The Allendale Wake-Up Call

Good Morning! Paul Georgy with early morning comments for May 23, 2012 at 5:10 am. Thanks to all who attended the Ag Leaders Webinar Live! If you have any unanswered questions give us a call or email. Corn and soybean futures are mostly lower led by wheat. Rains in Russia and strength in the dollar seem to be the catalyst for lower prices this morning. Weather models turned wet for next week in the Midwest and the dome of heat disappeared in the 10 to 15 day model runs. The heat this weekend will last only a few days. The fact that various models are agreeing on good moisture coverage of the Corn Belt that far out is providing selling pressure from the trade. Yesterday grain traders were hit with unconfirmed rumors such as China possibly canceling or rolling purchases of corn and possibly a large fund liquidating positions and shutting down. China will auction 600,000 tonnes of reserve soybeans on Thursday. We are starting to hear HRW yields out of TX and OK which are termed as good. Next week harvesters should get into southwest KS where yields are expected to be poor. There are reports coming out of Brazil putting next year’s bean production at 80 mmt vs. 65 mmt this year for Brazil. Several grain contracts closed below major moving average support levels. A strong close will be needed today negate the trend. The macro market is very concerned about the Euro situation as government leader’s change and austerity plans come into jeopardy. We should be in for more volatility through the balance of the week especially with a holiday on Monday and markets will be sensitive to weather forecasts. Boxed beef values were mixed on Tuesday, choice was down .31 and select was up .57. Fill-in buying for holiday featuring by retailer should be complete and likely will pressure beef values for balance of the week. Cash cattle markets are still at a standoff as packers will need fewer cattle next week. Cold storage numbers were larger than expected for beef and pork. Check out detailed analysis in yesterday’s livestock report. Pork cutout values were down 2.09. Check out the Allendale "Morning Coffee" on YouTube at 8:00AM.

 

Tuesday’s failure below the 5/16/12 $12.82 ¼ low opens up the prospect for an epic collapse in pricing in the weeks and months ahead. With no technical levels of substance coming in to play to support this market until the double bottom that was created in late November early December at $11.15 ¾ and $11.19 1/2 . If producers have not begun to price Nov. Beans action should be taken immediately.

In the first crop rating of the year, USDA indicated 77% of the nation’s corn crop was rated as either good or excellent. That was far above the average guess of 70% among analysts. Corn planting is virtually complete at 96%.

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