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The Allendale Wake-Up Call

RSS By: Paul Georgy,

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.

Dollar Plummet Triggers Commodity Buying

Jul 11, 2013

Good Morning! Paul Georgy with early morning comments for July 11, 2013 at 5:00 am.  Grain futures are higher as double crop soybeans are at risk in the Ohio River Valley and old crop stocks very tight. Grain support is also coming from a weak dollar and traders’ risk-on attitude. Traders are expecting a neutral report. We suggest,however, that the HFT or headline traders may construe a slightly unchanged data as a sell signal. Be prepared for volatility when data is released. Weather forecasts have added more rain in the 11 to 15 day period. Temps are expected to reach 100 in the western cornbelt this weekend with no significant rain event. Crops will show further stress in the west while the rest of the cornbelt should continue to improve as more corn will be pollinating. Traders will be doing some last minute position adjusting ahead of the USDA Monthly Supply and Demand Reportwhich will be released at 11:00 CDT. The questions to answer is how much of the report will traders believe and for how long? Historically, on the July report, the USDA uses the acreage number from the June planting survey times the yield from the June S+D. If they follow their recent pattern, corn ending stocks could be near 1.9 billion bushels for 2013/14. Ethanol production numbers for week showed a 7% increase over last year. Although this is an improvement, year to date production is 8.8% below last year when USDA’s goal is a 7.2% decline. Corn and soybean basis remains very strong through first half of August. End-users are expecting harvest to begin in the south. Corn basis is 2.35 over the Sep in Hereford, TX which is causing feedlots to use hard red wheat as a substitute. Tight cash supplies and July contract expiration is providing support in the nearby contracts. Weekly export sales data will be released at 7:30 this morning. Trade estimates are as follows:

                         2012/13                      2013/14       
                      Estimates                    Estimates                        
Corn         150,000-250,000        200,000-350,000
Soybeans        zero-100,000        200,000-350,000
Soymeal    50,000-100,000           50,000-150,000 
Soyoil           5,000-20,000                     zero           
Wheat            **********              650,000-900,000

Livestock markets are struggling to rally as meat consumption slows during July. Cash cattle trade is at a standstill. Boxed beef was lower with choice down another 1.25 and select was up .20. Hog futures found support of a firmer cash trade due to hot weather in the forecast. Packers wanted to have a few more hogs before the heat hit. Pork cutout values were down 2.50 on Wednesday. Republicans in Congress were unable to agree upon a split-bill late yesterday so it is back to the drawing board on the Farm Bill. Rich Nelson, Allendale’s Chief strategist will be providing a YouTube discussion after the USDA Report later today.

Markets as of 5:00 AM

  • Dec Corn    +5 1/2
  • Nov Beans   +7 1/4
  • Sep Wheat   +5 3/4
  • Aug Cattle  +.02
  • Aug Hogs    -.15
  • Sep Dlr     -1.01
  • Sep S&P     +16.50
  • Aug Crude   -.69
  • Aug Gold    +34.50


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