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November 2013 Archive for The Allendale Wake-Up Call

RSS By: Paul Georgy, AgWeb.com

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

Thanks To All The Farmers For A Bountiful Harvest

Nov 27, 2013

Good Morning! Paul Georgy with early morning comments for November 27, 2013 at 5:00 am. Grain futures are higher as soybean meal posts new contract highs.

Will there be any new export sales announcements at 8:00? Yesterday the USDA announced 360,000 in new sales and 300,000 tonnes of cancellations. The soybean complex continues to provide support for ag commodities at the CBOT. In the last few minutes of trade on Tuesday the December soybean meal set new contract highs. Holiday trade will likely keep markets on edge.

Corn and wheat news is not positive. Although there are increasing export tenders, buyers are still able to make purchases at lower prices elsewhere in the world.

Producers are interested in making cash sales on rallies but basis is slipping along with futures prices for corn. Ethanol plant bids are suggesting they have enough inventories for the moment and they believe within 30 days it will be much easier to buy grain.

The EIA ethanol report is out later this morning which is expected to show plants were busy last week as crush margins were positive.

First notice day for December contracts on Friday.

Ag markets have regular trading hours on today, closed on Thursday and will reopen on Friday morning. No globex ag markets on Thursday night. The Allendale Wake-Up Call will not be produced on Friday Morning. Call us with any questions at 800-262-7538.

Call your Allendale Representative to get the price movement study for the day after Thanksgiving.

It is the time of the month when major funds starting to roll positions: The Rogers Fund roll out of January contracts begin today. The well touted Goldman roll starts next Friday, Dec 6.

Livestock traders and funds have turned buyers as cutout values for beef improved on retail fill-in buying. Cash cattle are at a standstill but trade is looking for steady prices this week. Market ready cattle supplies are tight but larger carcass weights are offsetting some of that reduction. Beef cutout values are higher with choice up .10 and select up .80. The CME Feeder Index is 164.21.

Hog carcass weights are at record high levels which is masking the reduction in slaughter numbers from PEDv. Pork cutout values were down .51 on Tuesday.

Everyone at Allendale wishes you a very happy and safe Thanksgiving holiday. We are thankful for the opportunity to work with all of you.

Markets as of 5:00 AM

  • Dec Corn    +2 1/4
  • Jan Beans   +10
  • Dec Wheat   +4 3/4
  • Dec Cattle  +.12
  • Dec Hogs    +.15
  • Dec Dlr     -.08
  • Dec S&P     +1.75
  • Jan Crude   -.42
  • Dec Gold    +11.2
Chart of the Day

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

Holiday Trade Leads to Volatility

Nov 26, 2013

Good Morning! Paul Georgy with early morning comments for November 26, 2013 at 4:45 am.  Grain futures are lower on profit-taking ahead of the holiday.

Rumors continue to circulate as traders try to find a good reason for the rally in soybeans. The best explanation maybe technical buying when resistance levels are broken. There also have been reports of end-user purchases as they fear for higher prices. Farmer selling has picked up a little in soybeans but most bin doors are closed until next year. Producers are telling us that they will not move corn until they see a price rally.

The USDA says farmers have 95% of corn harvest completed. The last crop progress report for 2013 puts the US winter wheat crop at 62% G/E compared to 33% G/E last year.

Funds were big buyers of another 7,000 contracts of soybeans and bought 6,000 contracts of corn.  

Weather conditions in Argentina and Brazil, as reported by the forecasters we follow, are ideal for the young crop. South American farmers are struggling with insect problems this year which could affect population and ultimately yield.

Wheat tenders are plentiful this week and US wheat is getting more competitive. We will be watching for announcements from the USDA at 8:00 am.

First notice day for deliveries against the December contract at the CBOT is Friday. Traders are not expecting big deliveries in corn, wheat and meal as cash is premium to futures. However there have been surprises on delivery day, stay in contact with your broker on how you might handle the risk.

Cattle traders are waiting for some sign of cash trade this week. Packers should need more cattle for a full work week therefore trade is expecting a steady to better price. Retailers should be looking to refill coolers for first of month feature of beef and pork. Beef cutout values were sharply higher with choice up 2.40 and select up 1.46. The CME Feeder Index is 164.53.

Lean Hog futures struggle with the short work week and record high hog weights. As we approach December, slaughter numbers should decrease due to the effect of PEDv. Pork cutout values were down .50 on Monday. Markets have regular hours on Wednesday, closed on Thursday and will reopen on Friday morning. No Globex Ag markets on Thursday night. The Allendale Wake-Up Call will not be produced on Friday Morning. Call us with any questions at 800-262-7538.

Markets as of 4:45 AM

  • Dec Corn    -4 1/4
  • Jan Beans   -1 3/4
  • Dec Wheat   -4 1/4
  • Dec Cattle  +.07
  • Dec Hogs    +.12
  • Dec Dlr     -.18
  • Dec S&P     -1.00
  • Jan Crude   +.45
  • Dec Gold    +9.20
Chart of the Day

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

Profit Taking in Soybeans

Nov 25, 2013

Good Morning! Paul Georgy with early morning comments for November 25, 2013 at 5:00 am.  Grain futures are mixed as traders begin adjusting positions for the holiday shortened week.

Traders will be watching the newswires at 8:00 AM when the USDA announces export sales. The jump in soybean prices last week has circulated talk that China was buying large amounts of US meal and that Brazil is halting soybean sales until February until they figure out their supply situation. Some traders believe that the rally on Friday was driven solely by technical factors. Technical resistance crosses today in January soybeans at 13.22.

Farmers were notable sellers of soybeans on Friday and processor basis weakened. Corn sales are light as farmers finish harvest and prices struggle to rally.

Weather conditions in South America are still viewed as favorable to growing crops.

The Iran deal over the weekend is being spun as potentially friendly to demand for wheat and meal, however it doesn’t mean they will buy from the US.

Friday is first notice day for the December CBOT contracts. Trade is expecting large meal deliveries, no meal and zero to 1000 corn and wheat.

Managed funds increased short corn positions by 7,000 contracts to be net short 146,086 contracts. They added 8,500 contracts to their long position in soybeans and added 8,000 contracts to increase their short positions in wheat.

Israel tenders for 100,000 tonnes of optional origin corn and South Korea is tendering for 39,600 tonnes of optional origin milling wheat.

The Cattle on Feed report might be considered a little bearish as placements were higher than trade was expected. Total cattle on feed and marketing’s were on trade estimates. The sharp break in cattle futures last week may give way to some buying as markets are technically oversold and the report is out of the way. Beef cutout values were higher with choice up .34 and select up .39. The CME Feeder Index is 164.85 up .03.

Pork traders will be dealing with the short work week ahead and the hopes that the largest supply of market hogs are behind them. December futures currently are carrying a $3.00 premium to the cash hog index. Pork cutout values were down .34 on Friday. Expect volatility this week as some traders start their Thanksgiving holiday early.  

Markets as of 5:00 AM

  • Dec Corn    + 1/2
  • Jan Beans   -4 1/4
  • Dec Wheat   +3 1/2
  • Dec Cattle  Steady-Lower
  • Dec Hogs    Steady-Lower
  • Dec Dlr     +.22
  • Dec S&P     +5.50
  • Jan Crude   -1.35
  • Dec Gold    -13.00
Chart of the Day

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 Cash Markets Fuel Hopes

Nov 22, 2013

Good Morning! Paul Georgy with early morning comments for November 22, 2013 coming to you from New York City at 5:00 am. Grain futures are higher on better demand prospects and strong vegetable oil markets. Japan and Iraq are looking for wheat.

Grain markets are looking for any news to react too. Yesterday the good export data and stronger cash markets were the drivers. We expect farmer movement of grain to be minimal until mid-December. Basis for corn and soybeans could become stronger even if futures prices move higher or lower. Keep an eye on the spread between Dec and March futures as it could continue to narrow due to the strength in cash markets.

Wheat quality out of Australia is creating concern as frost and heavy rains are reducing harvests.

China’s Ag Ministry says they set to reap the largest grain harvest on record which is an increase for the 10th straight year.

The South American weather forecast looks like there is moisture on the way and ample opportunity to get the seed in the ground. The doctor could not have ordered it any better.

In Washington, the Ag Committee members have met several times recently without any agreement. The size of the food stamp cuts is the biggest hurdle with only a few weeks left in this year’s session.

Funds bought an estimated net 7,000 corn contracts, sold 1,000 wheat, bought 7,000 soybean, bought 2,000 soymeal and bought 5,000 soyoil contracts.

Yellen’s approval as the next Fed Chairman is almost a done deal as her nomination passes the Senate Banking Committee.

Cash cattle traded lightly on Thursday at $131 in Texas and Kansas which is $1.00 lower. This should not be much of a surprise as product prices, packer margins and futures prices were all lower this week. The USDA Cattle on Feed report today will give traders an indication of the tightness of market-ready cattle.

Estimates for the Cattle on feed report at 2:00 pm today are:

                                         Average Est.
On feed Nov 1                          94.0  
Placements in Oct                   108.7      
Marketing’s in Oct                   101.4   

Beef cutout values were lower on Thursday with choice down .76 and select down .87. The CME feeder Index is 164.82.

Cash hog prices, as measured by the lean hog index, generally bottom at this time of year (the peak of the year’s slaughters). The latest lean hog computation comes to 82.49. Futures are implying that it will get back to 86.25 by December 13. Pork cutout values are up .13.  

Markets as of 5:00 AM

  • Dec Corn    +1 1/4
  • Jan Beans   +10 1/2
  • Dec Wheat   +3 1/2
  • Dec Cattle  -.07
  • Dec Hogs    -.32
  • Dec Dlr     -.21
  • Dec S&P     -1.25
  • Jan Crude   -.23
  • Dec Gold    -1.60
Chart of the Day

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

Holiday Markets Have Arrived

Nov 21, 2013

Good Morning! Paul Georgy with early morning comments for November 21, 2013 at 3:30 am. Grain futures are slightly higher in anther quiet session.

This report is prepared a bit early this morning because I have to catch an early flight to New York City for an NFA Board of Directors meeting.

Futures traders are focused on the USDA Export Sales report at 7:30 am. Trade estimates for today’s report are: corn 750 to 950 tmt, soybeans 650 to 850 tmt, soymeal 200 to 350 tmt, soyoil 30 to 80 tmt and wheat 375 to 475 tmt.

Cash grain movement is likely to come to a standstill as harvest is complete on the majority of farms. Producers will not be sellers on further weakness in futures. Historically basis levels get stronger into the first half of December as bin doors are closed and will not open until next year. However, grain will have to move sometime in 2014 as farmers have a larger amount of unpriced grain.

Weather conditions remain very favorable for South American crops. Some weather forecasters are starting to suggest the potential for dryer weather patterns in mid-December for that region. Traders believe it will take some kind of weather problems to support a rally in CBOT grain futures.

Ethanol production is running 8% above last year and the USDA’s target is 5% higher. Last week production averaged 904K compared to 927K last week.

Funds sold an estimated net 3,000 corn, 2,000 wheat and 2,000 soybean contracts on Wednesday.

Talk out of Washington is now suggesting an extension of the current farm bill is more likely than new legislation.

December CBOT contracts options will expire on Friday.

Allendale is changing the way we will deliver the 26th Annual Ag Leaders Conference, click here.

Historical and seasonal studies suggest hog slaughter could peak this week. Pork export demand is impacted by China’s purchases thus far in 2013 show they have imported 20% less than last year. However August and September exports averaged 18% higher than last year. December Lean Hog futures bounced off the 100 day moving average with next resistance crossing at 87.00 level. Pork cutout values were down 1.07 on Wednesday.

Fundamental cattle traders feel like they have been de-horned after the first few trading days this week. Technical chart damage has bullish traders hoping for a quick rally. Beef cutout values were mixed with choice up .32 and select down .60. CME Feeder Index is 165.01. The monthly Cattle on Feed report Friday at 2:00 pm.

                                         Average Est.
On feed Nov 1                          94.0  
Placements in Oct                 108.7      
Marketing’s in Oct                101.4      

Markets as of 3:30 AM

  • Dec Corn    +2 3/4
  • Jan Beans   +5
  • Dec Wheat   +2
  • Dec Cattle  +.02
  • Dec Hogs    +.25
  • Dec Dlr     +.01
  • Dec S&P     +1.75
  • Jan Crude   +.01
  • Dec Gold    -10.10
Chart of the Day

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

Technical Indicators Dominate Price Direction

Nov 20, 2013

Good Morning! Paul Georgy with early morning comments for November 20, 2013 at 5:00 am. Grain futures are mostly unchanged in a very quiet overnight session.

The market is looking for new news to trade. We have been dealing with excellent South American weather and planting progress, a large corn harvest, changes to the EPA mandate, China rejecting a cargo of corn and technical oversold conditions. Without fundamental news, traders turn to technical indicators such as moving averages, retracement levels and overbought/oversold signals.

Traders are already talking about the January USDA report. They are concerned that USDA has underestimated corn production on the November report and overestimated the demand. Historically the USDA has the propensity to increase corn production from Nov to Jan reports. Allendale will be crunching numbers to give our clients and readers our best guess.

Midwest weather forecast is for dry weather into the weekend which should allow for a rapid completion to the 2013 corn harvest. Basis levels are mostly steady across the cornbelt. Soybean river basis is lower likely due to demand at the gulf.

Allendale is moving this year’s conference from Crystal Lake, IL to your computer. We will be providing the same information and forecasts but you will be able to listen and watch from your office or home. Sign up to today!

The University of Illinois issued a report on the crop insurance outlook for 2014. The probability of lower price guarantees could put producers at a negative return even with 80 to 85 % coverage for corn and soybeans. Bottom line is, it will be more important to market ahead the 2014 crop. Allendale has several strategies which could offer marketing opportunities for the 2014 crop.

Current weakness in cattle futures may set the stage for the springboard to higher prices in the 1st quarter of 2014. Replacement heifer demand is showing up across the plains as feed supplies improve. The Cattle on Feed report on Friday could show larger placements than last year but should not be much of a surprise as feed cost were high and feed supplies were tight. Beef cutout values were lower with choice down 1.54 and select down 1.81. CME Feeder Index is 165.23.

Pork cutout values were down 1.72 on Tuesday. A close below the 100 day moving average in nearby lean hog futures could trigger more fund and technical selling. 

Markets as of 5:00 AM

  • Dec Corn    -1 3/4
  • Jan Beans   -0
  • Dec Wheat   – 1/4
  • Dec Cattle  -.00
  • Dec Hogs    -.05
  • Dec Dlr     -.06
  • Dec S&P     -2.50
  • Dec Crude   -.13
  • Dec Gold    -3.10
Chart of the Day

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 Markets are Quiet Waiting for Next Headline

Nov 19, 2013

Good Morning! Paul Georgy with early morning comments for November 19, 2013 at 4:45 am.  Grain futures are mixed with corn and wheat higher and soybeans lower.

Corn harvest is 91% complete versus 86% average and soybeans 95% complete versus 96% average, as of Sunday. Winter wheat conditions dropped 2% to 63% Good/Excellent. Average G/E conditions for this time of year are 52%. Soils moisture in wheat country has been recharged which makes for better prospects come spring.

Local analysts in Brazil are suggesting that corn production will drop 8.4% this year due to the switch from corn to soybean planting. Estimates for Brazil’s soybean crop range from 86 to 89.5 mmt. Corn crop production’s estimated range is 70 to 79.2 mmt.

Current weather conditions for Brazil and Argentina are extremely favorable for getting the crop off to a good start. US grain traders will be watching for any shift in South America to a dry, hot pattern which could support prices at the CBOT.

Basis improves for corn and soybeans in the east while western processors were lower.

Yesterday funds sold an estimated net 12,000 corn contracts and 1,500 wheat contracts. They bought 4,000 soybean and 2,000 meal contracts on Monday.

China rejected a cargo of U.S. corn because it contained a genetically modified variety that is not approved for import.

The CBOT December contract option expiration is Friday. With the recent sell-off in corn, expect more volatility as traders adjust positions going into expiration.

The technical picture points to 3.90-4.00 as a possible support level. I suggest listening to the Allendale’s Weekly Strategy Session from yesterday afternoon. Rich Nelson discusses a study comparing similar fundamentals to this year’s corn crop.

Technical selling pressures lean hogs and cattle futures on Monday. Cash cattle strength last week and sliding beef cutout values are putting packers margins further in the red. They will be tough to deal with this week and trade is expecting lower cash trade. With Thanksgiving approaching expect some fill-in buying by retailers as they prepare for post-holiday features. The Cattle on Feed report is Friday at 2:00 pm. Beef cutout values were mixed with choice down .60 and select up 1.27. CME Feeder Index is 165.50. Pork cutout value was up .71.

Markets as of 4:45 AM

  • Dec Corn    +1 1/2
  • Jan Beans   -2 1/4
  • Dec Wheat   +5
  • Dec Cattle  -.22
  • Dec Hogs    -.32
  • Dec Dlr     -.03
  • Dec S&P     -2.50
  • Dec Crude   -.10
  • Dec Gold    -.60
Chart of the Day

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 Complete For Most Farmers

Nov 18, 2013

Good Morning! Paul Georgy with early morning comments for November 18, 2013 at 5:00 am. Grain futures are mixed with corn making new lows and wheat higher. Soybeans are unchanged. USDA will give us harvest progress this afternoon which should show we are virtually done with harvest.

The EPA announcement of reducing the mandate for ethanol was in line with trade expectations. This change, however, will likely not impact ethanol production while crush margins remain positive.

CIF basis for corn has posted highs not seen since August. Harvest will be slow for the balance of season due to heavy weekend rains.

Weather in Argentina is favorable for the week ahead, Brazil is expected to have good coverage (up to 80%) as their planting progress reaches 75% complete.

CFTC Commitment of Traders report showed managed money reducing short positions in corn by 39,660 contracts to leave them net short 139,060 contracts. They bought 23,326 bean contracts which was an addition to already long position. Managed funds added 27,716 contracts to make them short 47,251 contracts in wheat.

South Korea buys 10,000 tonnes of non-GMO soybeans from China over the weekend.

December grain contract options expire on Friday.

Cash cattle trade at 132 in the south late on Friday which was $1.00 higher than last week. Packers remain reluctant to pay up for cattle when their margins are in the red. Beef cutout values were lower on Friday with choice down 1.40 and select down .08. CME Feeder Index is 164.96.

Cash hogs weakness is mostly due to increased weights. Product movement will have competition at the retail counter the next few weeks. Pork cutout values were down 2.00 on Friday. Look for livestock futures to open lower this morning.

Markets as of 5:00 AM

  • Dec Corn    -4
  • Jan Beans   -0
  • Dec Wheat   +1 3/4
  • Dec Cattle  Steady-Lower
  • Dec Hogs    Steady-Lower
  • Dec Dlr     -.11
  • Dec S&P     +1.75
  • Dec Crude   -.46
  • Dec Gold    -4.30
Chart of the Day

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 Add Life To Grain Markets?

Nov 15, 2013

Good Morning! Paul Georgy with early morning comments for November 15, 2013 at 5:00 am.  Grain futures are mixed as corn and wheat bounce, while soybeans are slightly lower.

Later this morning traders will get the USDA Weekly Export data. Estimates are: corn 800 tmt to 1.0 mmt, soybeans 900 tmt to 1.2 mmt, soymeal 200 to 350 tmt, soyoil 25 to 50 tmt and wheat 350 to 550 tmt.

On the ethanol report this week production was raised by 25 bbd to 927. This is 13% greater than last year. No word yet from EPA on their mandate decision. Industry officials say it may not have an impact anyway because lower corn prices are providing an excellent reason to crush for ethanol.

NOPA will release October crush figures at 11:00 today which could show a usage of 154.9 million bushel of soybeans.

The FSA prevent planted acres are the 2nd highest on record at 8.8 million acres. Average prevent planted is 2.5 to 3.0 million acres, therefore you would have to assume farmers could plant an additional 5 to 6 million acres in 2014 if weather conditions are normal. This maybe enough of a reason to think about protecting price on 2014/15 crops, talk to your Allendale representative.

Basis levels were steady to higher in the interior and at the gulf. Barge freight is strong as demand for barges has increased. Elevators along the river are full and now are turning to filling barges as near-term storage.

As of yesterday, Argentina bean planting progress is normal at about 22% of expected area. Corn planting is still behind normal at 42% planted.

Egypt bought French and Romanian wheat on their purchase of 240,000 tonnes. Japan bought 120,000 tonnes of food grade wheat, about half from the US, the rest from Canada and Australia.

The poultry industry has geared up for the cheaper feed cost since August by increasing layer herd size by 4.9%. The cattle industry is declining in numbers and the pork industry struggles with PEDv and production losses. Cash cattle trade is ready to wait until Friday as packer demand is very light and profit margins are calculated to be in the red. Choice beef was down .45 and select was up .03. The CME Feeder Index is at 165.25, down .25. December cattle futures are trying to work higher as traders hope for a steady to higher cash trade this week.

Lean Hog futures have seen fund and speculative liquidation this week. Yesterday the Dec contract found support at the 100 day moving average. Today 82.25 should provide first line of support. Pork cutout values were up 1.78 on Thursday.

Markets as of 5:00 AM

  • Dec Corn    +1
  • Jan Beans   -3
  • Dec Wheat   +3
  • Dec Cattle  +.07
  • Dec Hogs    +.27
  • Dec Dlr     +.04
  • Dec S&P     +3.25
  • Dec Crude   -.09
  • Dec Gold    -3.90
Chart of the Day

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 Lead On Demand Front

Nov 14, 2013

Good Morning! Paul Georgy with early morning comments for November 14, 2013 at 5:00 am.  Grain futures are mixed. Wheat sees strength from numerous tenders in the world market. Corn and soybean traders seem to be picking each other’s pockets as they wait for some news to push prices out of trading range.

After the last USDA report on corn and soybean production for 2013, it is likely the trade will be looking for guidance on price direction to come from demand and South American weather. China will be the key focus for a pickup in purchases to offset the large US supplies.

Domestic demand for soybeans continues to provide support for the soy complex. Crush margins are very favorable and reports of a Midwest pushing bids to get enough supply. This is another sign that farmers are reluctant to sell before the first of the year.

The USDA Weekly Export Sales Report has been pushed back until tomorrow morning due to Monday’s holiday. The NOPA crush data will be released on Friday at 11:00 AM. Trade will also be watching for any changes in demand from the Philippines due to recent typhoon damage. There are estimates of major losses to their coconut crop.

Wheat basis at the gulf is showing some improvement as US wheat is getting competitive in the world market. There is talk Brazil booked 2 cargoes of US Hard Red Winter wheat for shipment yet this year.

South American weather is starting with ideal conditions to get their crops off to a good start. Traders will be watching for any indication that dryness may set in.

Trading volume was moderate yesterday in the CME grains. Funds are estimated to have sold a net 5,000 corn contracts, were even in wheat and bought 2,000 soybean contracts. Traders are watching fund positions closely as they are currently carrying a large short position in corn.

Cash hog weights hit record high levels on Wednesday in IA-MN. Pork cutout values slid $3.05, led by bacon prices. Lean Hog futures for December are testing October lows and nearing the 100 day moving average of 85.25.

Cash cattle bids are developing at 128 to 129 in the south with feedlots asking 133 to 135. Trade feels that we should get a steady trade this week. Competition for other meats is making it difficult for packers to become aggressive on beef. Cutout values for choice beef was up .75 while select was down .05. The CME Feeder Index was set at 165.50.

Markets as of 5:00 AM

  • Dec Corn    + 1/4
  • Jan Beans   -5 3/4
  • Dec Wheat   +5 1/2
  • Dec Cattle  +.35
  • Dec Hogs    -.42
  • Dec Dlr     +.23
  • Dec S&P     +4.00
  • Dec Crude   -.11
  • Dec Gold    +15.10
Chart of the Day

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 Nears Completion In Soybeans

Nov 13, 2013

Good Morning! Paul Georgy with early morning comments for November 13, 2013 at 5:00 am.  Grain futures are mostly unchanged in a very quiet overnight session.

China has raised their wheat import estimate for this year from 7.5 mmt to 8 mmt due to this year’s poor harvest.

In the US, soybean harvest as of Sunday is 91% complete compared to 86% last week and 92% average. Corn harvest is 84% complete versus 79% average. Winter Wheat planting was 95% planted versus 93% average. Winter wheat condition improved 2% to 65% good/excellent compared to 36% last year.

The weather forecast is favorable for soybean harvest at least through the weekend.

Funds sold an estimated net 6,000 corn contracts and bought 6,000 soybean contracts. They were even on wheat.

Bloomberg News ran a story that America’s diet changes are causing questions about wheat flour demand. They cited 1 out 3 Americans are reducing wheat flour consumption while only 1% is affected by a gluten-free dietary disorder.

USDA will update the FSA acreage data for October and November later today. The October data was delayed due to the government shutdown.

Gulf basis for soybeans was weaker on Tuesday while corn was steady. Our customers were telling us of stronger bids at interior markets.

President Obama picks new CFTC Chairman Timothy Massad to replace Gary Gensler. He comes from the Treasury Department and as no background whatsoever in Ag Commodities.

Federal Reserve Bank of Atlanta President Dennis Lockhart said Tuesday he believes the economy will need substantial central bank stimulus for some time to come in a speech he repeated from Friday.

The CME says they will lower the margin requirement for soybean and wheat contracts which will be effective after the close today.

Cash hog weakness pressures futures as IA-MN runs were larger than expected while weights continue to climb. This trend is "pulling the rug" from under those expecting reduced slaughter due to PEDv. Pork cutout value is up .39 to 95.24. The cash hog index remains below the Dec futures contract.

Cash cattle hopes of a higher trade this week have now moved to looking for steady prices. The showlists are a little larger this week and packer margins are in the red. Fed cattle supplies are expected to get tighter in December and through the 1st quarter of 2014. Beef cutout values are lower with choice down .53 and select down 1.20. the CME feeder Index is 165.43.

Markets as of 5:00 AM

  • Dec Corn    +0
  • Jan Beans   – 1/4
  • Dec Wheat   +0
  • Dec Cattle  -.02
  • Dec Hogs    -.15
  • Dec Dlr     +.01
  • Dec S&P     -3.25
  • Dec Crude   +.29
  • Dec Gold    +3.40

 

Chart of the Day

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

Corn Leads The Charge For Third Day

Nov 12, 2013

Good Morning! Paul Georgy with early morning comments for November 12, 2013 at 4:30 am.  Grain futures are higher.

Corn futures have now bounced over 20 cents off the low made on Friday. The USDA has given the market data that will be traded until the December report. According to Rich Nelson, Allendale’s Chief Strategist, the long-term picture still points to a target of 3.60 to 3.90 however short term factors have to be considered. Watch for large speculative short cover, weak shorts that are rushing to cover positions, aggressive export demand and lack of farmer selling going into year end. Stay tuned to the Allendale Advisory Report or contact your Allendale representative for strategies that fit your needs.

Weather conditions in the US have dropped snow over parts of the Midwest but should clear out in a few days then giving producers the chance to finish up harvest. The harvest progress report will be released this afternoon due to the Veterans Day holiday.

The only problem with South American weather is that it is too ideal right now. There is a long growing season ahead. Planting is progressing between rains with excellent field conditions.

Illinois River basis was under pressure on Monday as barge freight rises and farmer selling picks up on futures rally.

Funds bought an estimated net 12,000 corn contracts, sold net 4,000 wheat and bought 4,000 soybean contracts on Monday.

Ethanol producers are continuing to work with the Obama Administration and trying to convince the EPA to not lower the mandate. Many are expecting an announcement from the EPA this week.

Cash cattle were traded at 132 late on Friday which gives futures traders hope that we could see steady to higher this week. No product data was released on Monday. Retailer demand is being watched closely going into the end of November. The mention of snow in the forecast is keeping traders cautious about being short cattle futures especially with tight fed cattle supplies. CME Feeder Index is 165.44 up .02.

Cash hogs supplies are in question as we are getting into a period where the PEDv losses could begin to impact market ready numbers. Cash hog index is now below December futures.

Markets as of 4:30 AM

  • Dec Corn    +2 1/2
  • Jan Beans   +5 1/2
  • Dec Wheat   +4
  • Dec Cattle  -.05
  • Dec Hogs    -.10
  • Dec Dlr     +.22
  • Dec S&P     -3.00
  • Dec Crude   -.48
  • Dec Gold    -.50
Chart of the Day

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 Demand Support A Rally In Grains?

Nov 11, 2013

Good Morning! Paul Georgy with early morning comments for November 11, 2013 at 4:50 am.  

Thanks to our veterans and all the US troops protecting us around the world on this Veterans Day.

Grain futures are mixed as corn and wheat are higher on short covering and profit taking in soybeans after Friday’s rally. Spreading is a factor to watch also many financial markets are closed today for the holiday.

After a weekend to crunch the USDA numbers, traders will be making position adjustments this week. Corn futures rallied on Friday but ended the week unchanged.

Harvest progress this afternoon is expecting corn to be 82 to 85 % complete and soybeans 90 to 92% done. The weather forecast is for another cold front to move south and provide some snow across the central Midwest by midweek.

South American weather should be favorable to getting the row crops off to a good start. Argentina is expected to be over 50% planted.

The CFTC Commitment of Traders report on Friday afternoon showed managed money slightly reducing short positions in corn to 178,720 contracts short. They reduced long positions in soybeans by 18,793 and went from a net long to a net short position in wheat after selling a net 32,474 contracts.

Traders are looking for the EPA to make a decision on the ethanol mandate this week. The results could weigh on the corn market after a technical short covering rally.

The rally in futures caused soybean and corn basis to work lower late last week on a pickup in farmer selling.

Cash cattle traded at 131 last week. Packers were meeting their needs with contracted cattle. Beef cutout values were lower with choice down 1.20 and select down .43. Retailers will be featuring turkey the next several weeks, taking counter space of pork and beef. Pork cutout values were up .79 on Friday. Technical support crosses at last week’s lows in both cattle and hogs.

Markets as of 4:50 AM

  • Dec Corn    +5
  • Jan Beans   – 1/2
  • Dec Wheat   +4 1/4
  • Dec Cattle  steady-lower
  • Dec Hogs    steady
  • Dec Dlr     -.18
  • Dec S&P     +1.50
  • Dec Crude   -.20
  • Dec Gold    -.80
  •  
Chart of the Day

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 Wait For USDA Supply and Demand Data

Nov 08, 2013

Good Morning! Paul Georgy with early morning comments for November 8, 2013 at 5:00 am.  Grain futures were quiet overnight as traders prepare for a USDA report that will have lasting implications.

The trade average estimates are looking for an increase in yield however many are thinking the market is really pricing in a much larger increase. We will find out at 11 o’clock this morning. The market will likely be volatile at the release as the high frequency traders or headline traders will cause a sharp move. Any order within the daily trading limit could get filled. We suggest checking your open orders (GTC) so you don’t get an unwanted fill.

USDA trade average estimates as collected by Reuters News Service:

                                                         Total      Average    Harvested  
Corn                                               Prod       Yield           Acres      
Average trade estimate             14.003    158.933      88.097    
USDA September                       13.843    155.300      89.135      
Soybeans                                         
Average trade estimate               3.221      42.407      75.928
USDA September                         3.149      41.200      76.378
US Ending Stock                    Wheat    Corn      Soybeans
Average trade estimate              0.519       2.029       0.172
USDA September                         0.561       1.855       0.150

CONAB should be releasing the Brazilian production estimates at 7:30. Their last estimate for corn production was about 5.0 mmt higher than USDA.

Corn basis is a little weaker as harvest restarts after this week’s rains. Bean basis is firm as exporters and processors need inventory to meet aggressive near term demand.

Well known funds rolling positions out of the December contracts will continue today through next Wednesday.

On the CFTC Commitment of Traders report, due out this afternoon, traders are expecting a large short position by managed funds. The report by CFTC today should have them caught up on data releases after the government shutdown.

Argentina soybean planting is 11% complete, corn 39% and wheat harvest is 4% done. Brazil is expected to plant a record amount of acres of soybeans this year. They are turning pastures into bean fields which come after record soybean production in 2013.

The USDA will give us their 4th quarter pork production estimates today. It will be interesting to see how it matches up to September Hogs and Pigs report. Pork cutout values were up .48 on Thursday.

Packers are taking contract cattle at the beginning of the month with hope of buying the rest of their needs at lower money. Packer margins have turned red as product fights for space at the retail counter. A few cattle traded in the TX panhandle at 131 which would be 1 to 2 lower than last week. Beef cutout values were lower with choice down .57 and select down .45. CME Feeder Index is 165.32.

Rich Nelson will be presenting a video around noon today recapping the USDA reports, be sure to watch.

Markets as of 5:00 AM

  • Dec Corn    +1
  • Jan Beans   -1 1/4
  • Dec Wheat   +1 1/4
  • Dec Cattle  -.12
  • Dec Hogs    +.20
  • Dec Dlr     +.09
  • Dec S&P     +4.50
  • Dec Crude   -.16
  • Dec Gold    +.60
Chart of the Day

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 the Report Really Be That Bearish?

Nov 07, 2013

Good Morning! Paul Georgy with early morning comments for November 7, 2013 at 5:00 am. Grain futures are quiet as bulls and bears prepare for tomorrow’s crop production report.

The bears have the upper hand as they expect USDA to raise yields, total production and ending stocks for corn and soybeans. Bears also are getting help from the good planting conditions and good start of the South American crop.

The bulls are touting strong basis, lack of farmer selling and the expectation for USDA to raise demand estimates on the balance sheet. The large purchases of corn and soybeans by China are the main reason for their confidence.

History tells us that going into a major report and the majority is leaning one direction, the results will have to be even more convincing to keep the market moving in the direction of the crowd. Technical indicators are oversold in corn and wheat.

There is talk that the EPA will announce its decision on cutting the corn for ethanol mandate sometime on Friday. Trade is also thinking the odds of extending the bio-diesel tax this year is low as Senate is going to take a long Thanksgiving holiday.

CONAB, the government agency similar to USDA in Brazil, will release their estimates for corn and soybean production on Friday.

Export sales estimates for this morning’s report are: Corn 1.0 to 1.3 mmt, soybeans 800 tmt to 1.1 mmt, soymeal 190 to 250 mmt, soyoil 20 to 60 tmt and wheat 350 to 550 tmt.

Under CFTC’s new position limit rule the amount of positions a fund could hold is as much as 10 times higher than the CME currently allows.

Cattle packer margins are in the red again by as much as $30. They are reducing slaughter in an attempt to support product values. Retailers are getting ready for the Thanksgiving holiday and the featuring of turkey. Beef cutout values were mixed on Wednesday with choice down .89 and select up .64. CME Feeder index is 164.59.

Hog slaughter has picked up this week compared to the last 6 weeks. Pork cutout values are down .26.

Markets as of 5:00 AM

  • Dec Corn    - 3/4
  • Jan Beans   +4
  • Dec Wheat   +1 1/2
  • Dec Cattle  -.10
  • Dec Hogs    +.10
  • Dec Dlr     +.06
  • Dec S&P     +3.00
  • Dec Crude   +.23
  • Dec Gold    -2.60
Chart of the Day

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

Normal Fall Weather Halts Harvest

Nov 06, 2013

Good Morning! Paul Georgy with early morning comments for November 6, 2013 at 5:00 am.  Grain futures edge higher as a weather system drives farmers from the fields. Talk of export business is providing support although the expectation of negative numbers from the USDA limits any rallies.

Weather forecasts are for normal Fall, wet and cold, conditions for the next few days are followed by drier, warmer conditions. Argentina is getting rain where they needed and Brazil continues with soybean plantings.

Traders are discussing recent newswire polls that put corn yield under 159 bushels per acre. Some think that USDA yield and total production estimates could lead to nothing but a bearish report. Likely a reason for limited strength before Friday’s report.

(Reuters) – The trustee of MF Global’s defunct brokerage received approval from a bankruptcy judge on Tuesday for a plan that will repay its former commodity trader customers in full.

The Goldman roll will begin on Thursday as well as the DOW roll. Index funds are rebalancing which means they are believed to be adding to long positions in corn.

South Korea and Egypt are tendering for wheat on the world market.

Yesterday’s USDA hog slaughter was 436,000 which was the largest work load in almost a year. Pork cutout values were down 1.08 on Tuesday. Cash hogs are down over $5.00 in the past week.

Cattle slaughter is about 12,000 head below last week’s level. Normally, some of this drop in production is made up by cow slaughter. However cow slaughter over the past 4 weeks is 10% less than last year. Choice beef was down .11 and select was down 1.08 yesterday. The CME Feeder Index is 164.63 up .11.

Markets as of 5:00 AM

  • Dec Corn    – 1/4
  • Jan Beans   +3 1/4
  • Dec Wheat   +3 3/4
  • Dec Cattle  -.00
  • Dec Hogs    -.37
  • Dec Dlr     -.16
  • Dec S&P     +10.00
  • Dec Crude   +.66
  • Dec Gold    +10.20

 

Chart of the Day

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

Index Funds Roll And Rebalance

Nov 05, 2013

Good Morning! Paul Georgy with early morning comments for November 5, 2013 at 4:45 am. Grain futures are quiet and slightly higher on short covering.

With the USDA Report on Friday, the trade is looking for some fundamental news to key on between now and then. The rainfall in South America has relieved their drought conditions and planting progress is near normal.

Did you miss our October Ag Leader Webinar where we spoke to Geoff Cooper of the Renewable Fuels Association? Watch the recording here.

Harvest progress in MN and IA worked at a record pace to gather their crops last week, says USDA. Overall 73% of US corn is harvested versus 71% normal. Soybean harvest is 86% complete versus 85% average. The winter wheat crop is off to a great start with 63% Good/Excellent which 2% better than last week. Last year’s wheat conditions were rated at 39% Good/Excellent.

Traders are watching spreads as index funds roll out of the December futures contract. Deutsche Bank is buying December ’14 contracts and selling December ’13 contracts in corn, meal and soyoil for the next few days. On Thursday, the Goldman roll begins which is the time when they buy March and sell December ’13. Index funds are doing some rebalancing and traders believe they could be buying a sizable amount of corn contracts.

Corn traders are looking for an increase in yield, a reduction of nearly a million harvested acres and still come up with ending stocks of over 2 billion bushels on Friday’s report. Traders are finding it difficult to expect any bullish news for corn out of this report. This is usually a sign to be cautious.

Soybean production, acreage and probably demand adjustments could make for a very interesting report results. Contact your Allendale representative for some trading ideas.

Hog producers are holding back sows as evidenced by sow slaughter running at 7% below year ago levels. The effects of PED could have a big impact on Dec and 1st quarter slaughter. Pork cutout values were up .87 on Monday.

Cattle carcass weights have declined since feedlots have stopped using Zilmax. Beef production for Dec through March still suggests very tight supplies. Beef cutout values are higher with choice up .96 and select up .29. The CME Feeder Index is 164.52 down .59.

Markets as of 4:45 AM

  • Dec Corn    + 0
  • Jan Beans   +4 1/4
  • Dec Wheat   +1 1/4
  • Dec Cattle  -.07
  • Dec Hogs    -.05
  • Dec Dlr     -.01
  • Dec S&P     -4.50
  • Dec Crude   -.34
  • Dec Gold    -3.00
Chart of the Day

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

Corn Yield Estimates Grow Close To Trend

Nov 04, 2013

Good Morning! Paul Georgy with early morning comments for November 4, 2013 at 5:00 am.  Grain futures are mixed. Corn is lower on rain in South America and prospects of a large US harvest. Soybeans and wheat are higher on short-covering.

Traders will be getting positioned this week for Friday’s USDA Crop Production Report. We will get yield estimates for corn and soybeans, acreage adjustments for 2013 (planted and harvested) and ending stock projections. Last Friday two highly recognized analysts put out their yield and production estimates. Both have corn yield at 161.2 with total production at 14.369 and 14.223. The USDA’s last estimate was 13.843 billion bushel. Soybean yield estimates were 43.3 and 42.8 bushels per acre. Total production for soybean estimates was 3.270 and 3.298 billion bushel. USDA’s last estimate was 3.149 billion bushel.

Weather forecasts have a few more hours of dry conditions then rain moving across the Midwest on Tuesday and Wednesday.

Corn harvest is expected to be 70% complete compared to 59% last week. Soybean harvest should be about 90% complete compared to 77% last week. Brazil soybean planting progress is estimated to be 50% done.

Last week corn futures were down $0.13, soybeans were down $0.42 and wheat was down $0.23. Many technical indicators are suggesting an oversold condition, watch for a pre-report short covering bounce.

There were 275 soybean deliveries against the November contract through October 1st.

This week the trade will be watching for any change in the interest rate policies of the European Central Bank and Bank of England.

Hog slaughter has been stable for the last 4 weeks. Trade is expecting an increase of 20,000 or more this week. The past month has seen cash hog prices fall as much as $7.00 which futures rallied sharply on PED loss concerns. Look for spreads in futures to get some attention as we start the month of November. Pork cutout values were unchanged on Friday.

Cash cattle traded at $132 in Kansas and Texas on Friday. That was equal with the bulk of last week’s action. Supplies of market-ready cattle are tight. Beef cutout values were lower on Friday with choice down .57 and select down .94. The CME Feeder Index is 165.11 down .28. Look for support on setbacks in nearby futures.

Markets as of 5:00 AM

  • Dec Corn    – 3/4
  • Jan Beans   +4 3/4
  • Dec Wheat   +1 1/4
  • Dec Cattle  Steady-Lower
  • Dec Hogs    Steady-Lower
  • Dec Dlr     -.11
  • Dec S&P     +3.00
  • Dec Crude   -.09
  • Dec Gold    -.40
Chart of the Day

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 Turns To November 8th Report

Nov 01, 2013

Good Morning! Paul Georgy with early morning comments for November 1, 2013 at 5:00 am. Grain futures are mixed in a very quiet session. Corn has seen a 1 ¼ cent, wheat 2 ¼ and soybeans 6 cent trading range overnight.

Traders are now turning their focus to the next USDA report that could have important consequences on grain prices. On November 8 we will get USDA’s planted and harvested acreage adjustments for corn and soybeans as well as production numbers for 2013. Yield will still have the biggest impact.

Allendale released estimates yesterday, corn yield 158.7 bushels per acre and soybean yield 42.4 bushels per acre. Ending stock estimate for corn is 1.990 billion bushels and soybeans 180 million bushels. Informa and FC Stone will be out with their estimates later today.

We saw "buy the rumor, sell the fact" attitude after the large export sales numbers yesterday. Export sales were almost twice as large as was expected by the trade for corn and soybeans. Corn sales are at 66% of USDA target compared to 60% last year. Soybeans are 86% sold compared to 71% last year and wheat is 69% compared to 56% last year.

The International Grain Council raises their forecast for world wheat production to 696 mmt from their last estimate of 693 mmt.

A USDA Attaché in Argentina lowers their corn production to 24 mmt versus 26 mmt and lowers wheat production by 1.5 mmt to 10.5 mmt.

The October live cattle contract expired at 134.50 after a surprisingly large 3.05 wide trading range. USDA finally released the October Cattle on Feed report which was in line with trade estimates. October Cold Storage report was released Thursday afternoon which was originally scheduled for the Oct 22. At the end of September beef stocks rose by 15 million lbs. over August to total 445 million pounds. This is the largest beef stocks number in five years. Beef cutout values were lower with choice down .51 and select down .01. The CME Feeder Cattle Index was .15 higher at 165.39.

Hog slaughter will likely wrap up the week up with a 4% decline versus last year. That is about a 5% difference from what the Hogs and Pigs report said we should be slaughtering during this period. Pork in cold storage was up 17 million lb. in September for total pork stocks figure of 566 million lbs. This was an increase less than the normal of 30 million lb. seen in September.  Pork cutout values were up 1.42.

Markets as of 5:00 AM

  • Dec Corn    – 1/4
  • Jan Beans   +2
  • Dec Wheat   +0
  • Dec Cattle  +.05
  • Dec Hogs    +.10
  • Dec Dlr     +.27
  • Dec S&P     +2.00
  • Dec Crude   +.05
  • Dec Gold    -6.60
Chart of the Day

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

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