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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.

Is China Rejecting Corn A Big Deal?

Dec 17, 2013

Good Morning! Paul Georgy with early morning comments for December 17, 2013 at 4:30 am. Grain futures are steady to lower led by profit taking in the soybean complex.

Corn basis is down 2 to 5 cents while soybean basis was down 3 to 5 cents. The rail backup and river closures have been cited as reasons for weakness. Farmer movement is limited.

Export shipment data yesterday was supportive as soybeans saw 62.5 million bushels shipped. Soybean sales are running at 96% of USDA expected exports compared to 71% normal. Corn was on the light side of expectations. With all the talk about China rejecting US corn, we looked at how much corn sales could be impacted. China is the 3rd largest importer of US corn. They have purchased 5.7 mmt of corn which 3.7 mmt still has to be shipped.

South Korea purchased 65,000 tonnes of US corn overnight.

NOPA crush data showed a very aggressive pace for November at 160.1 million bushel. This represents a 2% increase from last year however the first quarter of this marketing year averaged 1.1%. The USDA’s target is only a 0.1% increase from last year.

USDA Secretary Vilsack is headed to China for a meeting on December 20th. The USDA is saying this is a meeting that has been scheduled for some time and not called because of China rejecting corn imported from US.

Traders are now estimating a 40% chance of some type of tapering announcement on Wednesday by the FED.

Technical support in March corn is 4.18 1/2. Nearby soybean futures are testing resistance and upper end of trading range.

Beef came out "of the chute" strong on Monday which has promoted some buying interest in live cattle futures. We suspect some fill in buying by retailers as they plan for post-holiday featuring.

Hog farmers are expanding herds as sow slaughter is 6.4% below year ago levels. Increasing competitions for pork and beef are slowing price rallies as supply numbers decline.

Beef cutout values were higher with choice up 1.08 and select up 1.40. The CME Feeder index is 168.32.

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Markets as of 4:30 AM

  • Mar Corn    – 1/4
  • Jan Beans   -6 1/4
  • Mar Wheat   – 1/2
  • Feb Cattle  +.05
  • Feb Hogs    +.20
  • Mar Dlr     +.01
  • Mar S&P     -1.75
  • Jan Crude   -.23
  • Feb Gold    -7.70


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