Good Morning! Paul Georgy with early morning comments for July 10, 2014 at 5:15 am CDT.
Grain futures are higher as short-covering ahead of reports ttys to relieve the oversold condition.
Allendale’s Ag Leaders Conference "Summer Update" will be presented in less than 2 weeks. Get answers on the following topics: Temperature and Precipitation Outlook through Crop Maturity. US Harvest Weather outlook, what is the potential for Early Frost? Where is El Nino? South American Planting Weather Outlook and an update on price directions for grains and livestock markets.
The weather session takes place July 22nd at 2:00 PM CDT. The series will continue July 23rd and 24th at 2:00 pm with our grain and livestock outlooks. All sessions will be recorded for your viewing convenience.
Below normal temperatures during pollination has historically produced big corn yields. The production years of 2004 and 2009 were years where cool temps produced yields well above trend. Traders expect USDA to raise yield on average to 166.1 per acre. However, history suggests USDA is very reluctant to change yields from June to July. They have only changed yields 3 times since 1990.
Allendale thinks the standout adjustments on Friday’s Supply and Demand report for old corn could come in feed use, ethanol use and exports with a net increase in Ending Stocks. New crop corn will likely see adjustments in planted acres, harvested acres and possibly yield.
The USDA is less likely to change soybean yields on the July report as they have made adjustments only one time out of the last 28 years. Ending stocks for new crop soybeans could reach 400 million bushels, more than 3 time current year ending stocks.
Old crop soybeans are being watched closely on how the USDA will handle the stocks situation due to actual export sales and domestic crush usage already above previous targets.
The Weekly export sales will be released at 7:30 this morning. Trade estimates from Reuters are:
Wheat 0 400,000-635,000
Corn 225,000-400,000 375,000-650,000
Soybeans -100,000-100,000 300,000-500,000
Soymeal 30,000-150,000 0-125,000
Soyoil 0-20,000 0-10,000
There is more talk circulating that China is offering to resell beans out of Brazil. Also concerns that as many as 4 cargoes have reach china and buyers were unable to produce a letter of credit.
Last trading day for the July grain contracts is Monday.
CONAB in Brazil once again raised their old crop corn production estimate a bit to 78.2 mmt, up 300K while the USDA is still using 76 mmt.
Index Funds continue to roll out of the August contracts pressuring cattle futures already a discount to cash. The nearby cattle closed below key moving average support and posted a reversal day on the charts. This action will likely give packers a reason to hold out as long as they can before buying, especially with an increase in showlist numbers. Beef values were mixed with choice up .59 and select down .36. The CME feeder Index is 214.09.
Spreaders are providing volatility in the pork complex. Trade analysts are looking for hog supplies to get extremely tight over the next 60 days as it is the time where PEDv should have the greatest effect. We expect to see very choppy markets in livestock futures during this period. Pork cutout values are up 1.05.
Markets as of 5:15 AM CDT
- Sep Corn +1
- Aug Beans +9
- Sep Wheat +2 3/4
- Aug Cattle +.40
- Aug Hogs -.32
- Sep Dlr +.07
- Sep S&P -16.00
- Aug Crude -.66
- Aug Gold +19.10
Chart of the Day
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