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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.

Heat in Forecast Ignites Buyers

Jul 10, 2013

Good Morning! Paul Georgy with early morning comments for July 10, 2013 at 5:00 am.  Grain futures are higher as traders prepare for the USDA report and warmer weather to move into Midwest. Outside markets are also providing a lift with the dollar down, crude oil and metals higher. Several factors have spooked the bulls this week. The weather forecasters are using the "HOT" word to describe temps later this week in the western Corn Belt where conditions are dry. Although the high temps may be around for only a few days, it may be too much for dry land corn. Producers in Nebraska are telling us the dry land corn is already being affected by the dry/hot conditions. Technical buying and fund buying is also a large factor in recent rallies. Will the funds continue to buy ahead of the USDA report? Trade averages are suggesting this upcoming report as bearish. The USDA will use the planted acreage numbers from the June 28 report. History suggests that it is not likely for them to make any significant changes to yield due to lateness of the crop. When doing the math, we would expect about 1.9 billion bushel corn carryover for 2013/14, which is almost 3 times as much as this year. Chart patterns and key moving averages are driving technical buying. Trading volume is expected to heavy going into the USDA report on Thursday at 11:00. Open interest in the July contracts is getting smaller but could lead to volatile trading before Friday’s expiration. Funds were big buyers in corn yesterday with an estimate of 18,000 contracts. They were net buyer in wheat of 3,000 contracts and soybeans of 9,000 contracts. The rally in corn has not had much effect on basis. However, soybean basis has dropped in most areas. Bean processors are shutting down for maintenance. Cattle futures are waiting to see if cash can trade steady to higher this week as we head into a seasonal slowdown in product demand. Choice beef was down .53 while select was up .72. Allendale’s Chief Strategist, Rich Nelson has done an excellent analysis on the hog market in last night’s Hog Commentary. Take time to read it. Pork cutout values were down 1.48 on Tuesday.

Markets as of 5:00 AM

  • Dec Corn    +2 1/2
  • Nov Beans   +4 3/4
  • Sep Wheat   + 1/2
  • Aug Cattle  -.02
  • Aug Hogs    +.15
  • Sep Dlr     -.21
  • Sep S&P     -1.5
  • Aug Crude   1.28
  • Aug Gold    +6.90


View Today’s Chart of the Day

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