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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 Will Markets Deal With Government Shutdown?

Oct 01, 2013

Good Morning! Paul Georgy with early morning comments for October 1, 2013 at 5:00 am.  Grain futures are lower as traders deal with the US Government shutdown.

Weather conditions should allow for harvest to pick up over the next few days until another system moves through the Midwest late this week. The USDA says only 12% of the corn is harvested compared to 23% average. Only 11% of the soybeans are harvested, compared to 20% average. Crop conditions report showed an improvement of 3% to 53% in G/E category for soybeans. Corn was unchanged from last week at 50% G/E.

The USDA surprised the trade by putting corn quarterly stocks for the 2012/13 marketing year at 824 million bushels compared to the trade estimate of 681. Without any adjustments for yield or harvested acreage this data would suggest ending stocks for the 2013/14 marketing year will be near 2.0 billion bushel.

Soybean stocks were 16 million bushel higher than trade was estimating due to USDA increasing last year’s production by 19 million bushel.

Traders are combining this news with harvest reports of larger than expected yields to provide selling pressure. A close in November futures below 12.80 would point to the 12.25 level as the next downside target.

The wheat stocks number was friendly compared to trade expectations. It appears feed usage of wheat replaced high corn prices during July and August.

Heavy rains in parts of Ukraine and eastern Russia are slowing winter crop seeding.

China is expected to be quiet as they celebrate their Golden Week Holiday which starts today and runs through Oct 7th.

Non-farm payroll data comes out on Friday and the Goldman Roll starts next Monday in soybeans.

The October WASDE report is only 10 days away. Trade will be honing in on the acreage changes and yield adjustments the USDA may make on the upcoming report. The release of this report, however, is being overshadowed by the government shutdown.

Livestock traders are shocked that the USDA made no adjustments for PED virus and only a had slight increase in herd expansion. Lean hog futures are testing support levels which are key to maintaining uptrend. December futures have support at 85.90. Pork cutout values were down .04 on Monday.

Cattle traders are concerned about demand as we go forward with the shutdown although beef cutout values were higher with choice up .62 and select up 1.46. The CME Feeder Index was up .26 to 159.63.

Markets as of 5:00 AM

  • Dec Corn    – 1/4
  • Nov Beans   -10
  • Sep Wheat   -1 3/4
  • Oct Cattle  -.40
  • Oct Hogs    -.37
  • Dec Dlr     -.15
  • Dec S&P     +7.50
  • Nov Crude   -.17
  • Dec Gold    +4.80
Chart of the Day

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