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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.

How Long Can Soybean Demand Drive Prices?

Dec 02, 2013

Good Morning! Paul Georgy with early morning comments for December 2, 2013 at 5:00 am.  Grain futures are mostly higher this morning in the front month contracts. The strength is coming from demand for US supplies of corn and soybeans by crushers and exporters.

Soybeans continue to lead the charge as traders are expecting an increase in soybean exports for the 2013/14 marketing year because sales are currently 93% of USDA forecast. Soybean basis remains seasonally strong as crush margins are positive due to meal demand.

Corn traders are looking for markets to remain weak into end of year unless new news develops in the next few weeks. Ethanol margins remain positive for crushing however many plants have enough corn around them for the next 30 days. The next major USDA report is not until mid-January.

Wheat demand is good in the world market as several countries are looking for supplies. Wheat had 724 contracts of new deliveries through November 27, 2013 and there were no corn deliveries.

Wednesday Stats Canada and Australia Wheat Board will issue reports.

South American weather forecast continues to be favorable for crops in most areas.

Managed Money increased short position in corn by 7,000 to 146,086 and increased short positions in wheat by 8,000 contracts to 55,199 net short. They increased long positions in soybeans by 8,500 contracts to make them net long 129,393. Non-commercial traders now hold a record short position in wheat.

Technical support in the March corn contract is 4.20 with last week’s high as resistance. January soybeans should find some resistance near 13.50. Check in with Allendale Advisory Report for full details.

Cash cattle traded 1.00 to 2.00 higher last week. Trade is looking for steady to higher cash as packers go back to a full work week. Product demand will be watched closely with beef prices above 200 and first of month features. Beef cutout values were higher on Friday with choice up .33 and select up .21. The CME Feeder Cattle Index is 164.63.

Managed Money reduced long contracts in lean hogs and cattle each by more than 10,000 contracts.

The discount of cash index to futures is weighing on prices however traders are watching slaughter supplies. Analyst are expecting seasonal supply peaks behind us and looking ahead for the effects of last summer’s PEDv losses. Pork cutout values were up 1.01 on Friday. Look for higher opening calls for livestock.

Markets as of 5:00 AM

  • Mar Corn    – 3/4
  • Jan Beans   +7 1/4
  • Mar Wheat   +2 1/2
  • Feb Cattle  Steady-Higher
  • Feb Hogs    Steady-Higher
  • Mar Dlr     +.24
  • Mar S&P     -1.25
  • Jan Crude   -.06
  • Feb Gold    -12.60
Chart of the Day

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