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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.

Processors Raise Bids To Fill Immediate Needs

Aug 02, 2013

Good Morning! Paul Georgy with early morning comments for August 2, 2013 at 5:00 am.  Grain futures are higher on short covering overnight.

Cool weather has had a cooling effect on the grain futures in recent weeks. The rainfall data is coming in for July showing most areas of the Midwest was well below average. However when trying to determine the impact on corn production there were 75 years of below average rainfall with only a few years of cool temperatures. This will add to the difficulty of determining crop size. The timely rains mixed with cool temps have certainly improved the appearance of the crop.

The August USDA crop production and S+D report will be released on Monday the 12th at 11:00 am. Several firms are releasing their estimates. FC Stone released their numbers yesterday. They project corn yields at 157 and a total production of 13.993 billion bushel. Soybean yields were estimated at 43 bushel per acre and total production at 3.309. Informa will put out their numbers next week.

The cash trade in corn and soybeans is becoming a real "cat and mouse" game. Processors that need grain are raising bids until they make the purchases they need then back off bids quickly. Producers with old crop to move before harvest are rolling the dice as they will have to move their inventory before their neighbors and before the processors are convinced they don’t need any more grain until the new crop arrives. We hear some central cornbelt elevators are creating incentives for farmers to harvest corn at high moisture. Trade is talking of rail rates for a poultry producers being negotiated for corn coming into the gulf. Soybean and meal basis is steady.

Export sales were excellent last week as lower prices have created buying interest. Old crop soybeans sales were 78,000 tonnes which continue to pile on the ending stock problem the USDA will have to deal with on the upcoming reports. Crush margins are positive even while some plants are closed for maintenance. Where will the USDA find the soybeans?

Chart damage this week is leaving the bulls bruised going into today’s close. The markets are oversold which could lead to a short covering rally however a rally is likely to be met with selling until funds and fundamental traders find a reason to buy.

Cash cattle traded in Kansas at $119 which was steady with last week. Boxed beef was mixed at the close of business Thursday with choice up $.34 and select down $.12. Futures contracts are trading at a premium going into first notice day for the August cattle contract on Monday. The October closed below last week’s low which could make it technically vulnerable going into the weekend. Thursday afternoon pork cutout values were up $1.39. Lean Hog October futures have bounced off of July lows on short covering.

Markets as of 5:00 AM

  • Dec Corn    + 1/2
  • Nov Beans   +5 1/4
  • Sep Wheat   +3 1/4
  • Aug Cattle  -.20
  • Aug Hogs    +.20
  • Sep Dlr     +.06
  • Sep S&P     +.25
  • Sep Crude   -.13
  • Aug Gold    -23.50


View Today’s Chart of the Day

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