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
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