corn production due to the increase in acres this year.

Economic news such as Retail Sales and Business Inventories is on the docket for 7:30 this morning.

China has barred pork imports from six U.S processing plants and six cold storage facilities effective on Wednesday to enforce its ban on the use of a feed additive that promotes lean muscle growth, the U.S. Department of Agriculture said on Tuesday.

Livestock futures are be bombarded with technical selling and weak demand fundamentals causing futures traders to cover long positions. The lean hog contracts are dealing with the heavier hog weights and an increase in supply. The cattle complex is dealing with the "sticker shock" consumers are finding at the retail counter. Beef values were mixed with choice down 1.29 and select up 1.51. The CME Feeder Index is 222.55. The Pork cutout value is down 3.50.

Markets as of 5:30 AM CDT          

  • Dec Corn   + 1/4
  • Nov Beans   +3 1/2
  • Sep Wheat   +5
  • Oct Cattle  -.67
  • Oct Hogs    -.77
  • Sep Dlr     +.14
  • Sep S&P     +7.50
  • Sep Crude   -.00
  • Oct Gold   +.20

 

Chart of the Day

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Trade Not Believing Lower Than Expected Yield

Aug 12, 2014

Initial Report Reaction:

 

August-14-WASDE-US-World-CornOld Crop Corn:It is normal for the focus on this report to be all about new crop production. There were some old crop demand changes to discuss though. Corn for ethanol was raised by 45 million bushels and exports by 20. That is not out of bounds. Feed/residual was left unchanged. Ending stocks were lowered moderately from 1.246 billion to 1.181. This helped offset much of the new crop numbers.

New Crop Corn: USDA’s numbers would appear to be bullish but it is unlikely the market will trade it so. Yields were increased from 165.3 bpa to now 167.4. This was under all yield numbers submitted by the 26 analysts surveyed by newswires. Over the past 21 years USDA has increased yields on the August report 10 separate times. Today’s increase, of only 1.3%, is the third smallest increase of those 10 years. Yields are determined by four separate factors. You have the number of plants per acre, the number of ears on those plants, the number of kernels on those ears, and the weight/size of those kernels. This survey, and even the September one, is only a partial look at the crop due to the lack of mature plants. The only real surveys including kernels are in the far South. In the Cornbelt, the field checks are covering plant populations and ear checks. The real jewel of this year’s corn is the incredibly successful pollination. That won’t be reflected until the September or October reports. Corn production, of 14.032 billion, was under the 14.253 average guess but still an increase over USDA’s July 13.860. Even USDA’s low production is still a record. Ending stocks were increased only from 1.801 to 1.808.

World Numbers: Old crop ending stocks were lowered from last month’s 173.4 million tonnes to now 171.1. New crop was lowered from 188.1 mt to now 187.8.

Price Expectations: USDA lowered its estimate of the average marketing cash price from $4.00 to $3.90. Allendale suggests very clearly that today’s report was a small step of the process of supply determination. It is likely no one in the industry believes the crop is this small and will therefore not trade it. On the positive end today’s report could allow for a small rebound in prices this month.

August-14-WASDE-US-World-BeansOld Crop Soybeans: Minor changes to demand were made but there was no change in the final ending stock estimate of 140 million bushels. Exports were raised by 20 million bushels, domestic crush was left unchanged, and imports were lowered by 5. On the bearish end residual use was lowered by 25 million. Don’t forget that USDA will likely revise up the fall 2013 harvest on the September 30 Grain Stocks report. That will take the place of their odd looking -94 million bushels of "residual use" that is in the balance sheet. Final stocks will end in the 130 – 150 mb range, not a market mover.

New Crop Soybeans:USDA did confirm that big soybean stocks are right around the corner. Yields were raised a bump from 45.2 to 45.4 bpa. The trade was expecting a small increase to 45.6. Production was raised to 3.816 billion, near the 3.823 average guess. Ending stocks were raised from 415 to 430 million bushels with no changes in demand.

World Numbers: Old crop world stocks were lowered from 67.2 million tonnes to now 67. New crop was increased from 85.3 to now 85.6.

Price Expectations: USDA lowered their marketing year average cash price by 25 cents to now a $10.50 estimate. Note this is not a futures price or even a target. This is a "marketing year average". Much of that number assumes pre-harvest sales at higher prices.

August-14-WASDE-US-World-WheatNew Crop Wheat: Production was raised by 38 million bushels today. The trade was expecting a 5 million increase in winter wheat and was surprised by the 30 million increase. Minor increases for "other spring" and durum filled the remainder. Including a 10 million increase for feed/residual they brought ending stocks up from 660 million last month to now 663. That was right on the average guess.

World Numbers: Along with a bigger US crop USDA also added 1.5 million tonnes to its EU crop estimate. New crop ending stocks were raised from 189.5 million tonnes to now 193.0.

Price Expectations: USDA lowered its marketing year average cash price from $6.60 to now $6.30.

For more information on pricing implications, give us a call at 800-262-7538, or visit us at www.Allendale-Inc.com

 
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