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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.

Soybeans Rally As January Goes Off Board

Jan 15, 2014

Good Morning! Paul Georgy with early morning comments for January 15, 2014 at 4:30 am.  

Grain futures are mixed as demand for US soybeans provides underlying support. Many traders are now looking for the March futures to reach the levels at which the January went off the board.

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Drew Lerner from World Weather Inc. sees some rains moving into Argentina over the weekend and early next week which will cool down temps and reduce crop stress. The 6 to 10 and 11 to 15 day forecasts are projecting moisture to spread across Argentina and Brazil’s growing regions.

The Chinese demand for US soybeans has pushed sales over 100% of USDA soybean export target. Traders are waiting for some cancellations by China but it appears they are going to wait until South American harvest is in full swing and assess port delays.

There has been more talk that China cancelled another 2 cargoes of DDGs but we have no confirmation. Gulf DDG bids were steady late yesterday. Cash corn basis was a couple cents lower while soybean basis strengthened.

The National Oilseed Processors Association’s (NOPA) monthly crush report is due out today at 11:00 should show that its U.S. members crushed 163.9 million bushels of soybeans in December (a record), up 2.3 percent from November. Positive crush margins were the driver of this record processing number.

Foreign Agricultural Service of United States Department of Agriculture issued a report on Brazilian infrastructure which identified the infrastructure advances made, particularly in the ports of São Luis and Belem. Nevertheless, administrative red tape and the pace of construction persist as challenges. In the short and medium term, the team believes that the ports of the North and Northeast will continue to increase export capacity by 3-5 mmt per year. In the long term, the region is poised to radically shift the country’s current agricultural export channels and thereby significantly increase Brazil’s agricultural export competitiveness. 

The Baltic Dry Index at 1,395, which reflects the daily charter rate for vessels carrying cargoes such as iron ore, coal and grain, is now down 18% in the last 2 days alone. This is the biggest drop in 6 years and drops back to the 4-month lows.

Pork cutout was up 2.73 as futures rally on turnaround Tuesday. The February lean hog contract put in an outside day up. Another strong close today will provide hope that a near term bottom has been made.

Beef cutout values continue to scream higher as choice was up 4.10 and select was up 4.59 on Tuesday. Traders are expecting higher cash trade this week. The CME Feeder Index is 171.15.

Markets as of 4:30 AM

  • Mar Corn    -1 1/2
  • Mar Beans   +3 3/4
  • Mar Wheat   – 1/2
  • Feb Cattle  +.17
  • Feb Hogs    +.52
  • Mar Dlr     +.24
  • Mar S&P     +2.75
  • Feb Crude   +.11
  • Feb Gold    -8.20

Chart of the Day


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