Aug 22, 2014
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April 2014 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.
 

Are Weather Worries Overdone?

Apr 30, 2014

Good Morning! Paul Georgy with early morning comments for April 30, 2014 at 4:30 am.  

Grain futures are lower on profit taking as traders have a risk-off attitude across all commodities.

Allendale Meteorologist, Ryan Martin’s weather comments from last night’s April Ag Leaders Webinar are worth your time to review. He believes planting delays are not an issue as later planting this year may be a benefit due to moisture projections in July. Click here to listen to the recording.

Traders are taking some profits but will likely be expecting a friendly weekly export sales number on Thursday.

Traders are also waiting for the May 9th Supply and Demand Report. The USDA will be giving us their first estimates on yield for 2014. After that report, analysts will be able to tweak acres and come up with their total production estimates.

The results of day one of the Kansas Wheat Quality Tour was 34.7 bushels per acre compared to a year ago number of 43.8. The scouts sampled 271 fields on the first day. Comments from tour participants confirm traders concerns that the wheat crop deteriorates the further west you go.

Funds continue to pour money into the grain markets as they are estimated to have bought a net 10,000 corn contracts, 6,000 soybeans contracts and 3,000 wheat contracts. There is more talk of major banks advising their investor clients to get long the commodity markets as a hedge of the Ukraine/Russia situation.

On May 1st the daily price limits will change to .35 for corn, 1.00 for soybeans and .50 for wheat. Research conducted by CME Group across the entire grain and oilseed complex indicates that a price limit set at seven percent of the underlying futures price will likely capture daily price moves with at least 99 percent confidence. Thus, under normal market conditions, one should expect less than three limit-move days per year under this mechanism. Historically, option price limits are rarely hit and typically just by deep-in-the-money options. Therefore, the elimination of option price limits is not expected to have any major impact.

Funds have added to the volatility in the livestock complex. The cash hog market is trending weaker as packer margins erode. Pork cutout values are down 3.34 on Tuesday.

Spreading in the live cattle contracts are a feature in recent sessions. The April Live Cattle contract goes off the board today at Noon. Beef cutout values were mixed with choice up 1.19 and select down 1.15. The CME Feeder Index is 179.59.

Markets as of 4:30 AM

  • May Corn    -2 1/2
  • May Beans   -2
  • May Wheat   -5 3/4
  • Jun Cattle  -12
  • Jun Hogs    -1.07
  • Jun Dlr     -.04
  • Jun S&P     -3.00
  • Jun Crude   -1.03
  • Jun Gold    -3.80

 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

Planting Progress Slower Than Trade Expected

Apr 29, 2014

Good Morning! Paul Georgy with early morning comments for April 29, 2014 at 4:30 am.  

Grain futures are mixed in a quiet trading session.

Allendale’s April Ag Leaders Webinar is tonight. Sign Up Now! It is Free.

Corn planting progress nationally is 19% complete compared to 28% average. The USDA says 3% of the soybean crop is planted compared to 4% average. Traders are already looking at next week Monday when the average is 42% planted. The week ahead will see limited planting progress with rain forecast through Thursday over the Midwest.

Wheat crop conditions dropped to 33% good/excellent from 34% last week. The Kansas Wheat Quality Tour begins today. They will start on the eastern side of Kansas. Expect to see comments through the day from reporters on the tour. Historically their comments could be market movers throughout the session. The tour has overestimated the yield compared to actual 8 out of the last 14 years.

In China crush margins have improved considerably over the last few days. History says we could see a slight improvement then weakness into mid to late June.

The price difference between US and Brazil has narrowed from $52.00 per tonne to $23.00 for soybeans. It no longer works for beans to be sold into the US.

The US and UN have imposed new sanctions against Russia. Meanwhile the situation heats up with more military action by Russia.

There is more talk that major banks are advising their investors to get involved in corn and wheat because of the potential production and export problems in the Black Sea region.

A significant take away from the Cattle on Feed report shows a sharp decline in the amount of heifers placed on feed during the first quarter. This should lead to an increase in cowherd over the next inventory report.

April contracts go off the board at noon on Wednesday. June may get some support due to the deep discount to cash markets.

Beef cutout values were mixed with choice up .34 and select down .07. The CME Feeder Index is 178.86.

The PEDv findings this week are less than last week. Traders are waiting to see if pork supplies really drop 10 to 15% like some analysts think possible due to the virus. Currently hog slaughter is running about 4% below a year ago. Pork cutout value is up 2.28.

Markets as of 4:30 AM

  • May Corn    +3 1/2
  • May Beans   – 3/4
  • May Wheat   -4
  • Jun Cattle  +.25
  • Jun Hogs    +.57
  • Jun Dlr     -.07
  • Jun S&P     +5.00
  • Jun Crude   +.48
  • Jun Gold    -8.30

 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

Firm Start To Week

Apr 28, 2014

Good Morning! Paul Georgy with early morning comments for April 28, 2014 at 4:30 am.  

Grain futures are higher as money flow, weather forecast and headlines will be important drivers early this week until planters can roll again.

The Wheat Quality Tour starts this week and history suggests we should get some support from headlines as the wheat crop is 2 to 2 ½ weeks behind normal. They will provide their final estimate later in the week.

The trade is looking for a corn planted to be 20-25% this afternoon but likely more progress than that has been made. Our clients are reporting 30 to 50% corn planting completed. The 5 year average is 30%.

Weather forecast has not changed much since Friday. Forecast models are inconsistent for next weekend however the first few days this week should give good moisture coverage of Midwest. Trade continues to talk of delays in corn planting and switching away from corn. Our research suggests the contrary. Last year is an example of how quickly the US corn and soybean crop can go into the ground.

Our next Ag Leaders Webinar will be held tomorrow at 8PM Central Time. We’ll talk with Allendale Meteorologist Ryan Martin about a weather forecast for the remainder of planting season. Register here.

Option expiration on Friday left puts being exercised and having to cover short positions early in the session. First notice day for May futures is Wednesday. Large traders have to reduce position size by then.

CME changes to trading limits are effective Thursday May 1. Corn goes to 35 from 40 and soybeans will be 1.00, up from .70.

Managed money reduced long positions in corn by 13,868 contracts, soybeans by 21,386 and wheat by 11,120 contracts on the latest Commitment of Traders report.

FOMC meeting minutes released on Wednesday will be important to financial markets.

USDA actual numbers versus trade estimates for Cattle-on-Feed report are:

                                          Actual           Ranges        Average     

On feed April 1                    99.0          99.0-100.8        100.2    
Placements in March           95.0          95.3-104.0       100.8     
Marketings in March           96.0          95.0-98.8           96.4   

The report should provide for a higher open in cattle this morning.

Pork cutout values are down .57. Beef values were lower on Friday with choice down .97 and select down .43. The CME Feeder Index is 179.10.

Markets as of 4:30 AM

  • May Corn    +3
  • May Beans   +19 1/4
  • May Wheat   +2 1/4
  • Jun Cattle  Higher
  • Jun Hogs    Steady-Higher
  • Jun Dlr     -.17
  • Jun S&P     +6.50
  • Jun Crude   +.65
  • Jun Gold    +1.10

 Chart of the Day

daily chart

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

How Will Traders Want to be Positioned for the Weekend?

Apr 25, 2014

Good Morning! Paul Georgy with early morning comments for April 25, 2014 at 4:30 am.  

Grain futures are higher in a light volume session.

Spreading remains a factor in Ag markets during recent sessions. China trying to resell several of cargoes of soybeans continues to pressure cash prices in the export market.

Allendale Meteorologist Ryan Martin says, "Showers and thunderstorms have started in the Corn Belt, with moisture moving into the western half of the belt overnight. We still like half to 2 inch rain totals over the region, with coverage at 80% through tomorrow." Full Story

The Ukraine/Russia situation is heating up with more shootings as Ukraine take back some of the check points from pro-Russian militants. When will Putin take action? When will he believe he has to step in to protect the Russian speaking people in Ukraine? Headline traders will be keying off of any new developments over the weekend and when trade begins on Sunday night.

Reuter’s interview with a grain a analyst from Ukraine suggests wheat crop is doing well with a few areas needing moisture. He was questioned about corn planting and his forecast for Ukraine’s maize production. Their forecast is looking for a slight decrease in acres planted but the real effect could come from less fertilizer being applied.

Next week the winter wheat crop tour will begin in Kansas. Traders are anticipating some very poor findings.

The Australian Government Bureau of Meteorology released a report stating, "The likelihood of El Niño remains high, with all climate models surveyed by the Bureau now indicating El Niño is likely to occur in 2014. Six of the seven models suggest El Niño thresholds may be exceeded as early as July."

Statscan said that the Canadian farmer is expected to plant 4.8% less wheat in 2014 and plant .7% less canola in 2014. Flax and Pea seeding are expected to significantly greater than last year.

May grain options go off the board today.

Retailers prepare for one of the biggest meat demand weekends of the year (Memorial Day). With tight meat supplies of beef, pork and poultry, retailers are going to plan ahead. Although beef supplies are expected to increase going into the summer months, the uncertainty of pork supplies provides underling support. Beef cutout prices are firmer with choice up 1.16 and select up 1.40. Packers have been quiet this week but should be much easier to work with due to the improvement of cutout values. The CME Feeder Index is 178.98. Trade estimates for this afternoon’s Cattle-on-Feed report are:

                                                   Ranges        Average      Mln Head
On feed April 1                    99.0-100.8        100.2          10.946
Placements in March          95.3-104.0       100.8             1.899   
Marketings in March           95.0-98.8           96.4             1.662

Lean Hog futures are extremely volatile as we have seen this week due to money flow and uncertain supplies. Pork cutout values are down .71.

Markets as of 4:30 AM

  • May Corn    +2 1/4
  • May Beans   +5 3/4
  • May Wheat   +4
  • Jun Cattle  +.62
  • Jun Hogs    -.20
  • Jun Dlr     -.10
  • Jun S&P     -2.75
  • Jun Crude   -.62
  • Jun Gold    +3.60

 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

Spread Unwinding Drives Price Movement

Apr 24, 2014

 Spread Unwinding Drives Price Movement

Good Morning! Paul Georgy with early morning comments for April 24, 2014at 4:40 am.  

Grain futures are quiet with prices holding near unchanged.

We talked about spread unwinding yesterday morning which was the driver during yesterday’s session. Long positions have been building in the old crop soybeans and meal while selling corn, wheat and new crop soybeans.

Traders will have to reduce position size to 600 contracts by next Wednesday which is first notice day for May contracts.

There is more talk that 2 to 3 cargoes of Brazilian soybeans have been sold into the US. This seems like the only way for USDA to solve the balance sheet issue.

A senior member of the Sunrise group from China is reported as being in the US. Many traders believe he is here to renegotiate previously sold soybean or meal cargoes. No confirmation of this being the reason for his visit.

Stats Can is out this morning with the trade looking for canola acres to be up 1.2 million to 21.1 million acres.

The corn market is being impacted by spread unwinding and weather forecasts. Although not an unexpected forecast, the cold and wet weather for next week has many thinking corn will not get planted. We think otherwise as some of our customer believe they will have more than 50% planted by this weekend.

The possibility of rain in the western southern plains is weighing on wheat futures. Many observers are saying rain will help but they need it now, time is running out for the wheat crop.

This morning at 7:30 the USDA will release the weekly export sales numbers. Trade estimates are:

                            Trade Estimates            Trade estimates

                                  2013/14                         2014/15

Wheat               200,000-400,000             250,000-500,000

Corn                 500,000-800,000             150,000-250,000

Soybeans        -200,000-+100,000           350,000-550,000

Soymeal             25,000-125,000              50,000-100,000

Soyoil                          0-25,000                         0-10,000

This week’s cold storage report for pork has sparked reality in the minds of livestock trader. Pork supplies in storage are very tight and we haven’t seen the real effects of PEDv on cash hog supplies yet. Pork cutout values were up .32 on Wednesday.

Cattle packers are waiting as long as possible this week even with beef price improvement. Friday afternoon the USDA releases the April Cattle-on-Feed report. Choice beef is up 1.43 and select is up 1.05. The CME Feeder Index is 177.35.

Markets as of 4:40 AM

  • May Corn    + 3/4
  • May Beans   -1
  • May Wheat   – 1/2
  • Jun Cattle  +.15
  • Jun Hogs    +.25
  • Jun Dlr     -.06
  • Jun S&P     +6.50
  • Jun Crude   +.15
  • Jun Gold    -.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

What Are We Watching Today?

Apr 23, 2014

Good Morning! Paul Georgy with early morning comments for April 23, 2014 at 4:30 am.  

Grain futures are mixed in a quiet overnight session.

Spread unwinding is the feature as traders wait for new news. The several points of interest traders are focusing on include weather forecast for US planting season, export news on soybeans to China and geo-political events in Ukraine. Chartists are watching support and resistance levels which could trigger money flow reactions.

The weather forecast has added a little more moisture for Midwest and the Euro model has snow for the northern Midwest. Read Allendale Meteorologist, Ryan Martin’s weather comments for all the details.

The long soybean – short corn spreads have been a feature the last few months. In this position traders are short 2 or 3 contracts of corn for every 1 long contract of soybeans. The news of China’s soybean purchases or cancellations will impact spreaders biases.

Ukraine’s Ag Ministry says that 97% of the early spring planting has been completed which amounts to 2.55 million hectares out of an expected 2.63 million hectares.

Abiove, Brazilian soy crushing association said on Tuesday they expect exports of 43 million tonnes of soybeans, down from its forecast of 44 million tonnes due to weaker Chinese demand.

The CME announced NEW contract limits for grain contracts. "On May 1, the initial daily limit for corn will drop to 35 cents a bushel from 40 cents. The initial daily limit will rise to $1.00 from 70 cents for soybeans and drop to 45 cents a bushel from 60 cents for CBOT wheat", the notice said.

The USDA released meat in cold stage numbers yesterday. Rich Nelson, Allendale’s Chief Strategist says, "It is not often that we get shocking numbers from the monthly Cold Storage report but that was the case this time. A massive 79 million pounds drawdown was made during the month of March. This was the largest pork drawdown in all previous March findings. It was also the third single largest monthly drawdown in history (after June 2013 and May 2008)."

"USDA found 404.7 million pounds of beef stocks at the end of March. This is 21% lower than last year (end of Feb was 16% lower). The drop compared with February was 5 million lbs. (normally a 2 million increase)."

The USDA April 1 Cattle-on-Feed report will be released on Friday at 2:00 pm. Beef cutout values are higher with choice up 2.15 and select up 1.55. The CME Feeder Cattle Index is 177.13. Pork cutout values are down 2.33.

Markets as of 4:30 AM

  • May Corn    + 1/4
  • May Beans   -10 1/4
  • May Wheat   + 3/4
  • Jun Cattle  -.37
  • Jun Hogs    -.05
  • Jun Dlr     -.16
  • Jun S&P     -.50
  • Jun Crude   -.50
  • Jun Gold    +2.60

 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

Will Big Money Be Buying Today?

Apr 22, 2014

Good Morning! Paul Georgy with early morning comments for April 22, 2014 at 4:30 am.  

Grain futures are higher on bargain hunting after yesterday’s sell-off.

USDA weekly crop progress report showed winter wheat good/excellent conditions stayed at 34% compared to 35% last year.

Corn planting progress was 6% complete nationally. Allendale’s research suggests we should not be worried about late planting. In the past 6 late panting years, yields exceeded trend yield projections 5 times.

Corn export inspections were 1.6 million tonnes which was above week ago levels. There were 138,777 tonnes of soybeans shipped which was about half of previous week and at the low end of trade estimates.

NOAA’s latest long-term forecast has most of the Midwest with normal temps and normal precip for May, June and July.

A $500,000 study paid for by the federal government and released Sunday in the peer-reviewed journal Nature Climate Change concludes that biofuels made with corn residue release 7 percent more greenhouse gases in the early years compared with conventional gasoline. Read comments from AP article.

Barclays is expected to announce this week a plan to rein in its presence in commodity markets. Barclays is among the leading five banks in commodities, but many lenders are shrinking their operations or forgoing the sector because of increased regulatory scrutiny.

April cattle contact is nearing expiration day with a sizable open interest. This contract could get very volatile before the last trading day on April 30. The discount of June futures to cash is providing some support however larger supplies of fed cattle should be available as we move to the end of the 2nd quarter. Cattle on Feed Report will be released on Friday. Beef values are showing a sign of improvement as choice was up 2.71 and select was up 2.84. The CME Feeder index is 177.13. Cash cattle are expected to trade steady to better this week.

Fieldwork is having its seasonal impact on hog movement in the Midwest. Packers are becoming more aggressive early in the week as market ready hog supplies are tight. Pork cutout values are down 1.92.

Poultry prices have had a sharp increase in recent weeks which has taken away some of the competitive edge at the retail counter. With cookout season on top of us, traders will be watching consumer demand very closely.

Markets as of 4:30 AM

  • May Corn    +3 1/4
  • May Beans   +4 1/2
  • May Wheat   +2 1/2
  • Jun Cattle  +.10
  • Jun Hogs    +.02
  • Jun Dlr     -.07
  • Jun S&P     -.25
  • May Crude   -.37
  • Jun 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

Great Weekend For Planting Progress

Apr 21, 2014

Good Morning! Paul Georgy with early morning comments for April 21, 2014 at 4:40 am.  

Grain futures are lower due to weather and profit taking.

The week ahead has something for everybody. Corn traders will be talking about the planting progress made this weekend. The USDA will give us the official numbers at 3:00 pm today. Trade is expecting as much as 15% planted versus 18% average.

Soybean traders will be watching for any official announcement on cancellations or switching of soybean purchases by China.  RJO’s Sao Paulo affiliate is hearing more reports of PRC soy cargoes unable to load as buyers are unable to open letters of credit which is pressuring basis as beans back up in ports.

The weather forecast for the southern plains and estimates of frost damage to the winter wheat crop will have an impact on wheat futures.

The Russia/Ukraine situation continues to intensify but so far has been a battle of words. Any further military action will have an impact on world economies. Grain markets will be very sensitive to events in the Black Sea area due the possible impact on shipping commitments.

The weekly commitment of traders report showed Managed Money funds reducing long positions in corn by 19,634 contracts. They increased long positions in soybeans by 5,285 and reduced long positions in wheat by 4,979 contracts.

On the economic front in the US we will get existing home sales on Tuesday and new home sales on Wednesday. The week ahead will also be a big week for corporate earnings reports.

The USDA announced late last week new rules for reporting of PEDv with hopes to slow the spread of the virus.

Cash hog values continue while lean hog futures rally. The trade is expecting much bigger declines in hog supplies going into the summer months. Product demand should pick up this week as retailers restock coolers for the cookout season. Pork cutout value is up 1.26.

Cattle are hoping to see some improvement in packer interest this week. Product values are mixed with choice up .47 and select down .20. The CME Feeder Index is 179.95. Livestock futures could start steady to lower.

Markets as of 4:40 AM

  • May Corn    -3 1/2
  • May Beans   -5 1/4
  • May Wheat   -13 3/4
  • Jun Cattle  Steady
  • Jun Hogs    Steady
  • Jun Dlr     -.02
  • Jun S&P     +1.75
  • May Crude   -.29
  • Jun Gold    -5.80

 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

Long Weekend Could Impact Monday’s Direction

Apr 17, 2014

Good Morning! Paul Georgy with early morning comments for April 17, 2014 at 4:50 am.  

Grain futures are higher ahead of export data numbers. End-users are aggressively accumulating inventory before farmers head to the fields.

Weekly export data will be released at 7:30 this morning. Traders are focused on the soybean sales as there are already more beans sold than USDA has in the balance sheet. Traders are talking about 12 cargoes of Brazilian soybeans canceled by China and being redirected to the US. Also there is talk that 2 cargoes of soybean meal have been sold to US. No confirmations yet.

                          Trade estimates          Trade estimates
                            for 2013/14                   for 2014/15
Wheat               50,000-250,000          225,000-375,000
Corn               550,000-850,000                 0-150,000
Soybeans      -100,000-+100,000         175,000-350,000
Soymeal         100,000-200,000           50,000-100,000
Soyoil                        0-50,000                        0-10,000

Weather forecasts suggest farmers will have a chance to get in the fields next week. Several of our customers are going to start planting today and many others will be in full swing by the weekend. Traders will be watching the long-range weather forecast as they get positioned for Monday. In recent weeks Monday’s have been a buy day for funds. This Monday much of the world will be on holiday.

Without a major change in Ukraine or in the weather forecast bears might have the upper hand to start the week.

Soybean basis remains strong in the Eastern Cornbelt as processors struggle with rail shipments from the western Cornbelt. They also hope to get enough inventories before farmers go the fields.

US grain futures markets will close at regular time today and not open until Sunday night. Livestock will close at 1:55 CDT today and reopen at 9:05 on Monday morning.

Typically the trade pays little attention to USDA’s regular mid-month Livestock, Dairy, and Poultry report. This report provides a text commentary followed by tables of USDA’s big picture projections in the livestock world. This year hog analysts are trying to find any guidance to get a handle on hog supplies. USDA again suggested 2014 pork production will only run 2% lower than last year. Adjusted from a live price to a lean with premium they are projecting cash hogs from $107 to $112 in Q2, $100 – $108 in Q3, and $92 to $100 in Q4. Futures are suggesting prices will be much higher. Pork cutout values are down .57.

Given the higher tone to wholesale beef prices this week there is an undercurrent of optimism for this week’s cash cattle trade. Some are suggesting steady to firm. Beef cutout values are higher with choice up .89 and select up 1.33. The CME Feeder Index is 179.63.

Markets as of 4:50 AM

  • May Corn    +1 3/4
  • May Beans   +10 1/2
  • May Wheat   +5 1/4
  • Jun Cattle  +.00
  • Jun Hogs    -.25
  • Jun Dlr     -.22
  • Jun S&P     -3.75
  • May Crude   +.07
  • Jun Gold    +4.10

 Chart of the Day

daily chart

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

Beans Leading The Charge

Apr 16, 2014

Good Morning! Paul Georgy with early morning comments for April 16, 2014 at 4:30 am.  

Grain futures are mixed as demand for old crop soybeans provides the support.

The NOPA crush number was a surprise for traders as the average estimate was 146.1 million bushels and the high estimate 150 million bushels. The actual March usage was 153.84 million bushels. This is 12% above a year ago with an average for the year up 2%. The USDA balance sheet estimate is for soybean crush to be down 0.2%. Needless to say the May Supply and Demand table will be much anticipated.

The impact on winter wheat crop from the recent frost in the southern plains is yet to be determined.  

Unrest in Ukraine has wheat traders on edge as Ukraine has deployed troops to the area where Russian dissidents are controlling government buildings. However the Eastern region of Ukraine is more of a corn producing area and spring planting should be getting started.

There is more talk that China canceled a couple of cargoes of soybeans from Brazil. Those cargoes are thought to be offered to East Coast buyers in the US.

Brazilian farmers took advantage of yesterday’s rally in soybeans and were aggressive sellers. US farmers were light sellers at the $15.00 level.

Markets are closed on Friday for Good Friday observance. Monday is "Patriots Day" in Boston where this year is more significant due to the bombing a year ago. Easter Monday is an observed holiday in many countries around the world. Will Managed Money be a large participant in the markets to start the week?

Funds bought a net 8,000 contracts of wheat and 9,000 contracts of soybeans. They were estimated as being even on corn.

Weather forecasts are setting up for clear and drying conditions next week which will allow for some planters to go to the field.

Beef cutout values showed improvement on Tuesday as choice was up .34 and select was up 1.09. The CME Feeder index is 179.75.  Cash cattle are expected to be lower this week. Traders are hoping to see an improvement in product next week as retailers start building inventory for cookout season.

Lean Hog futures are not for the weak of heart or the shallow pockets. We expect to see more volatility ahead of the long weekend. The battle line is drawn between less hogs due to PEDv and high priced pork at the retail counter. Pork cutout values are down 2.68.

Markets as of 4:30 AM

  • May Corn    – 3/4
  • May Beans   +16
  • May Wheat   – 1/2
  • Jun Cattle  +.20
  • Jun Hogs    -1.07
  • Jun Dlr     -.10
  • Jun S&P     +8.75
  • May Crude   +.88
  • Jun Gold    -1.40

 Chart of the Day

daily chart

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

Slow Planting Start For Corn

Apr 15, 2014

Good Morning! Paul Georgy with early morning comments for April 15, 2014 at 4:30 am.  

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

Planting progress for corn is 3% completed nationally. Weather forecasts suggests slow progress this week but the last week in April should allow for much better planting conditions for western 2/3 of Midwest.

Winter wheat good to excellent conditions were down 1% to 34%.

A French analyst has cut their estimate of 2014 wheat crop in the Black Sea Region by nearly 4 million tonnes which is 9% less than last year. They cut corn production by 3.9 million tonnes which would be down 14.2% from last year. They see the rising turmoil in the region and dry weather as the reason for the reduced production outlook. Other analysts are citing lack of available financing, fewer fertilizers and poor quality seeds mean spring crops in Ukraine and Russia will be more vulnerable than ever due to changeable weather this year.

The National Oilseed Processors Association will release its monthly crush report today at 11:00 am. Trade estimates ahead of the report ranged from 140.1 million to 153.0 million bushels. The median was 146.5 million. The average would suggest a crush of 7% higher than last year and a very strong pace. In order to hit USDA’s target crush needs to run 3.2% below last year for the balance of the year.

Weekly export shipments were well below trade expectation for soybeans however there were 267,939 tonnes loaded out last week.

A major bank came out with their forecast for a negative return on commodity investments for the next 12 months, predicting a fall in precious metals, agriculture and energy. The decline will be led by a 15 percent drop in precious metals, 10 percent drop in agriculture, 2.5 percent drop in energy and a 4 percent decline in industrial metals.

China is expected to intensify its efforts to promote crop insurance, with a goal to cover 60 percent of the country’s cultivated land by 2020.

Market ready hog supplies are causing some packers to be dark during the Easter weekend. High prices have impacted weekly pork exports as it has fallen to the worst level this year. Hog slaughter is expected to continue to decline as the largest impact from PEDv should hit during summer months. Pork cutout values were down .35.

Beef cutout values were mixed with choice up .40 and select down .41. With a short trading week it is expected that retailers will have enough inventory and will want to clean out the coolers going into Easter. Beef demand should improve next week as cookout season is near. The CME Feeder Index is 180.39.

Markets as of 4:30 AM

  • May Corn    -3
  • May Beans   +6 1/2
  • May Wheat   + 1/4
  • Jun Cattle  -.05
  • Jun Hogs    +.32
  • Jun Dlr     +.11
  • Jun S&P     -2.00
  • May Crude   -.81
  • Jun Gold    -16.00

 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 futures are mixed with soybeans higher, wheat steady and corn lower.

Key Factors Affecting Trade This Week

Apr 14, 2014

Good Morning! Paul Georgy with early morning comments for April 14, 2014 at 4:30 am.  

Grain futures are higher on an increase in tension between Ukraine and Russia, US weather and money flow.

The USDA will give us the first weekly planting progress report this afternoon. Trade is expecting 2% to 5% of corn planted nationally. The 5 year average for April 14 is 7% planted.

Weather will be the focus this week as cool temps and lack of planting progress are on traders’ minds. You are able to get the full insight from Allendale’s in-house meteorologist Ryan Martin by clicking Allendale Weather.

NOPA will release crush data on Tuesday. Average analyst estimates are 146.1 million bushels for the March and 1.917 billion pounds for soyoil stocks.

The soybean market is very concerned about the Chinese default on several loads of soybeans. A Chinese research firm is suggesting as much as 2 million tonnes may have been defaulted on due to the importers inability of getting a line of credit.

Money flow has been a huge driver to the Agricultural markets in recent months. Managed Money Funds were net sellers on Friday’s CFTC commitment of traders report as they reduced long positions in corn, soybeans and wheat.

The geo-political unrest in Ukraine is escalating as pro-Russian activist take over government buildings and Ukraine vows force to regain control. Russia has warned against any use of force by Ukraine.

Outside markets are stronger this morning as traders have a risk on attitude.

Cash cattle traded at 147 in TX and KS late on Friday which was 1.00 lower than the previous week. The drop in product is giving packers a negative margin. Beef cutout values were under pressure again on Friday with choice down 2.88 and select down 2.12. CME feeder Index is 178.30. Product is not likely to see post Easter Holiday featuring until next week.

Pork cutout values are up .29. Hogs supplies are tight which is causing the weekly slaughter declines. A meat price rally is showing up at the retail counter and it remains to be seen how consumers will react. April contract expires today and June is discount to the cash index. Look for the livestock futures to start the week a bit lower.

Markets as of 4:30 AM

  • May Corn    +5 1/4
  • May Beans   +5 1/2
  • May Wheat   +17 1/2
  • Jun Cattle  Steady
  • Jun Hogs    Steady
  • Jun Dlr     +.29
  • Jun S&P     -4.75
  • May Crude   +.04
  • Jun Gold    +5.80

 

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

Weather, Weekend and China

Apr 11, 2014

Good Morning! Paul Georgy with early morning comments for April 11, 2014 at 4:45 am.  

Grain futures are mixed as the weather forecast is the focus for corn traders heading into the weekend. China’s default on bean purchases weigh on futures.

Allendale continues to grow by adding an in-house meteorologist Ryan Martin. You are able to get his insight on US weather by clicking Allendale Weather.

USDA Weekly Export sales in soybeans at 79,000 were considered friendly however the news of China backing away from several cargoes of soybeans due to a line of credit has pressured prices. The trade now will be watching the newswire very closely at 8:00 am when the USDA announces new sales or cancellations to see if there are any official cancellations.

Egypt is tendering for 55,000 to 60,000 tonnes of soft wheat after 2 cargoes were being held up in Russian ports.

The Climate Prediction Center, an agency of the National Weather Service, pegged the likelihood at more than 50 percent that an El Nino will develop by this summer.

The Brazilian crop agency, Conab, expects a record soy crop of 86.1 mmt, up from 85.4 mmt seen last month. USDA said 87.5 mmt onWednesday. Conab’s corn forecast was little changed at 75.46 mmt, up from last estimate of 75.18 mmt, USDA said 72 mmt.

The first Conab wheat forecast for 2014/15 is 6.7 mmt compared with 5.5 mmt 2013/14 crop.

IA soybean basis (futures minus cash) is nearly 75 cents per bushel less than last year at this time.

Russian President Putin has warned the EU that if Ukraine delays in paying for gas it could become a critical situation. Russia may be forced to stop movement of gas across Ukraine. EU gets about one third of its gas from Russia.

Japan and the United States are seeking a two-way trade deal before Obama travels to Japan for an April 24-25 state visit. It is believed Japan is offering a tariff reduction on US beef from 38.5% down to 10%. Beef cutout values were lower with choice down .46 and select down .93. Featuring of beef and buying for Memorial Day usually is supportive to beef product values the week after Easter. Cash trade is developing at steady to $1.00 lower this week. The CME Feeder Index is 178.31.

Grocery retail ads this week has beef prices edging lower. Pork prices this week work higher as bacon moves above $4.00 per pound. Chicken ads were steady with last week. Pork cutout values were down 2.48 on Thursday. Yesterday’s volatility in lean hog futures was on low volume.

Markets as of 4:45 AM

  • May Corn    +2
  • May Beans   -5 1/4
  • May Wheat   – 1/4
  • Jun Cattle  +.25
  • Jun Hogs    -.70
  • Jun Dlr     +.04
  • Jun S&P     +.25
  • May Crude   -.23
  • Jun Gold    -1.30

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

Can Wheat Hold Uptrend Support?

Apr 10, 2014

Good Morning! Paul Georgy with early morning comments for April 10, 2014 at 4:40 am.  

Grain futures are lower on follow-through selling and profit taking.

USDA provided a few surprises, one of which was a sharp decline in corn and bean stocks. All details of report and a YouTube commentary by Rich Nelson, Allendale’s Chief Strategist can be found here.

Weather now takes a more important role in grain price fluctuations. Warmer temps are headed into the Midwest but southern areas could be getting more rain which will stall planting progress.

On Monday, we are expecting to get the first planting progress numbers for corn. Average for that date is 7% planted.

This week’s ethanol production report was a little surprising. In last week’s report, we saw that producers were responding aggressively to profit signals. EIA ethanol production was down to 896,000 barrels vs 920,000 barrels last week while stocks are up to 16.4 vs 15.9 last week. Given the sharp drop in ethanol prices in the US, exporters shipped more than 3 times as much as previous week.

Weekly export sales will be released later this morning at 7:30. Trade estimates as accumulated by Reuters:

                            Trade estimates             Trade estimates
                               For 2013/14                     for 2014/15
Corn                    700,000-900,000                0-200,000
Soybeans                        0-150,000          100,000-300,000
Soymeal              100,000-250,000                  0-150,000
Soyoil                             0-30,000                        0-10,000
Wheat                  250,000-375,000           150,000-300,000

Argentina’s Rosario grains hub will be brought to a standstill today for a 24-hour strike as port workers and truck drivers plan to protest high inflation.

The USDA’s Foreign Agricultural Service attaché said Canada’s planting of wheat, barley, oats and corn will decline in the 2014/15 after slow rail transportation to market created burdensome stockpiles of the commodities this year.

Russian President Vladimir Putin threatened Wednesday to start charging Ukraine in advance for vital gas supplies. Russia continues to pressure Ukraine’s fragile economy. More finger pointing between Moscow and Washington is keeping a tense situation elevated. Traders are very concerned about spring planting and production caused by shortages and civil unrest.

The lean hog futures shook the tree on Wednesday. After being limit down, they traded limit up. Chart watchers are looking at yesterday’s action as positive after prices made nearly a 50% retracement from recent sharp rally. Pork cutout values are down 2.89.

Cattle trade is still in a stand-off. Traders are expecting a steady lower cash trade this week. The discount of futures to cash remains supportive for near-term. Weaker corn prices are providing buying interest in feeder cattle. Beef values were lower on Wednesday with choice down 1.53 and select down 1.74. The CME Feeder Index is 178.74.

Markets as of 4:40 AM

  • May Corn    -2 3/4
  • May Beans   -10
  • May Wheat   -2
  • Jun Cattle  -.10
  • Jun Hogs    -1.00
  • Jun Dlr     -.03
  • Jun S&P     -5.75
  • May Crude   -.16
  • Jun Gold    +16.3

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 USDA Deal With Tight Stocks?

Apr 09, 2014

Good Morning! Paul Georgy with early morning comments for April 9, 2014 at 4:45 am.  

Grain futures are higher as traders want proof that USDA can deal with declining stocks. The late start to planting season in the Midwest, money flow and the Ukraine/Russia situation is adding underlying support.

USDA reported total U.S. winter wheat conditions at 35 percent good/excellent which was down from the 62 percent in late November before winter dormancy. A year ago the wheat crop spring rating started at 36 percent good/excellent.

The USDA Monthly Supply and Demand Report will be released today at 11:00 am.

U.S. 2013/14 Ending Stocks survey from Reuters

Figures in billion bushels     Wheat     Corn  Soybeans
Average trade estimate         0.583    1.403     0.139
Highest trade estimate         0.625    1.478     0.147
Lowest trade estimate          0.553    1.306     0.125
USDA March                          0.558    1.456     0.145

Production for South America.

Figures in millions of tonnes   Argentina               Brazil 
                                                   Corn  Soybean     Corn  Soybean
Average trade estimate       23.95    54.15        69.66    87.43
Highest trade estimate       25.70    57.10         71.20    89.50
Lowest trade estimate        21.80    53.00       68.00    86.50
USDA March estimate       24.00    54.00       70.00    88.50

Post-report, traders will focus on weather forecast for Midwest as farmers wait for an opportunity to plant corn. Stay in touch with the weather forecast by reading Allendale’s in-house Meteorologist’s daily comments.

Goldman Roll continues which created a large volume for the pit after the electronic platform went down late in yesterday’s session.

Funds were estimated to have been a net buyer of 10,000 corn contracts, 2,000 wheat contracts and 7,000 soybean contracts on Tuesday.

The upper Mississippi River was closed due to a barge running into a railroad bridge.

April contract of CME Lean Hogs goes off the board on Monday. Currently, futures are $6.00 under the cash index. The weakening pork demand weighs on futures as Easter ham buying comes to an end. June futures have declined sharply in recent sessions to become oversold, technically. Pork cutout values were .01 on Tuesday.

The discount of nearby futures to cash fed cattle is providing support. The product values have declined sharply over the last 2 weeks. The onset of the cookout season could help product values and packers margins. Beef values are mixed with choice down .94 and select up .98. The CME Feeder Index is 178.68.

Allendale’s Rich Nelson will be presenting a video breaking down the data from the USDA within an hour after the report’s release.

Markets as of 4:45 AM

  • May Corn    +2 1/4
  • May Beans   +9 3/4
  • May Wheat   +5
  • Jun Cattle  +.27
  • Jun Hogs    -.42
  • Jun Dlr     +.08
  • Jun S&P     +2.50
  • May Crude   -.16
  • Jun Gold    +1.40

Chart of the Day

daily chart

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

Wheat Conditions Fall In Top States

Apr 08, 2014

Good Morning! Paul Georgy with early morning comments for April 8, 2014 at 4:30 am.  

Grain futures are mostly lower in a quiet overnight session. Traders are concerned about three factors: weather, USDA Reports and Ukraine’s stability.

Weather is a factor as we go into planting season. Get Allendale’s Meteorologiical view by clicking here.

The USDA delayed the weekly crop conditions report until this afternoon at 3:00 pm central time. Kansas, OK and TX did release their respective state wheat conditions. Kansas the largest wheat producing state’s good/excellent went down from 32 to 29% while the poor to very poor increased from 25 to 27%. Oklahoma’s rating went from 17 to 15% in good/excellent and the poor to very poor were up 4% to nearly 50% of the state’s crop. Texas has only 13% good/excellent with poor to very poor at 61%.

The civil unrest in 3 of the Ukraine’s eastern cities is cause for wheat to find support going into the USDA report tomorrow.

Russia’s oil company Gazprom has raised energy costs for Ukraine by nearly 80% in a week.

Next Monday we should get the first corn planting progress report from USDA. The 5 yr. average is 7% done on corn.

Soybean prices in South America are about $52 per mmt cheaper than US. That price difference, even with $15 per tonne shipping, is an incentive for soybean imports into the US.

With Chinese crush margins now positive it seems less likely to see cancellations.

The Supply and Demand report on Wednesday will be directed to old crop ending stocks. Corn ending stocks are expected to be lowered due to exports and ethanol production. Soybean ending stock are potentially more explosive as exports are already well over target with tight supplies. Possible adjustments in soybeans could come in exports, imports or production. Stay tuned to Allendale research for report results.

Beef cutout values slide again with choice down .53 and select down 1.62. Packer margins are in the red as they pull contracts and showlists increase. Recent placement data suggests fed cattle inventory should improve into June. The CME Feeder Cattle Index is 178.42.

Lean hog futures are being moved by spreaders. Pork cutout values are down 1.14. Retailers are finishing up with pre-Easter purchases which could weigh on product until we kick-off the cookout season. Traders are concerned about the high price of beef and pork stifling demand. Listen to Allendale’s weekly research meeting.

Markets as of 4:30 AM

  • May Corn    -1 3/4
  • May Beans   +1 3/4
  • May Wheat   -3 1/4
  • Jun Cattle  +.27
  • Jun Hogs    -1.10
  • Jun Dlr     -.24
  • Jun S&P     +1.25
  • May Crude   +.81
  • Jun Gold    +15.00

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

Weather And USDA Report On Trader’s Minds To Start

Apr 07, 2014

Good Morning! Paul Georgy with early morning comments for April 7, 2014 at 4:40 am.  

Grain futures are mixed with corn lower and soybeans and wheat higher. Weather seems to be the focus for corn and wheat while tight supplies support soybeans.

Traders will be waiting for the first national crop conditions report on wheat. The trade estimates ranges from 35 to 40% good/excellent.

Allendale’s Meteorologist, Ryan Martin views on this morning’s weather forecast can be found at here.

On Wednesday, the USDA will release the Monthly Supply and Demand report. Traders are hoping to get some indication on how the USDA is going to handle the soybean exports on the balance sheet. Will they increase imports of soybeans or increase last year’s soybean production to keep ending stocks at 145 million bushels?

Brazil soybean harvest is now more than 80% complete while Argentina has about 10% harvested. South American bean and meal premiums continue to soften. US soybean basis is also softening as crushers appear to be bought out for several weeks.

The CFTC Commitment of Traders report on Friday showed Managed Money added to long positions in grains. They added 36,549 corn contracts to bring total long positions to 275,836. In soybeans they added 8,017 contracts to bring them to a total net long position to 193,446 and in wheat they are now net long 45,025 after adding 8,533 contracts last week.

There is a light economic calendar in the US but watch for overseas data to catch headlines.

Livestock futures were hit with fund selling, profit taking and margin liquidation. Product values continue to come under pressure. Beef cutout was sharply lower with choice down 3.21 and select down 4.04. The CME Feeder Index is 178.09.

Pork cutout values were up 1.08 as product is still finding a home at higher prices. Profit taking and fund selling has been the feature in recent sessions. We expect livestock futures to open lower this morning.

Markets as of 4:40 AM

  • May Corn    -2 1/2
  • May Beans   +3 1/2
  • May Wheat   +2 3/4
  • Jun Cattle  Steady-Lower
  • Jun Hogs    Steady-Lower
  • Jun Dlr     -.05
  • Jun S&P     -5.25
  • May Crude   -.35
  • Jun Gold    -4.40

 

Chart of the Day

daily chart

 

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

Only A Few Days Until Another USDA Report

Apr 04, 2014

Good Morning! Paul Georgy with early morning comments for April 4, 2014 at 4:40 am.  

Grain futures are mixed with soybeans higher, corn and wheat lower. Tight US soybean supplies are supporting old crop while planting concerns weigh on new crop.

We could repeat comments from yesterday morning, where will the money flow today? Fund buying or money flow is impacting price movement and giving producers an opportunity to make marketing decisions with profitable production returns in the price.

Funds bought an estimated net 3,000 wheat contracts, 6,000 corn contracts, 5,000 soybean contracts, 1,000 soymeal contracts and 4,000 soyoil contracts on Thursday.

Traders and clients bring up the argument that it is getting late and the crop will not get in the ground on time. Have we forgotten last year where farmers planted nearly 60% of the corn crop in IL, IA, and MN in one week? They planted 62% of soybeans in one week as well.

The USDA monthly supply and demand report will be released next Wednesday, April 9. Allendale does not expect many surprises other than USDA making adjustments from the March 31 stocks.

Gulf basis is steady on corn but waning demand for soybeans and wheat was the reason for weaker bids.

Argentine harvest has been supported by recent dry weather. Yields there are coming in as expected, giving the reason for the Buenos Aries Exchange to keep soybean production at 54.5 mmt.

China canceled purchases of 221,400 tonnes of U.S. corn last week for unapproved GMO contamination, according to the U.S. Department of Agriculture. They now have canceled more than 1 million tonnes of U.S. corn this season.

The cash hog index is 130.34 while the April futures are nearly a 6.00 discount. Packers have their needs for this week and meat is starting to find resistance at the retail counter. Pork cutout value was down 3.83 on Thursday. Spreads have been a feature this week in the pork complex.

Cash trade is quiet as packers are pulling contracted cattle. We are hearing bids at 147 and offers at 153. Tight supplies of feeder cattle have futures traders buying as potential moisture moves into the southern plains. Beef cutout values are weak with choice down .69 and select down 1.19. The CME Feeder Index is 177.83.

Markets as of 4:40 AM

  • May Corn    -2
  • May Beans   +6 1/2
  • May Wheat   -6 3/4
  • Jun Cattle  -.02
  • Jun Hogs    -1.15
  • Jun Dlr     +.01
  • Jun S&P     +3.5
  • May Crude   +.72
  • Jun Gold    +8.40

Chart of the Day

daily chart 4414

 

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

Which Way Is the Money Headed Today?

Apr 03, 2014

Good Morning! Paul Georgy with early morning comments for April 3, 2014 at 4:45 am.  

Grain futures are higher after sharp losses. Technical traders will be watching yesterday’s lows for support.

There is a combination of things causing the extreme volatility we are experiencing this week. Money flow has been the driving force to the upside and profit taking on word that a Chinese importer is trying to resell soybeans and meal. Chinese importers are having issues with financing some purchases which may cause straight out cancellations rather than reselling of their previously purchased soybeans.

Trade talk has several cargoes of South American meal being bought by a major poultry producer. Exporters are getting calls to push back delivery times as the world all of the sudden has more meal than buyers.

Cash movement of corn and soybeans in the US has picked up this week which is causing pressure on basis. Meal basis has eroded rapidly tightening what was a positive crush margin for US processors. Decatur corn basis is steady while river locations have plenty of grain around them.

Funds are estimated to have sold a net 7,000 wheat contracts, sold a net 13,000 corn contracts and sold 9,000 contracts of soybeans on Wednesday.

Ethanol margins remain very strong as proved by last week’s 14% increase in production year over year. 

(Reuters) – Farmland values in Iowa, the top U.S. corn and soybean state, fell 5.4 percent over the past six months, under pressure from lower grain prices, according to a benchmark survey of realtors. The average selling price of farmland across Iowa in March was $8,286 an acre, compared with $8,758 six months before. Prices were down 4.6 percent from $8,690 a year earlier.

Export sales estimates for the 7:30 am report as surveyed by Reuters are:

                          Trade estimates             Trade estimates
                             for 2013/14                    for 2014/15
Wheat              200,000-400,000          200,000-400,000
Corn                850,000-1,150,000                   0-200,000
Soybeans                    0-200,000          350,000-550,000
Soymeal          100,000-200,000                      0-150,000
Soyoil                         0-30,000                        0-10,000

Cash cattle players are in a stand-off as packers are bidding 147 and feedlots are offering at 153. Packer’s margins have been under pressure this week as meat values tumble. However, Wednesday beef cutout values were higher with choice up 1.10 and select up .71.  The CME Feeder Index is 177.56. Futures remain at a discount to cash which should provide underlining support.

Pork packers have filled their needs for the rest of the week either by being aggressive buyers or by cutting work hours. Fund selling combined with technical selling is pressuring lean hog futures. Pork cutout values were up 1.11 on Wednesday.

Markets as of 4:45 AM

  • May Corn    +3 1/4
  • May Beans   +7 3/4
  • May Wheat   +2 1/4
  • Apr Cattle  +.65
  • Apr Hogs    -.95
  • Jun Dlr     +.03
  • Jun S&P     +.50
  • May Crude   -.39
  • Apr Gold    -4.00

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 Faucet Wide Open

Apr 02, 2014

Good Morning! Paul Georgy with early morning comments for April 2, 2014 at 4:45 am.  

Grain futures are mixed with corn and wheat lower, soybeans higher. Will today be the day for profit taking?

The longs have been in control of the grain markets as weather forecasts, technical buying, fund buying and the Chinese are providing support going into the April 9th report.

Funds bought an estimated net 12,000 corn contracts, sold 6,000 wheat contracts and bought 8,000 contracts in soybeans on Tuesday.

Corn basis is weak as the rally in futures brings out farmer selling. Soybean basis is weak due to farmer selling in the US and in Argentina. South American harvest is underway and farmers want to move grain into a market where China is believed to have cancelled as many as 10 cargoes in recent weeks.

Chinese processor crush margins are deep in the red and banking requirements are changing. Talk of the current rally in soybeans and credit issues are forcing Chinese buyers to price purchases. Watch out when this forced buying is complete.

The technical picture has traders buying and short covering as corn closes above the 5.00 area. Chartists are now suggesting 5.20 to 5.30 as next level of resistance in corn.

The Ukraine/Russia standoff seems to have cooled off for now. The real focus is on the ability of Ukraine to get the spring crops in the ground.

Rain in the forecast for the Southern Plains and Australian dry wheat areas have caused profit taking in wheat futures.

Pork cutout value was up .21 on Tuesday. Futures rebound as traders focus in on true supplies of market ready hogs. Spreaders have been selling June, buying the deferred contracts since the Hogs and Pigs report.

Cash trade has been quiet this week as packers pull in contract cattle. Auction barns are reporting fed prices at 150 early this week. Beef cutout values were lower again as choice was down 1.25 and select was down 2.06. The CME Feeder Index is 177.71.

Markets as of 4:45 AM

  • May Corn    -1 1/2
  • May Beans   +7
  • May Wheat   -3 3/4
  • Apr Cattle  -.00
  • Apr Hogs    +.05
  • Jun Dlr     -.01
  • Jun S&P     +3.00
  • May Crude   -.09
  • Apr Gold    +3.70

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

Weather Now Becomes Driver

Apr 01, 2014

Good Morning! Paul Georgy with early morning comments for April 1, 2014 at 4:45 am.  

Grain futures are mixed with corn and soybeans higher, wheat lower. Follow through buying and the weather forecast are seen as the drivers this morning.

The USDA report is now behind us and it provided a large trading range on Monday. Technical traders are focused on the large outside day in corn and soybeans.

Planting intentions has analysts scratching their heads on why the USDA does not expect all the available acres to be planted this year. The data we have to use from now until the June Plantings report will open the opportunity for headlines as weather impacts planting conditions.

The USDA quarterly stocks report was not far from what traders were expecting. The USDA will use the stocks numbers that were released yesterday in the April Supply and Demand Report. Soybean supplies will be extremely tight while corn should see further reduction in ending stocks.

Funds now have nothing to stop their buying. They bought a net 20,000 corn contracts, were even in wheat and bought 11,000 in soybeans on Monday.

Turning the calendar to April means weather forecasts will be watched closely. The current forecast for cooler/wet conditions over the next 10 days continue is providing underlying support for row crops.

The Ukraine/Russia situation is being watched very closely by grain traders as spring planting begins in Ukraine.

Wheat crop conditions dropped for the third straight week in Kansas while OK and TX hold week ago levels.

Hog futures were impacted Monday by the bearish Hogs and Pig Report. Many traders believe it may take a few reports before they get the hog supply right. Nearby pork demand is strong and supplies are tight. The pork cutout value is up 1.26.

Cattle traders are struggling with the discount of futures to cash versus the expectation market ready supplies will increase into summer months. Beef values are weaker with choice down .67 and select down 2.33. CME Feeder Index is 177.60.

Markets as of 4:45 AM

  • May Corn    +1 1/2
  • May Beans   +13 3/4
  • May Wheat   -10
  • Apr Cattle  -.07
  • Apr Hogs    +.12
  • Jun Dlr     -.05
  • Jun S&P     +3.00
  • May Crude   -.28
  • Apr 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

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