Oct 2, 2014
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August 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.
 

Allendale’s Yield Survey Results On Wednesday

Aug 29, 2014

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

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

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

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

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

Update - Morning Coffee:

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

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

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

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

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

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

August Cattle contract expires at noon today.

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

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

Livestock markets open at 9:05 on Tuesday.

Markets as of 5:30 AM CDT                                                                    

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

Chart of the Day

daily chart

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

 

 

Low Prices Wake-Up World Buyers

Aug 28, 2014

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

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

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

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

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

Update - Morning Coffee Commentary:

 

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

(Reuters)      

         Trade estimates for     Trade estimates for

                     2013-14                 2014-15

Wheat                    N/A         300,000-500,000

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

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

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

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

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

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

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

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

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

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

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

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

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

Markets as of 5:30 AM CDT                                                                    

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

Chart of the Day

daily chart

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

Harvest Yields Start To Roll In

Aug 27, 2014

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

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

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

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

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

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

Update - Morning Coffee Commentary:

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

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

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

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

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

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

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

Markets as of 5:30 AM CDT                                                                    

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

Chart of the Day

daily chart

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

Crop Conditions Remain Near All-Time Highs

Aug 26, 2014

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

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

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

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

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

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

Update - Morning Coffee Commentary:

 

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

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

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

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

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

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

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

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

Markets as of 4:30 AM CDT                                                                    

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

Chart of the Day

daily chart

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

Demand For Old Crop Soybeans Provides Support

Aug 25, 2014

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

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

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

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

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

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

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

Update - Morning Coffee Commentary:

 

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

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

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

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

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

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

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

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

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

Markets as of 5:30 AM CDT                                                                    

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

 

Chart of the Day

daily chart

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

Can Grains Rally as Tour Week Comes to a Close?

Aug 22, 2014

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

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

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

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

Morning Coffee Commentary:

 

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

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

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

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

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

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

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

Markets as of 5:30 AM CDT                                                                    

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

Chart of the Day

daily chart

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

 

 

Bounce in Grains While Livestock Remain Weak

Aug 21, 2014

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

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

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

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

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

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

Update - Morning Coffee Commentary:

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

          Trade estimates for      Trade estimates for

                      2013-14                  2014-15

Wheat                     N/A          350,000-500,000

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

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

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

Soyoil               0-10,000                 0-10,000

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

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

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

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

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

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

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

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

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

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

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

Markets as of 5:30 AM CDT                                                                    

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

Chart of the Day

daily chart

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

Watch the Dollar Index And Headlines

Aug 20, 2014

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

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

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

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

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

Update - Morning Coffee Commentary:

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

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

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

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

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

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

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

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

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

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

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

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

 

daily chart

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

Markets Drift Lower Overnight

Aug 19, 2014

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

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

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

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

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

Update - Morning Coffee Commentary:

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

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

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

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

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

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

Stats Canada will release their production numbers on Thursday.

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

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

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

Markets as of 4:45 AM CDT

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

 

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

Headlines Will Add Excitement This Week

Aug 18, 2014

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

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

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

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

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

Update - Morning Coffee Commentary:

 

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

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

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

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

Stats Canada will update their 2014 production on Thursday.

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

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

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

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

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

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

Markets as of 5:30 AM CDT

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

 

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Can Corn Closeout Week With Largest Gain In 4 Weeks?

Aug 15, 2014

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

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

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

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

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

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

Update - Morning Coffee Commentary:

 

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

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

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

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

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

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

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

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

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

Markets as of 5:30 AM CDT

Dec Corn    – 1/4

Nov Beans   -5

Sep Wheat   +1 3/4

Oct Cattle+.05

Oct Hogs+.37

Sep Dlr     -.04

Sep S&P     +4.50

Sep Crude   +.01

Oct Gold    +2.10

Chart of the Day

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Markets Quiet Overnight

Aug 14, 2014

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

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

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

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

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

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

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

Get the export sales results in our Morning Coffee update:

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

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

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

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

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

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

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

Markets as of 5:30 AM CDT                                                                    

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

Chart of the Day

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Dealing With Record Crops

Aug 13, 2014

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

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

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

Update - Morning Coffee Commentary:

 

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

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

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

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

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

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

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

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

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

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

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

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

Markets as of 5:30 AM CDT          

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

 

Chart of the Day

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Trade Not Believing Lower Than Expected Yield

Aug 12, 2014

Initial Report Reaction:

 

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

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

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

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

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

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

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

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

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

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

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

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

All Eyes On USDA Report

Aug 12, 2014

Good Morning! Paul Georgy with the early morning commentary for August 12, 2014 at 4:30 am.

Grain futures are lower as traders expect a bearish report today.

Traders Focus: The USDA Supply and Demand Report and Crop Production Report to be released at 11:00 AM.

One of the key points to watch for on this report is the corn yield. USDA historically is reluctant to raise yields from July to August as they have increased yield only 5 times in the last 21 year. Weather conditions during July suggest they will have to raise the national average yield sometime soon. Last month their estimate was 165.2 bushel per acre and trade average is 170.1 bushels per acre. See what can previous USDA reports tell us about today’s yield numbers?

Don’t be surprised with the great condition of the US soybeans, that yield is not increased. They historically make very little changes to soybean yield on the August report. In the past they have waited until September.

The ending stocks for corn and soybeans will be critical as trade is looking for huge supplies at the end of 2014/15 marketing year.

The high frequency traders will be watching any deviation from the trade averages. Call your Allendale Broker to discuss all the details of the report and any last minute adjustments before 11:00.

Update - Morning Coffee Commentary:

 

Expect traders to set their focus on the weather forecast shortly after report. Rain coverage in the next 10 days can mean a lot in yield development in soybeans.

Corn crop conditions were steady with last week at 73% G/E. There is 56% of the crop in dough stage compared to 46% average.

Soybean conditions dropped 1% to 70% G/E which compares to 64% last year. This was not a surprise as several RJO offices reported stress in soybeans this last week due to dryness. There is 72% of the crop setting pods compared to 65% average.

The spring wheat conditions stayed at 70% G/E for another week. Harvest is just underway with 6% complete.

Weekly export inspections for corn and soybeans are running behind what is needed to meet the USDA’s Export targets.

Soybean basis jumps 10 cents in Central IL as supplies are tight before new crop harvest begins.

Pork cutout values were hit hard on Monday coming in 4.47 lower. The final holiday for cookout specials is just around the corner and pork supplies are plentiful. Retailers do not want to get caught with a burdensome supply post Labor Day Holiday. The Russian ban of US and Canadian pork will increase supplies here at home.

Live cattle futures put in a reversal after the recent sharp sell-off. Beef production is running about 10% below a year ago on a weekly basis. However the competitive meats supplies are increasing and the cook out demand for primal cuts is coming to a seasonal end. Beef values are weak with choice down 1.01 and select down 1.38. The CME Feeder Index is 223.09.

Markets as of 4:30 AM CDT          

  • Dec Corn   -1 1/2
  • Nov Beans   -3 1/4
  • Sep Wheat   -6 1/2
  • Oct Cattle  -.10
  • Oct Hogs    -1.45
  • Sep Dlr     +.19
  • Sep S&P     +4.25
  • Sep Crude   -.66
  • Oct Gold   +1.90

Chart of the Day

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Crop Conditions Expected to Improve In Soybeans

Aug 11, 2014

Crop Conditions Expected to Improve In Soybeans

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

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

Traders Focus: starting the week traders will be adjusting positions ahead of tomorrow’s USDA report. Crop conditions this afternoon and weather forecasts later in the week could be crucial soybean yields.

Update - Morning Coffee:

 

Average estimate for the 2014 crop has trade expecting nearly a 400 million bushel increase in corn production. The trade is looking for an increase of 23 million bushel in soybean production. The USDA historically has increased soybean yields from July to August.

Crop condition for soybeans is expected to improve by 1 to 2% on this afternoon’s weekly update. Corn is expected to be unchanged but corn in some areas is already showing sign of maturity.

Post report weather conditions will be watched closely as August rains can make a soybean crop.

Commitment of traders report showed Managed Money Funds adding to net long positions in corn. They were net sellers of soybeans which left their overall position short 14,613. Funds reduced short positions by 4,935 contracts (view the charts).

Russia is expected to announce the expansion of food imports to Latin American countries.

Algeria’s wheat harvest falls short of expectations and are tendering for 120,000 corn and 25,000 tonnes of feed wheat.

Friday’s 345,000 hog run and the 25,000 on Saturday puts together a 1.919 million slaughter. That is 52,000 head larger than last week. It is the biggest kill since the first week of June. This week’s run was only 5.2% smaller than last year. With 4.8% heavier weights this week’s pork production was only 0.4% under last year. Pork Cutout value was down 1.43.

Cattle traded down to $160 Friday. This was $3 lower than last week’s average price. It was also interesting to note that Nebraska traded down to that same price instead of holding the usual $1 premium. Beef values are weak with choice down 1.96 and select down 2.26. CME Feeder Index is 222.33.

Markets as of 5:30 AM CDT          

  • Dec Corn   + 3/4
  • Nov Beans   -2 1/2
  • Sep Wheat   -5
  • Oct Cattle  Steady-Lower
  • Oct Hogs    Steady-Lower
  • Sep Dlr     +.06
  • Sep S&P     +7.25
  • Sep Crude   +.05
  • Oct Gold   -1.80

Chart of the Day

daily chart

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Russian Sanctions Break Bulls Hold In Cattle

Aug 08, 2014

Good Morning! Paul Georgy with the early morning commentary for August 8, 2014 at 5:30 am.

Grain futures are lower in a quiet overnight session.

Trade appears to be at equilibrium going into next week’s USDA report. The hope is to get USDA’s take on how big the 2014 crop really is. However, as we have said before they likely will not give us the true size of the crop until the January report.

Update - Morning Coffee Commentary:

 

Russia’s recent sanctions against Ukraine, the European Union, Canada and the United States shows Putin is willing to move troops into Ukraine when he is ready at the sacrifice of his own people. Traders at the CME markets reacted by liquidating long positions in livestock even with tight supplies and price discounts to cash.

Russia says their ban of US and EU food products will not have any impact on grain exports. The majority of their grain goes to Middle East and North African countries.

Trade volume in the grain complex continues to erode as many exit for the sidelines ahead of the August USDA Supply and Demand report which will be out next Tuesday. Funds rolling positions out of the nearby contracts will continue for four more sessions.

Weather forecasts are not causing excitement as conditions remain ideal for a record crop. No talk of frost at this time although northern cornbelt producers are concerned because of current cool temps and slow crop maturity.

Brazil’s Conab raises it corn production forecast to 78.55 from 78.20 in July due to the improvement of the safrina crop.

Conab reduced their soybean production estimate by 800,000 tonnes from July to 85.66.

The raging rally in US beef prices has turned off world buyers. Beef exports in June were 235 million lbs., which was only 0.4% over last year in the same month. That falls below the 15% gain in April and 4% increase for May.

Beef values are mixed with choice up .44 and select down .51. The CME Feeder Index is 223.94.

Pork exports were 414 million lbs. for June, 4% higher than last year. It was the largest June export of pork since China’s big Olympics’ purchase in 2008. This fit in line with the previous two months which were +10% and unchanged respectively. Imports were strong at 78 million lbs. That was the largest since 2007 and 14% over last year. The previous two months were 14% and 15% higher than last year. Pork cutout values are up .11.

Markets as of 5:30 AM CDT          

  • Dec Corn   -2
  • Nov Beans   -2 1/2
  • Sep Wheat   -1 3/4
  • Oct Cattle  -.65
  • Oct Hogs    -.87
  • Sep Dlr     -.15
  • Sep S&P     -4.00
  • Sep Crude   +.69
  • Oct Gold   +6.30

 

Chart of the Day

daily chart

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Grains Stop At Chart Resistance

Aug 07, 2014

Good Morning! Paul Georgy with the early morning commentary for August 7, 2014 at 5:30 am.

Grain futures are lower after the rally on Wednesday. The buildup of Russian troops on the Ukraine boarder and next week’s USDA release of US yield estimates are keeping traders on edge.

Update - Morning Coffee Commentary:

 

Wheat has led the oversold recovery in the grain complex due to poor quality wheat in the southern Midwest and in the European Community. Supply of milling quality wheat is a concern to hedgers in the market. Nearby futures have recovered to test the 50 day moving average. A close above 5.73 ½ in September futures is needed to accelerate a buying frenzy.

Reuter’s survey of trade analyst suggests USDA will deliver a new crop ending stocks of 2.005 billion bushel of 2014/15 corn compared to USDA’s 1.801 billion last month. Traders estimate soybean stocks at .414 billion bushels compared to USDA’s last month figure of .415.

USDA weekly export sales data will be released at 7:30. Trade estimate for old crop corn is 100,000-200,000 tonnes and new crop 800,000-1,000,000 tonnes, wheat 600,000-800,000 tonnes, old crop soybeans 100,000-200,000 tonnes and new crop 1,000,000-1,200,000 tonnes, old crop soymeal 50,000-150,000 tonnes and new crop 250,000-450,000 tonnes, old crop soyoil 0-20,000 tonnes and new crop 0-20,000 tonnes. (Updated export sales results available, here).

Funds are estimated to have bought a net 6,000 corn contracts and 3,000 in soybeans and 7,000 wheat contracts on Wednesday.

Russia's veterinary service says they have decided to ban US poultry imports as part of Putin's order to prepare a list of food import bans. They say the decision on the US and EU food import bans is "to be quite substantial".

The CME is looking for your comments on suggested changes in the lean hog and live cattle contracts. Click here to voice your opinion.

Brazil says they can help meet the Russian chicken demand but will be unable to fill pork needs.

A few fed cattle traded in Nebraska at steady prices with last week. Beef values are weak with choice down 1.30 and select down 98. The CME Feeder Index is 224.56.

Russia had a ban in place on US pork through most of 2013 due to our use of ractopamine. That was lifted earlier this spring as they could not find adequate supplies of pork from the EU. During May, we shipped them 21 million lbs. of pork, this represented 5% of our exports that month. Pork cutout value was down 1.65.

Markets as of 5:30 AM CDT          

  • Dec Corn   -2 1/2
  • Nov Beans   -4 1/4
  • Sep Wheat   -3 1/4
  • Oct Cattle  +.12
  • Oct Hogs    -.75
  • Sep Dlr     +.04
  • Sep S&P     +3.75
  • Sep Crude   -.20
  • Oct Gold   -2.50

Chart of the Day

daily chart

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Quality Concerns Cause Recovery In Wheat

Aug 06, 2014

Good Morning! Paul Georgy with the early morning commentary for August 6, 2014 at 5:30 am.

Grain futures are mixed with wheat leading the charge higher due to quality issue in EU and US.

Update - Morning Coffee Commentary:

SRW is getting attention as trade is talking about a boat being loaded out of Toledo, OH. Quality of southern Midwest wheat is a concern as vomitoxin is showing up in the high yielding wheat crop.

Paris Euronext has changed the quality standard on its milling wheat contract to prevent poor quality wheat being delivered to hedgers.

Technical and fund short covering is also providing support to the wheat complex.

Funds bought a net 4,000 wheat contracts, sold 3,000 corn, sold 5,000 in soybeans on Tuesday.

Will crop revenue insurance payout this year on corn? Rich Nelson, Allendale’s Chief Strategist did a quick analysis using 180 APH, 75% coverage and $4.62 insured price equals $623 insured revenue. Current outlook of 195 farm yield, 75% coverage and $3.66 Dec futures equals revenue of $714 and no insurance payment.

Reuter’s informal survey of six analysts put the average price for 4th quarter corn at $3.52, soybeans at $10.27 and wheat at $5.52.

USDA Attaché report: The marketing year (MY) 2014/15 corn production forecast has been revised slightly downward to 22.3 MMT mainly due to lower planted area, while for MY 2013/14 corn production is revised slightly upward based on revised official government data. MY 2013/14 corn imports have been revised downward to 10.7 MMT. The Government of Mexico (GOM) continues to promote its plan to shift part of Mexico’s white corn production to yellow corn production through supports to its corn growers.

The Goldman Roll starts today by moving out of the September CME grain contracts.

Informa’s estimate for corn yield is 168 compared to USDA’s July estimate of 165.3. Their soybean yield estimate is 44.5 a decline from USDA’s July estimate of 45.2.

Allendale’s study of the possibilities USDA might change corn yields from July to August show a rise in yield 10 out of the last 21 years. Using an average percentage change it suggests a yield of 171 on the August 12th report. Review the study here.

The USDA raised the soybean yield only 5 times out of the last 21 years from July to August.

Corn and soybean basis at processor locations is steady/firm as farmers stop selling on recent weakness in futures.

New lows for this downtrend were posted for the August and October lean hog contracts on Tuesday. The market continues to hold concern about the threat of Russia banning US chicken as well as the supply issue just ahead. There are three pork plants that are considering moving from the current four day kill schedules back to a normal five day run. Pork cutout value is up .14.

No significant bids or offers have been posted yet. We would look for steady to lower trade this week based on the 26,000 head increase in this week’s showlist. Futures are implying cash at the end of August will run $158 compared with the $163 last week. Beef values are mixed with choice up .05 and select down 1.28. The CME Feeder Index is 225.15.

Markets as of 5:30 AM CDT          

  • Dec Corn   +1 1/2  
  • Nov Beans   -1 1/4
  • Sep Wheat   +8 1/4
  • Oct Cattle  +.12
  • Oct Hogs    -.15
  • Sep Dlr     +.14
  • Sep S&P     -9.25
  • Sep Crude   +.15
  • Oct Gold   +4.20

 

Chart of the Day

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Corn Conditions Downgraded Soybeans Steady

Aug 05, 2014

Good Morning! Paul Georgy with the early morning commentary for August 5, 2014 at 4:30 am CDT.

Grain futures are lower after a strong technical performance on Monday. Weather forecasts are a little wetter from North Dakota to Wisconsin for the first week while the second week has more rain for the eastern Midwest.

Crop conditions for corn were downgraded by 2% to 73% good/excellent. Soybeans held steady at 71% good/excellent.

Allendale is looking forward to the 25th Annual Yield survey. We work with farmers, who estimate their own farms production. Nobody knows their farms potential production better than the farmer. The survey will start August 18 through August 29. Allendale will release the survey results on September 3 at 7:30 am.

Update - Morning Coffee Commentary:

 

Brazil’s soybean plantings will likely increase by 4.9 percent next season says analysts AgRural. With normal weather conditions, the crop that will be planted starting in September could yield 94 million tonnes of soy, (USDA 91 mmt) surpassing this year’s record 85.6 million tonnes.

Rabobank lowers price projections for the Oct-Dec period by 57 cents per bushel to $3.50. This implies further downside and would be the weakest quarter since the April-June period of 2010. They are citing the reason for the reduction to low temperatures during July and strong second quarter precipitation.

FC Stone corn yield estimate was 172.4 bushel per acre and soybean yield was 46.0 bushel per acre. Corn production estimate is 14.455 billion bu. and soybeans 3.865 billion bu.

Economic reports out today: EIA report, Factory orders data and the ISM non-manufacturing index.

Fed cattle showlist increased in Nebraska by 36,000 head while CO, TX and KS fall short of last week. Feeder cattle put in an outside day up on Monday which usually is a friendly sign for prices. Beef values are steady-weaker with choice up .09 and select down .09. The CME Feeder Index is 225.68.

Lean hog futures rally after nearly 2 weeks straight of lower closes. The discount of futures to cash is providing some buying interest for futures. Heavy weights seem to be the concern in the pork complex as hog numbers are expected as much as 10% less than a year ago during Aug-Sep period. Pork cutout values rebound by .50 on Monday.

Markets as of 4:30 AM CDT          

  • Dec Corn   -2 1/4  
  • Nov Beans   -10
  • Sep Wheat   -1 1/2
  • Oct Cattle  +.65
  • Oct Hogs    -.57
  • Sep Dlr     +.08
  • Sep S&P     -1.00
  • Sep Crude   +.16
  • Oct Gold   +4.70

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 Forecast Triggers Short Covering

Aug 04, 2014

Good Morning! Paul Georgy with the early morning commentary for August 4, 2014 at 5:30 am CDT.

Grain futures are higher on short covering due to a little drier forecast for 10 to 15 period.

The weather forecast will be monitored closely as the location of moisture over the next 5 days will be beneficial to crops, while those areas missing the rain may be stressed. Check Ryan Martin’s Weather recap by clicking here.

Update - Morning Coffee Commentary:

 

Trade is looking for a decline in crop ratings this afternoon by 1% to 2% due to dry conditions in western and northern areas. Last week corn was 75% G/E and soybeans were 71% G/E.

Brazilians have approved subsidies to free up 7-8 mmt of corn which could be dumped into the export channels.

The weather problems in Europe and the unrest in Ukraine have provided support to US wheat market. However, the poor quality wheat in France and Germany may cause more pressure to world feed grain prices.

The CFTC Commitment of Traders report showed managed funds decreased their long positions in corn by 7,384 to net long 63,024 contracts. In soybeans funds bought a net 10,224 to leave them short 8,319 contracts. Funds added to net short positions by 17,449 to make them net short 71,968 contracts of wheat.

Police in China have detained six executives of a meat supply company at the center of the latest food safety scare to hit the country, state media reported on Sunday.

China’s chicken exports are expected to rise to 450,000 tonnes this year, according to the China Animal Agriculture Association on Sunday.

In the past few weeks, Russian agriculture and consumer watchdog groups have been working overtime in a response to US and European economic sanctions. They have announced a discovery of harmful levels of antibiotics in US poultry, contaminants in Ukrainian dairy, pests in EU produce and bacteria in US fast food. Russia has either imposed or threatened bans on products in response to violations.

This week there will be more estimates released for USDAs August Report. The "Goldman Roll" out of the September contracts starts on Thursday.

Cash cattle traded at steady to $2.00 lower than previous week. There will be more talk that we have seen a blow-off top in fed cattle values. Beef closed weak on Friday with choice down .53 and select down 2.48. The CME Feeder Index is 126.28.

Hog weights are the key topic of discussion. Will producers become more aggressive sellers as attempts to get current before prices slide further? Or will the reduced numbers of market ready hogs due to peak losses from PEDv keep marketing light?

October futures have seen liquidation and price decline of $16.00 since the July 7 high. Technical indicators are oversold. Pork cutout values were down 1.71 on Friday.

Markets as of 5:30 AM CDT          

  • Dec Corn   +1 1/2  
  • Nov Beans   +7 3/4
  • Sep Wheat   +7 1/4
  • Oct Cattle  Steady-Lower
  • Oct Hogs    Steady-Lower
  • Sep Dlr     +.06
  • Sep S&P     +7.50
  • Sep Crude   +.09
  • Oct 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 A New Month Change The Bearish Attitude?

Aug 01, 2014

 Good Morning! Paul Georgy with the early morning commentary for August 1, 2014 at 5:30 am CDT.

Grain futures are mixed with corn and soybeans lower and wheat higher. Index futures are showing a lower start for stocks this morning.

Update - Morning Coffee Commentary:

Corn closed out July with a 15% decline and the third straight monthly lower close. Traders are becoming convinced that USDA will raise yields on the August 12 report. Our study suggests the USDA will not give us the highest national yield until January.

Weather forecasts still remain the focus of row crop traders because a rain next week could be a "million dollar rain" for producers. One more good rain could be all the crop needs to make it to maturity.

In conversations with producers and elevators we are hearing a lot of corn moving off the farm on basis contracts or DP. Elevator managers are concerned about readying their facility for the bumper harvest. They would like to clean out their facilities before harvest.

Rail freight rates are high if you can get the railcars. Storage issues could make this year’s harvest a struggle for the producer.

The U.S. Environmental Agency on Thursday extended the deadline for refiners to show compliance with 2013 federal biofuel use targets under the Renewable Fuel Standard. Final targets for 2014 biofuel usage are expected to be sent to the White House within weeks, at which point the long-delayed rule will enter its final review before public release. Then the proposal will go to the White House's Office of Management and Budget which could take several weeks for a decision.

The U.S. Department of Agriculture said on Thursday it will modernize its decades-old inspection methods for poultry in an attempt to crack down on food-borne illness. They will require all poultry companies to take measures to prevent Salmonella and Campylobacter contamination.

Cattle futures were hit with the "Get Me Out NOW!" attitude on Thursday prompted by investor selling in the stock market and other commodities. Traders are waiting for the cash trade to develop this week. Lower futures are giving packers the incentive to reduce bids.

Feeders as the leaders will be watched closely because of the key reversal yesterday on the charts. They were limit down close after setting a new all-time high.

Beef values were mixed with choice up .74 and select down .23. The CME Feeder Index is 225.06. Call your Allendale Broker for strategies available in the cattle complex.

Lean hog futures tried rallying yesterday on oversold conditions and cattle/hog spread unwinding. However, Oct lean hog contract has closed lower 11 out of the last 12 trading session. Pork cutout values are down 1.20. Look for volatile markets to continue in livestock futures.

Markets as of 5:30 AM CDT          

  • Dec Corn   -1      
  • Nov Beans   -8 3/4
  • Sep Wheat   +3 1/2
  • Oct Cattle  -1.35
  • Oct Hogs    -.40
  • Sep Dlr     +.02
  • Sep S&P     -13.50
  • Sep Crude   -.79
  • Oct Gold   -3.30

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

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