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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.

Shock Subsides, Buyers Return

Jan 13, 2012

Good Morning! Paul Georgy with early morning comments for January 13, 2012 at 5:20 am. Grain futures are higher this morning after yesterday’s sharp sell-off. The USDA numbers released on Thursday morning had traders in shock and liquidating long positions in all grains. As we talked about many times in our comments in recent days the January report is a time to expect the unexpected. Although some might be convinced the data is inaccurate, this is the basis for fundamental calculations throughout the next year. The expanded limits to 40 cents in corn helped relieve the selling pressure. We have today’s trading session to find an equilibrium value before going home for another long weekend. Markets will be closed on Monday for the observance of Martin Luther King Day. Now that the report is out of the way we will go back to focusing on the weather in South America and the financial crisis in the EU. Drew Lerner from World Weather Inc suggests; "The bottom line in Argentina allows some rain to develop briefly late this coming weekend and early next week in a small part of the nation and then net drying will resume into Jan. 20. Net drying will occur prior to Sunday, as well. The few showers and thunderstorms expected in the middle of the two drier periods followed by another rain event Jan. 23-27 suggests Argentina crops will not get back to the same level of distress noted previous to this week’s rain. Crop conditions will either continue to improve or remain at status quo. Timely rainfall will still be very important since some crop areas in Argentina are still carrying limited subsoil moisture." You will get all the details on South America and the outlook for the US 2012 growing season on January 20 at the Allendale Ag Leader Conference. Ask Drew in person your weather questions. The Italian bond auction success has pressured the dollar on Thursday. This morning we are seeing some short covering ahead of the weekend. Box beef prices got hit gain on Thursday as choice was down 2.22 and select was down 1.03. The larger slaughter this week is creating more meat which has to be moved. Cash cattle trade has been at a standstill for the week. The weaker cutout has packers tougher to deal with. Pork cutout was higher on Thursday. Hog futures were dominated by bull spreading. Cheaper corn prices put pressure on the deferred contracts and nearby futures rallied on herd expansion which means less market hogs. Today should be an interesting session ahead of long weekend. Stay tuned to Allendale research for updates by following us on Twitter. Only a few chance to get tickets to the Allendale Ag Leaders Conference. Call Today!
Markets as of 5:20 AM
Corn: 0 to 1 higher               Beans: 2 to 3 higher            Wheat:3 to 4 higher
Live Cattle: 15 to 20 lower    Lean Hogs:30 to 40 higher
Dollar: .08 higher     Crude: .18 higher                   Gold: 5.60 lower
Allendale Advanced Charts
The February Crude Oil had a large trading range on Thursday engulfing nearly the entire price movement of the last 3 weeks. Support crosses at the 50 day moving average and the uptrend support line 98.50 area. The first resistance crosses at 103.28 and then at 105.36.
Nelson Notes from the desk of Rich Nelson
Corn production was raised by 48 million bushels. This was a surprise as the industry was expecting a 45 million bushel decline. A moderate 50 million bushel increase for old crop exports helped cushion the blow for almost no change in projected ending stocks for Aug 30, 2012. We will point out old crop stocks counted, as of Dec 1, were 251 million bushels above the average guess. This implies first quarter usage was disappointing (likely feed use)…again.
Contact Allendale: 800-262-7538
There is a significant risk of loss when trading futures and options contracts. This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities herein named, and each investor should consider the appropriateness of trading on this information, based on their objectives. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed as to accuracy. Past performance is not indicative of future results.

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