Aug 21, 2014
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June 2014 Archive for The Allendale Wake-Up Call

RSS By: Paul Georgy, AgWeb.com

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.
 

Last Minute Adjustments Before 11:00 Reports

Jun 30, 2014

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

Grain futures are lower as weather conditions are beneficial for crops.

View our June 30th USDA Report Update.

On my trip from Rockford IL to St. Louis MO this past week I saw some of the best corn and soybean crop along the interstate that I can ever remember seeing. The corn had a dark green color and most of the corn will be tasselling in the next 10 days south of I-88.

Corn fields on my brother-in-law’s farm in southern IL have the possibility of a bumper crop. However we all know that the crop is not made until it is in the bin.

Wheat harvest is progressing rather slowly in southern IL as they have a light shower about every day. Wheat yields vary from 40 to 80 bushel per acre with test weights under 60#.

Grain traders have one thing on their mind and that is, "what will USDA give us on the reports at 11:00 am this morning?"

Reuter’s trade estimate survey for Monday’s USDA Planted Acres Report:

                                                 Corn  Soybean     All   Spring   Durum

                                                                             Wheat    Wheat   Wheat

Average trade estimate          91.725   82.154   55.818   11.860   1.790

Highest trade estimate          92.200   84.000   57.000   12.200   1.900

Lowest trade estimate           91.000   80.500   54.800   10.500   1.694

USDA March estimate             91.691   81.493   55.815   12.009   1.799

USDA 2013 final                 95.365   76.533   56.156   11.596   1.470

Reuter’s survey of Quarterly Stock estimates:

                                                Wheat     Corn   Soybeans

Average trade estimate           0.598    3.722     0.378

Highest trade estimate           0.633    3.950     0.440

Lowest trade estimate            0.560    3.046     0.334

USDA March 1, 2014               1.056    7.006     0.992

USDA June 1, 2013                0.718    2.766     0.435

The quarterly update on the hog herd came in bullish. USDA counted June 1 hog numbers at 4.7% less than last year. That was quite a bit less than the average trade guess of a 2.9% decline. However, the bullish surprise in this report is that hog supplies will not get "back to normal" after this summer.

The December contract may need to gain back some of its losses posted last week. The other issue from a long term perspective is expansion, or the lack thereof. USDA counted the breeding herd at 0.5% less than last year. Analysts had been expecting a 1.8% year over year increase. Pork cutout values on Friday were up 1.18.

Strong cash cattle sales of $154 to $156 were paid last week. The bulk of this rally can certainly be attributed to the lack of slaughter ready cattle being offered. Slaughter last week was 6% lower than last year. Beef values closed out the week on a firm note with choice up .97 and select up .19. CME Feeder Index is 213.37.

Markets as of 4:30 AM CDT          

  • Jul Corn   -3 1/4   
  • Jul Beans  -2 1/2
  • Jul Wheat   -3 3/4
  • Aug Cattle  Steady-Higher    
  • Jul Hogs    Steady-Higher
  • Sep Dlr     -.03
  • Sep S&P     -1.00
  • Aug Crude   – .75
  • Aug Gold   -5.80

Chart of the Day

daily chart

If you have any questions on any of our material, give us a call at 800-262-7538 or email us at service@allendale-inc.com

USDA Reports Dominate Traders Thinking

Jun 27, 2014

 Good Morning! Paul Georgy with early morning comments for June 27, 2014 at 4:30 am CDT.

Grain futures are lower on risk-off selling in all commodities.

Grain traders are adjusting positions ahead of the "Biggest Grain Report of the Year" on Monday, first notice day for the July contracts on Monday, the end of a month and end of a quarter and a holiday shortened week ahead.

Livestock traders have a Quarterly Hogs and Pigs Report due to be released at 2:00 pm today. Grain traders will be looking at this afternoon’s report to get a prospective of corn and meal usage.

With all the rain we have seen throughout the cornbelt, this week’s US Drought Monitor suggests not much change from last week in the dry to severe dryness areas of the southern plains.

Kansas Wheat Commission and the Kansas Association of Wheat Growers are reporting Kansas wheat harvest is underway. Yields vary by region with overall range 8 to 60 bushels per acre. A farmer in the Scott City area has had over 6.5 inches of rain in June which has doused his chance of harvesting 8 to 15 bushels per acre.

Reuters trade estimate survey for Monday’s USDA Planted Acres Report:

                                                  Corn  Soybean     All   Spring   Durum

                                                                            Wheat    Wheat   Wheat

Average trade estimate          91.725   82.154   55.818   11.860   1.790

Highest trade estimate          92.200   84.000   57.000   12.200   1.900

Lowest trade estimate           91.000   80.500   54.800   10.500   1.694

USDA March estimate            91.691   81.493   55.815   12.009   1.799

USDA 2013 final                      95.365   76.533   56.156   11.596   1.470

The U.S. hemp industry is back. A provision in the 2014 farm bill signed by President Obama on Feb. 7 removed hemp grown for research purposes from the Controlled Substances Act, the main federal drug law. American farmers have been watching as Canadian farmers clear huge profits from hemp: $250 per acre in 2013. By comparison, South Dakota State University predicts that soy, a major crop, will net U.S. farmers $71 per acre in 2014.

(Reuters) – The U.S. Food and Drug Administration is opening the door for livestock feed manufacturers and pharmaceutical companies to roll out nanotechnology products that could make animals gain weight faster or absorb medications more quickly.

Hogs and Pigs Report Estimates:

                                        Ranges     Average     Mln head

All hogs June 1           96.0-98.9     97.1       63.200

Kept for breeding     101.0-102.5   101.8        5.990

Kept for market         95.5-98.6     96.8       57.310

Weight Groups

Under 50 lbs                95.4-101.4    98.2

50-119 lbs                      94.0-99.5     96.2

120-179 lbs                   92.3-96.7     95.3

Over 180 lbs                95.5-97.5     96.5

March-May Statistics

Farrowings                 101.9-105.0   102.8

Pigs per litter            93.4-98.0     95.3

Pig crop                       95.7-99.9     97.7   

Farrowing intentions

June-August               102.0-102.7   102.2

Sept-November         101.5-103.0   102.5

Weight breakdown should be an important part of this report as trade will be looking for a confirmation of supply. Pork cutout value is down 1.86.

Cash cattle traded as high as 155.50 on Thursday as packers need inventory to meet product commitments. Cattle futures set new highs for the third day in a row. Look for profit taking ahead of the weekend.

Average steak prices from the weekly grocery-store ads in Chicago are $8.49 per pound compared to $5.89 last week and 4.43 per pound last year. Beef cutout values continue to the charge higher with choice up .49 and select down .61. The CME Feeder Index is 211.23.

Markets as of 4:30 AM CDT          

Jul Corn   -1 1/4    
Jul Beans   -2 1/4
Jul Wheat   -5       
Aug Cattle  -.50
Jul Hogs    -.25
Sep Dlr     -.05
Sep S&P     -2.50
Aug Crude   +.00
Aug Gold   -1.10

 

Chart of the Day

daily chart

If you have any questions on any of our material, give us a call at 800-262-7538 or email us at service@allendale-inc.com

Can Upcoming Reports Revive Volume In Grain Markets?

Jun 26, 2014

Good Morning! Paul Georgy with early morning comments for June 26, 2014 at 4:30 am CDT.

Grain futures are higher on short covering while outside markets are very quiet.

A continuation of moisture patterns across the corn and soybean growing areas have traders convinced 2014 will provide a bumper crop and record yields. Technical indicators are registering oversold and history suggests volatility after June 30 stock and acreage reports. Talk to your Allendale Representative about risk management strategies.

Weekly ethanol production is back to normal after last week’s record. The processor’s margins have slipped due to a decline in ethanol values and the sharp drop in DDGs. In Iowa DDG prices fell from $201 to $151 per ton in just three weeks. It is expected that corn for ethanol use will exceed USDA target for this marketing year.

EU wheat harvest is going well with production not seen since 2008. Russia continues to offer wheat out of the Black Sea at much lower prices than US.

The USDA will release the Weekly Export Sales Report at 7:30 this morning.

(Reuters)           Trade estimates for     Trade estimates for

2013-14                     2014-15

Wheat                               0                        300,000-450,000

Corn                     150,000-300,000       200,000-300,000

Soybeans             50,000-150,000         200,000-400,000

Soymeal               0-100,0                         0-150,000

Soyoil                   0-20,000                       0-10,000

China said on Wednesday it would boost domestic grain reserves by 25 million tonnes this year and maintain sufficient stocks to supply no less than six months of demand. The government is also aiming to add 50 million tonnes of new storage capacity this year and the next.

The warehouse fraud at China’s third largest port is causing new rule making which could drive small firms out of the market. These new requirements could increase risk that customers without lines of credit may default on services such as hedging and imports.

The Commerce Department said gross domestic product fell at a 2.9 percent annual rate, the economy’s worst performance in five years, instead of the 1.0 percent pace it had reported last month. The difference between the second and third estimates was the largest on record going back to 1976.

Stats Canada will give us their projections on the number of acres planted to wheat and canola in 2014 on Friday morning at 7:30.

CME grains close at noon on Thursday July 3 and reopen 8:30 AM Monday morning July7.

Quarterly Hogs and Pigs report will be released on Friday at 2:00 PM. While most of the private market analysis group believes we will have 10% year over year declines in slaughter in the coming weeks, the question is whether USDA will show that on Friday’s Hogs and Pigs report. The key weight group is 120-179 lbs. Pork product demand continues to be strong as cutout values were up 2.14.

Cattle feeders hold market ready numbers back which continues the pattern from the past seven weeks. Cash cattle prices may now post their fourth week of appreciation. The question remains; is the historical downturn in demand for beef after the July 4th holiday going to weigh on fed cattle prices? Beef values are mixed with choice up .88 and select down .17. The CME Feeder Index is 207.93.

Trading maybe quite after 11:00 AM today as Team USA will be playing for the World Cup.

Markets as of 4:30 AM CDT          

  • Jul Corn   +2 1/2   
  • Jul Beans   +4 3/4
  • Jul Wheat   +1 3/4  
  • Aug Cattle  +.40
  • Jul Hogs    +.00
  • Sep Dlr     +.00
  • Sep S&P     -1.00
  • Aug Crude   +.04
  • Aug Gold   -10.10

 

Chart of the Day

daily chart

If you have any questions on any of our material, give us a call at 800-262-7538 or email us at service@allendale-inc.com

Traders Wait For Reports To Ignite A Move

Jun 25, 2014

Good Morning! Paul Georgy with early morning comments for June 25, 2014 at 4:30 am CDT.

Grain futures are mixed as growing conditions weigh on corn while tight supplies of old crop beans provide support.

We want to thank all of you for attend the June Allendale Ag leaders Webinar last evening. We had a great crowd interested in what USDA may say next Monday. If you missed it, the recording is available, here.

An extremely wide range in trade estimates for June 1 stocks is about 100 mil bushel from high to low in beans and 1.0 billion bushel in corn. This could lead to volatility after the report is released at 11:00 am on Monday.

The EIA report today and the Weekly export sales report tomorrow will draw attention ahead of the big stocks and acreage report Monday.

Brazil’s government approved reduction in tax from 10% to 0% on wheat imports starting August 15 for 1.0 mmt.

US DDG prices continue to slide to lowest level since July amid China stopping imports and ramped up ethanol production due to positive grind.

China sold 44,741 metric tonnes or 12.61% of the 354,726 tonnes of state reserve soybeans available at an auction on Tuesday, according to the National Grain and Oil Trade Center.

(Reuters) – China and Australia, which have been trying to set up a bilateral free trade agreement for years, are determined to sign a deal by the end of this year, Australia’s trade chief said on Tuesday after talks with Chinese leaders. But there has been little sign of a breakthrough despite Prime Minister Tony Abbott’s expressed intent to seal an agreement before November. Australian Trade and Investment Minister Andrew Robb said the deal with China was on track, but declined to give details of talks, saying he didn’t want to "put his cards on the table.

CME grains close at noon on Thursday July 3 and reopen 8:30 AM Monday morning July 7.

The following are estimates for the Quarterly Hog and Pigs Report due to be released on Friday at 2:00 PM.

(Reuter’s Survey)             Ranges         Average

All hogs June 1             96.0-98.9         97.1

Kept for breeding         101.0-102.5     101.8

Kept for market             95.5-98.6         96.8

Weight Groups

Under 50 lbs                 95.4-101.4         98.2

50-119 lbs                     94.0-99.5           96.2

120-179 lbs                   92.3-96.7           95.3

Over 180 lbs                 95.5-97.5             96.5

The total hog herd number is not really the major issue for this report. It will be the weight breakdowns for the live hogs that will be marketed later this summer. The trade guess is for hogs over 180 lbs. at 3.5% smaller than last year. That determines slaughter from June 1 to mid-July. Pork cutout values were up 1.77 on Tuesday.

Retailers are booking beef for the July 4th Holiday which is supporting product and ultimately the cattle prices. Expect some fill-in buying to support product into early next week. Beef values remain strong with choice up .89 and select up .99. The CME Feeder Index is 207.69.

Markets as of 4:30 AM CDT          

  • Jul Corn   -1 3/4   
  • Jul Beans   +2 1/4
  • Jul Wheat   – 1/4
  • Aug Cattle  -.47
  • Jul Hogs    +.77
  • Sep Dlr     +.01
  • Sep S&P     +1.25
  • Aug Crude   +.41
  • Aug Gold   -8.40

Chart of the Day

daily chart

If you have any questions on any of our material, give us a call at 800-262-7538 or email us at service@allendale-inc.com

Rain Makes Grain Attitude by Traders

Jun 24, 2014

Good Morning! Paul Georgy with early morning comments for June 24, 2014at 4:30 am CDT.

Grain futures are lower as traders downsize positions in July contracts. Chart watchers are looking at support in Dec corn at 4.35 and in Nov beans at 12.08 area.

Look ahead to this month’s USDA Grain Stocks and Planted Acreage reports in Allendale Ag Leaders next webinar, tonight at 8:00 PM CDT.Register here.

The upcoming quarterly stocks report is expected to show very tight supplies as exports and crush is running above USDA estimates.

Traders are waiting for the planted acreage numbers that will be released next Monday at 11:00 am. A few studies from Allendale’s research department suggest that corn acres increased in 5 out of last 5 late planting years. Soybean acreage increased 2 of the last 5 late planting years.

Corn crop conditions decline 2% to 74% Good/Excellent which was in line with expectations. The 5 year average is 68%. Soybean ratings declined only 1% to 72% Good/Excellent vs. 64% average. Soybean planting advanced 3% to 95% complete.

Winter wheat harvest climbs 17% to 33% now above the average of 31%. Spring wheat conditions declined 1% last week to 71% Good/Excellent verses 70% last year. Pasture and range conditions post 3rd weekly gain up 1% to 55% Good/Excellent.

First notice day for July contracts is Monday June 30. Therefore the large traders have to reduce their position size by the close on Friday, June 27.

(Reuters) – Football fever is so intense in Brazil, the host of the World Cup soccer tournament, that even the main shipping ports in the commodity-exporting powerhouse are shutting down when the national team plays. In Paranagua, Brazil’s No. 2 soy exporting port, the dock workers’ union negotiated an ordinance that lets them stop working an hour before the match and resume work an hour afterward for a total of around four hours to relax and watch the Brazilian team. "This is unprecedented," said the port’s press representative, Samar Razzak, who added that the port usually operates even during the New Year’s and Christmas holidays. Brazil has not hosted a World Cup since 1950.

Cattle feeders were impressed with their power last week and pulled back on the reigns. For now, this market is still on the positive side of the delayed marketing cycle. Showlist are smaller this week compared to last week.

The Cold Storage report yesterday afternoon showed beef left in storage on May 31 at 378.9 million lbs. This number is 21% smaller than last year.

Beef values remain strong as choice was up 1.88 and select up 3.98. The CME Feeder Cattle Index is 206.54.

The USDA cash summary report showed live hogs added another $2 to $3 on Monday. Friday USDA will release the Quarterly Hogs and Pigs report which many traders are thinking could be negative, just like the last few reports. Pork cutout values were up 2.28 on Monday.

Markets as of 4:30 AM CDT          

  • Jul Corn   -1 1/2   
  • Jul Beans   -10
  • Jul Wheat   -3 1/4
  • Aug Cattle  +.25
  • Jul Hogs    +.52
  • Sep Dlr     -.06
  • Sep S&P     -4.75
  • Aug Crude   -.26
  • Aug Gold   +5.20

 

Chart of the Day

daily chart

If you have any questions on any of our material, give us a call at 800-262-7538 or email us at service@allendale-inc.com

Could It Be Time To Rally?

Jun 23, 2014

Good Morning! Paul Georgy with early morning comments for June 23, 2014at 4:30 am CDT.

Grain futures are higher on technical short covering and world unrest.

Look ahead to this month’s USDA Grain Stocks and Planted Acreage reports in Allendale Ag Leaders next webinar, Tuesday June 24th at 8:00 PM CDT. Register here.

Soybean meal surges in late trade Friday as option traders caught short both puts and calls scramble to cover positions.

Early trade thoughts are for a decline of 1-2% in crop condition ratings this afternoon from last week’s 76% in corn verses 65% last year and 73% in beans verses 65% last year.

CFTC Commitment of traders report showed Managed Money Funds reduced long positions in corn by 9,156 but still holding a net long position of 137,280 contracts. They sold a net 33,519 contracts in soybeans and 1,807 contracts in wheat.

U.S. corn bids for August is near $205 a tonne at the gulf which is still about $4 cheaper than Brazilian corn but a little bit higher than Argentine quotes for July.

The CME Group will raise the maximum storage fee for its wheat futures contract in July, the first hike in three years, since the price difference or spread between the two front contract months was wide enough over the last month to trigger an increase, the exchange said on Friday

Iraq’s crumbling government was dealt another blow over the weekend when ISIS (Islamic State of Iraq and Syria) fighters captured more area along the Syrian border.

On Saturday, Putin "calls on the opposing sides to halt any military activities and sit down at the negotiating table." Putin also supported Ukrainian president Petro Poroshenko’s decision for a unilateral ceasefire. The peace-promoting gesture contrasted Putin’s previous order Saturday to put troops in central Russia on "full combat alert."

Tight supplies of feeder cattle and excellent forage conditions were reasons for placement figure to be down 7% from a year ago on USDA COF report. The On-Feed number was in line with trade expectations. Marketings were less than a year ago mainly due to feedlots holding cattle longer because of high replacement cost. Futures will likely start steady firm while keeping an eye on outside market activity. Beef cutout values are firm with choice up .43 and select up .28. The CME feeder Index is 204.92.

Cash hogs picked up $5.00 last week and pork was up over $6.00. For the week slaughter ran 4.0% less than last year while pork production ran 2.0% over last year. Heavier live hog weights are now making up for 6% slaughter numbers. Pork cutout value is down .62.

Markets as of 4:30 AM CDT          

Jul Corn   +3 1/4    
Jul Beans   +14 1/2
Jul Wheat   +5 1/4
Aug Cattle  Steady-Higher
Jul Hogs    Steady-Higher
Sep Dlr     -.03
Sep S&P     +.50
Aug Crude   +.19
Aug Gold   -2.40

Chart of the Day

daily chart

If you have any questions on any of our material, give us a call at 800-262-7538 or email us at service@allendale-inc.com

Can Grains Remain Range Bound?

Jun 20, 2014

Good Morning! Paul Georgy with early morning comments for June 20, 2014 at 4:30 am CDT.

Grain futures are lower on risk-off attitude this morning. Corn and soybean futures are developing a range bound trade ahead of USDA Reports.

Expiration of July options later today could cause last minute adjusting going into the close. Weather forecast is favorable for the majority of the growing crops. Read Ryan Martin’s Weather Blog for more detail.

Export sales showed another 98,000 tonnes of old crop beans sold at a time when sales already exceed USDA expectations.

Weakness in soymeal is caused by a buildup in DDGs from reduced sales to China and aggressive ethanol production.

Kansas wheat harvest is under way. While yields are poor, protein levels are favorable.

Argentina raised its 2013/14 corn production from 31.1 mmt to 32.1 mmt in its monthly report. The USDA is holding Argentina production at 24.0 mmt.

Crop planting in Saskatchewan is 95 percent complete, ahead of the five-year average of 90 percent for this time of year.

Saint Paul River at the Mississippi River could reach flood stage by Saturday night.

Corn basis bids were steady to lower in light trade. Soybean basis bids were 5 to 15 cents lower at processors and elevators in IL and IN.

There is talk circulating that China may become an exporter of corn to support domestic prices and get rid of the government stocks bought over the last several years. It seems unlikely until new crop corn production is assured.

Economic news: The Tea Party win for House Republican Whip may indicate more fiscal turmoil ahead.

Hong Kong has agreed to lift trade restrictions on certain types of U.S. beef, a move that should boost exports to what is already the fourth-largest export market for U.S. beef and beef products. US Cattle-on-Feed will be released this afternoon. Trade estimates are On Feed 98.6, Placed 93.2 and Marketed 96.0% of a year ago. Beef values are higher with choice up .92 and select up 1.04. The CME Feeder Index is 204.82.

(Reuters) – U.S. veterinarians are warning that outbreaks of a deadly pig virus will climb this autumn after a summertime hiatus, likely killing another 2.5 million pigs over the next 12 months and amplifying an increase in pork prices. Pork cutout values are up 1.93.

Markets as of 4:30 AM CDT          

  • Jul Corn   -1 1/2   
  • Jul Beans   -6 1/4
  • Jul Wheat   -1 1/4
  • Aug Cattle  -.25
  • Jul Hogs    -.025
  • Sep Dlr     -.01
  • Sep S&P     +.75
  • Jul Crude   -.04
  • Aug Gold   -2.10

Chart of the Day

daily chart

If you have any questions on any of our material, give us a call at 800-262-7538 or email us at service@allendale-inc.com

Quality Is Now A Concern For Wheat Producers

Jun 19, 2014

Good Morning! Paul Georgy with early morning comments for June 19, 2014at 4:30 am CDT.

Grain futures are higher on short covering ahead of the Weekly Export Report. Quality concerns in southern plains wheat are also providing support.

This morning’s release of NOAA’s long range forecast will be watched closely for any indication of change in weather pattern.

A record ethanol production was posted last week at 972,000 barrels per day. Ethanol producers are taking advantage of the profitability and produced 11% over last year during the same week. This is a jump from the previous week’s production of 5% to 8% larger than last year. We have to assume USDA’s whole-year estimate of 5.050 billion bushels of corn use will be exceeded.

The trade will be waiting for the weekly export sales data which will be released at 7:30. The results of this report could have an impact on the July/November soybean spread which has been extremely volatile in recent days.

         Trade estimates for        Trade estimates for
            2013-14                       2014-15:
Wheat          0                      350,000-500,000
Corn      300,000-500,000             50,000-150,000
Soybeans (-100,000)-100,000          350,000-550,000
Soymeal     0-100,000                    0-150,000
Soyoil      0-25,000                     0-10,000

A University of Illinois plant pathologist is reporting that head scab of wheat (Fusarium head blight) is now showing up in portions of southern Illinois.

(Reuters) – The Brazilian government plans to reduce to zero the 10 percent import tariff applied to non-mercosur wheat for a quota of up to 1 million tonnes through August 15, a source in the government with knowledge of the plan said on Wednesday.

Federal Reserve officials nudged up their projections for short-term interest rates in 2015 and 2016 but slightly reduced their outlook for interest rates in the longer run.

Cash cattle traded in NE at 148 which would be 1.00 to 2.00 lower than last week. Beef demand remains strong on higher product with choice up 2.74 and select up 2.78. Retailers need product to feature for the July 4th holiday even at these higher prices. Trade is concerned about post-holiday demand as we move into the proverbial "dog days of summer" where demand for high priced cuts slows. Feeder cattle futures rebound after Wednesday’s limit down. The CME Feeder Index is 203.70. June Cattle-on-Feed Report will be released on Friday.

Lean hog futures are not for the "faint of heart" with sharp moves in both directions. Talk of a vaccine approval for PEDv cause long liquidation in the deferred hog contracts. Support from technical buyers and bargain hunters arrived overnight. Technical trend still is up led by nearby contracts. Pork cutout values are up 2.21.

Markets as of 4:30 AM CDT          

  • Jul Corn   +2       
  • Jul Beans   +5
  • Jul Wheat   +5 1/4
  • Aug Cattle  +.92
  • Jul Hogs    +1.67
  • Sep Dlr     -.40
  • Sep S&P     +.25
  • Jul Crude   +.31
  • Aug Gold   +10.00

Chart of the Day

daily chart

If you have any questions on any of our material, give us a call at 800-262-7538 or email us at service@allendale-inc.com

Bargain Hunting On Technical Support

Jun 18, 2014

Good Morning! Paul Georgy with early morning comments for June 18, 2014at 4:30 am CDT.

Grain futures are higher on bargain hunting. July soybeans are finding support this morning as traders are concerned about the export sales report tomorrow morning.

Unwinding of the July/November soybean spread is playing a big role in the weakness of the July contract and the strength in the November in recent sessions. Tuesday posted its lowest close since late Feb in the old crop/new crop spread.

The corn and soybean closing at new lows on Tuesday is not a bullish signal. The remaining bulls will be waiting for the NOAA’s long-term weather forecast on Thursday. In recent years this forecast triggered a change in market attitude. Stay tuned to Ryan Martin’s weather blog for an update and details of this forecast.

Funds were net seller 6,000 corn, 11,000 soybeans, 4,000 soymeal contracts and even in wheat on Tuesday.

The price decline in July wheat below the $6.00 area has provided some interest in export business to Tunisia, the Philippines and Algeria.

On the economic calendar today the FOMC is expected to taper QE3 another notch but maintain dovish interest rate guidance. The U.S. current account deficit is expected to widen from Q4’s narrowest level in 14-1/3 years and the EIA reportis expected to show a decline in crude oil inventories

The showlist for market ready cattle this week is the largest we have seen in a while. Retail demand for beef has been aggressive this week as they restock shelves and prepare for July 4th weekend. Cattle-on-Feed report is Friday at 2:00 pm. Beef values are higher with choice up 2.56 and select up 3.16. The CME Feeder Index is 203.44.

The far deferred hog futures have been under pressure due technical selling and the news that USDA cleared the first PED vaccine. Total pork production is running at near year ago levels due to increase carcass weights. Pork cutout value is up .62.

Markets as of 4:30 AM CDT          

  • Jul Corn   +1 3/4   
  • Jul Beans   +9 3/4
  • Jul Wheat   +4 1/4
  • Aug Cattle  +.17
  • Jul Hogs    -.07
  • Sep Dlr     -.06
  • Sep S&P     +.25
  • Jul Crude   +.35
  • Aug Gold   -3.10

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Crops Off To A Near Record Start

Jun 17, 2014

Good Morning! Paul Georgy with early morning comments for June 17, 2014 at 4:30 am CDT.

Grain futures are lower as crop ratings are off to a great start.

Last week’s heat and rain through the Midwest improved the corn crop by 1% to 76% good/excellent compared to 68% on the 10 year average. The soybean conditions fell by 1% to 73% compared to 64% average.

Spring wheat conditions were 1% better than last week and 1% less than the 10 year average. Winter wheat good/excellent held steady at 30% while the poor/very poor increased by 1%.

The NOPA Crush data released yesterday makes the old crop soybean quarterly stocks, due for release on June 30, even more important. The May Crush was 5% higher than a year ago which means crush for the next 3 months must average 9% below last year. Be reminded that last year’s crush during June, July and August was the lowest in 9 years.

Funds were net sellers of 3,000 wheat, 8000 corn, 4000 soybeans, 2,000 meal and 1,000 soy oil on Monday.

The economic calendar has Housing Starts and CPI out at 7:30. The FOMC meeting begins today with their minutes released tomorrow.

The discount of futures to cash cattle is providing support to futures. Retail buying for weekend clearance and stocking up for the July 4th holiday is supporting product. Beef values were sharply higher on Monday with choice up 2.37 and select up 2.39.

Lean hog futures fell sharply on Monday as traders covered long positions. Hog slaughter dropped but pork production was higher than a year ago due to larger weights. Pork cutout values were up 1.66. Chart support crosses at the 20 day moving average in the August contract.

Markets as of 4:30 AM CDT          

  • Jul Corn   -1 1/4   
  • Jul Beans   -5 3/6
  • Jul Wheat   +2
  • Aug Cattle  +.70
  • Jul Hogs    +.27
  • Sep Dlr     +.05
  • Sep S&P     +5.00
  • Jul Crude   -.52
  • Aug Gold   -10.30

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Oversold Condition Prompts Bargain Hunting

Jun 16, 2014

Good Morning! Paul Georgy with early morning comments for June 16, 2014 at 4:30 am CDT.

Grain futures are higher on bargain hunting. The Goldman Roll is complete which could provide some support for bull spreads although time is running out. Traders are waiting for May NOPA crush at 11:00 am which will give some idea what USDA could say on the quarterly stock report in a few weeks.

Crop rating this afternoon for corn is expected to be steady to 2% higher than last week’s 75%, last year the G/E was 64%.

Soybean ratings also are expected to be steady to 2% higher vs. last week’s 74%, last year the G/E was 64%.

On the weekly CFTC Commitment of Traders report, managed money funds reduced corn net long positions by 27,724 contracts, soybeans by 24,007 contracts and wheat by 28,172 contracts. They are now long in corn by only 80,143 contracts and net short wheat by 27,135 contracts.

Australian farmers are holding back new-crop wheat sales on concern that the El Nino weather pattern could slash yields. This strategy could be risky as the European sales could make inroads in the Asian markets. We are already seeing Russia and Ukraine taking some of the Indonesian business, which is traditionally dominated by Australia. Australia’s new wheat marketing season starts in September.

EU member states have agreed on the sensitive issue of genetically modified organisms (GMO), opting for greater national control over authorizing or banning GMO cultivation.

Soybean basis was down .05 in interior locations as corn was mostly steady. Farmer selling was light.

Funds sold a net 2,000 wheat contracts, bought 4,000 corn and 5,000 contracts of soybeans on Friday.

Cash cattle traded $4 to $6 higher last week. Feed cattle supplies are tight and packers need meat to fill the July 4 holiday demand. Beef cutout values were higher with choice up .98 and select up .12. Trade will be watching for fill-in business after yesterday’s Father’s Day weekend. Futures are expected to start the week steady to higher. USDA will release June Cattle on Feed Report Friday. The CME Feeder Index is 198.91.

Pork cutout value is down 1.77. It has been a real tug-o-war between pork supplies and live hog supplies. We are reaching the time where hog supplies could be 15% below last year based on PEDv case reporting. Livestock markets could start the week on a firm bias.

Markets as of 4:30 AM CDT          

  • Jul Corn   +2 1/2   
  • Jul Beans   +7
  • Jul Wheat   +5 1/2
  • Aug Cattle  Steady-Higher
  • Jul Hogs    Steady-Higher
  • Sep Dlr     -.02
  • Sep S&P     -6.00
  • Jul Crude   +.16
  • Aug Gold   +7.20

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Short Covering in the Grains Pushes Prices Higher

Jun 13, 2014

Good Morning! Steve Georgy with early morning comments for June 13, 2014at 4:30 am CDT.

Energy markets were strong yesterday with concerns again in the Middle East. Islamic Extremists are moving through areas of Iraq and pushing toward the capital of Baghdad. The trade has been talking about threats from these insurgents of taking over an oil pipeline. That pushed crude oil as well as heating oil and unleaded gas to very strong levels. If this talk continues will we see the grain markets react as well?

Exports yesterday were in line with expectations but we typically would see any old crop sales for beans push prices higher due to the idea of tighter old crop ending stocks. That was not the case as July beans fell sharply. The Goldman Roll is now over and helped push the July/November bean spread back near a spread difference of $2. This spread will get a lot of attention in the next few weeks as we move toward the end of the month Quarterly Stock and Acreage numbers.

Informa will be releasing revised acreage numbers this morning at 10:30 and the trade is expecting to see an increase in bean acres as well as an increase in corn acres.

Basis levels remain firm across the country for corn, beans and wheat. That should give some support to old crop contracts and potentially see some short covering.

The weather is still going to be looked at as bearish as good rain moved across the Corn Belt and warmer temperature finally set in. The trade is expecting to see very good crop conditions again on Monday.

Cattle closed yesterday into some new highs in most contracts after a surprise cash trade that was $2 higher than last week. Kansas and Texas both traded $148 keeping a strong tone on the cash market as Box Beef finished mixed on the day. Choice was down .93 and Select up .65

Hogs are working higher this morning with cutout values up $2.56 at 123.45. The trade has seemed to find strength this week and have some optimism that we should be seeing tighter supplies showing up due to PED at the same time that we have summer demand picking up.

Markets as of 4:30 AM CDT          

  • Jul Corn   +4 1/4   
  • Jul Beans   +9 1/4
  • Jul Wheat   +3
  • Aug Cattle  +.35
  • Jul Hogs    +.85
  • Sep Dlr     -.10
  • Sep S&P     +.75
  • Jul Crude   +.61
  • Aug Gold   -.50

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What Is Next For A Market Stimulus?

Jun 12, 2014

Good Morning! Steve Georgy with early morning comments for June 12, 2014 at 4:30 am CDT.

Weather is expected to be the market mover for the next few weeks or at least until trade focuses in on the stocks and planted acreage report at the end of June. Weather forecast is ideal for growing throughout the next 15 days.

The USDA basically reprinted the May Report for June as they made no change to ending stocks in corn. In soybeans they decreased ending stocks by 5 million bushels by increasing crush usage. This will make the NOPA Crush Report on Monday at 11:00 a potential market mover for old crop soybeans.

Wheat market fundamentals continue to receive negative news. The USDA lowered overall wheat production from last month’s estimate but raised 2014/15 ending stock.

Weekly export sales report will be released this morning at 7:30.

             Trade estimates for     Trade estimates for
                  2013-14                 2014-15
Corn          250,000-500,000          50,000-250,000
Soybeans     (-100,000)-100,000       300,000-500,000
Soymeal           0-125,000            50,000-150,000
Soyoil            0-60,000                  0-10,000
Wheat                0                250,000-450,000

Ethanol production increased 6,000 barrels a day to 944,000 barrels per day last week which equals a season high set in December. The Chinese DDG situation may change the economics for processors but they are still seeing positive margins despite lower DDG values.

China intends to auction another round of corn out of their reserves. The banning of US DDGs should create some domestic buyers.

Unemployment claims are expected to remain favorable. The market is expecting today’s weekly initial unemployment claims report to show a small decline of -2,000 to 310,000, reversing part of last week’s increase of +8,000 to 312,000. Meanwhile, the market is expecting today’s continuing claims report to show a small increase of +2,000 to 2.605 million following last week’s decline of -20,000 to 2.603 million.

Feeder cattle had a bit of a correction on Wednesday. Traders are watching the feeder market as an indicator of the cattle complex. Retailers are booking their needs for the July 4th holiday and then the question is whether or not beef prices can hold going into the "dog days of summer." Beef values were mixed with choice down .69 and select up .60. The CME Feeder Index is 196.40.

Traders are expecting the peak tightness in market hogs to come in August and early September. Increased weights are compensating for numbers currently. Pork cutout values are down 1.40.

Markets as of 4:30 AM CDT          

  • Jul Corn   +1 1/2   
  • Jul Beans   +6
  • Jul Wheat   +3 1/2
  • Aug Cattle  -.40
  • Jul Hogs    +.02
  • Sep Dlr     -.01
  • Sep S&P     +1.75
  • Jul Crude   +1.13
  • Aug Gold   -.04

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What Does USDA Have “Up Their Sleeve” for Soybeans?

Jun 11, 2014

Good Morning! Paul Georgy with early morning comments for June 11, 2014at 4:30 am CDT.

Grain futures are mixed with profit taking and position evening ahead of today’s USDA report.

Exports and domestic crush for old crop soybeans are expected to be the highlight of the report as current demand is running above USDA estimates.

The following are trades estimates from a Reuter’s poll for the USDA June Supply and Demand Report to be released at 11:00 am:

                                        U.S. 13/14 ending stocks    U.S. 14/15 ending stocks
                                       Wheat   Corn   Soybeans  Wheat     Corn   Soybeans
Average trade estimate     0.590   1.170     0.127          0.552         1.716       0.319
Highest trade estimate     0.625   1.279     0.139           0.658       2.282       0.364
Lowest trade estimate      0.565   1.121     0.119             0.475       1.405       0.245
USDA May forecast          0.583   1.146     0.130            0.540      1.726       0.330
                                                All     Hard Red   Soft Red   White       All
                                             Winter   Winter       Winter     Winter     Wheat
Average trade estimate         1.394     0.733           0.455       0.207     1.964
Highest trade estimate         1.445     0.776           0.473       0.217     2.041
Lowest trade estimate          1.330     0.661           0.443       0.197     1.903
USDA May report                  1.403     0.746           0.447       0.209     1.963
U.S. 2013 winter wheat         1.534     0.744         0.565       0.225     2.130

NOPA crush will be released on Monday at 11:00 am. This report will be important as traders try to get a handle on available supply of old crop soybeans.

Chinese Ministry of Agriculture says their farmers in major wheat growing regions have harvested more than 60 percent of winter wheat.

China banning US DDGs seems to coincide with their decision to clean out inventory and empty bins in preparation for this year’s harvest.

Weather conditions across the Midwest are good for the crop as moisture falls in areas that need it.

Economic news for today: 10-year T-note auction to yield near 2.64%, EIA report expected to show usual seasonal decline in U.S. crude oil inventories, OPEC today is expected to leave its production target unchanged.

The chart picture is showing oversold conditions for corn and wheat. Dec corn’s next support is the January 10 lows of 4.35. November soybean contract closed above the 50 day moving average on Tuesday and major support crosses at 12.01.

Feeder cattle continue to lead the livestock complex as they post new record highs on Tuesday. Most live cattle contracts also made new highs due to the futures discount to cash. Beef values were higher with choice up .58 and select up .66. The CME Feeder Index is 196.09.

Spreaders have been the feature in the hog complex. Pork cutout is up .86.

Markets as of 4:30 AM CDT          

  • Jul Corn   +1 1/2
  • Jul Beans   +1 1/4
  • Jul Wheat   +2 1/2
  • Aug Cattle  -.17
  • Jul Hogs    +.25
  • Sep Dlr     -.04
  • Sep S&P     -6.00
  • Jul Crude   +.34
  • Aug Gold   +2.90

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Grains Quiet Overnight

Jun 10, 2014

Good Morning! Paul Georgy with early morning comments for June 10, 2014 at 4:30 am CDT.  

Grain futures are mixed in a quiet session ahead of the monthly USDA report tomorrow.

The next event for the grain market is the USDA report on Wednesday morning. Rich Nelson’s analysis suggests the USDA is not likely to change production. On the June report over the last 30 years they lowered production several times but never raised it.

The new yield model used by USDA for corn takes into account the mid-May planting progress and July temperature and precipitation. Only very select years have they used June weather conditions.

Weather forecasts look for cool temps and alternating showers for the balance of June.

US corn crop condition was 75% good/excellent versus 76% last week and 68% for the 5 year average. Corn emergence was 92% with a slight lag from normal in northern states.

US soybean’s first condition report put the crop at 74% good/excellent compared to an estimate of 72%. The record high start for soybean conditions was 75% in 2010. Soybean planting is 87% complete compared to average of 81%.

US winter wheat condition did not change from last week at 30% good to excellent. Spring wheat planting was up 7% to 95% vs. 93% average while the crop conditions were rated at 71% good/excellent vs. 62% last year.

Export inspections for soybeans showed another 4.5 million bushels of beans being shipped out of US ports.

Economic news — Federal Reserve Bank of St. Louis President James Bullard said Monday if the economy performs as he expects over the remainder of the year, it is likely the central bank will increase short-term rates earlier than most officials now expect.

Grain traders will be watching the US Dollar index as technical indicators are nearing a breakout to the upside. This could be another negative for Ag commodities.

This week we could see hog slaughter run just below 1.9 million head. That would be the smallest non-holiday kill since March of 2007. Packers have been quick to reduce slaughter when hog prices jump. Is this the beginning of really tight hog supplies? Pork cutout values are up .85

The final tally from Friday afternoon’s sales came in even better than initially reported. Kansas and Texas moved numbers at $145. Nebraska saw an average live price of $146. This was $2 higher than previous week. Futures are still at a considerable discount to cash. Feeder cattle continue their surge higher. According to DTN-K State formula a 700# steer bought today would lose $242 per head under current price structure. Beef values are higher with choice up 1.07 and select up .88.

Markets as of 4:30 AM CDT          

  • Jul Corn    + 3/4
  • Jul Beans   +6 3/4
  • Jul Wheat   – 1/2
  • Aug Cattle  -.10
  • Jul Hogs    +.72
  • Sep Dlr     +.08
  • Sep S&P     -4.00
  • Jul Crude   +.21
  • Aug Gold    -.30

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Report Week Provides Hope For Bounce

Jun 09, 2014

Good Morning! Paul Georgy with early morning comments for June 9, 2014 at 4:30 am CDT.  

Grain futures are mixed. Corn and soybeans are lower on good weather for crop production across the Midwest. Wheat is higher as bargain hunters provide support.

Traders will focus on this week’s USDA reports, later today the Weekly Export Inspections at 10:00 am and Weekly Crop Conditions at 3:00 pm. On the inspections report trade will be watching the old crop soybean shipments, analyzing the likely-hood of USDA hitting the soybean ending stocks target.

Crop conditions on corn should improve over last week as trade estimates range from 78 to 80% good/excellent. Soybean conditions are expected to start out the year above 70%.

The weather forecast is for alternating rain followed by sunshine across the Midwest through June 23. Weekend rains were beneficial for the growing crop with 75% of the production area getting measurable precipitation.

Traders will be adjusting positions going into the June USDA Supply and Demand report which will be released on Wednesday at 11:00 am.

The CFTC Commitment of Traders report showed managed money reducing long positions in the grain and soy complex. They reduced net longs in corn by 4,159 to 174,160 contracts, soybeans by 22,887 to be net long 104,150 contracts and in wheat they reduced positions by 18,678 contracts to be about even.

World and economic news for the week ahead includes Thursday’s ECB monthly report and Thursday’s Eurozone April Industrial Production report (expected +0.4% m/m).  The Bank of Japan, on Friday, will announce the outcome of its 2-day policy meeting.  Ukraine’s new president, Petro Poroshenko, who was sworn in this past Saturday, said violence must end this week as talks begin.

Feedlots are feeding cattle longer and to a heavier weight before replacing them with high priced feeders. Cost of gain to heavier weights is still profitable. Placement of feeder cattle today when using deferred futures prices would be locking in a loss. Beef values were lower on Friday with choice down .13 and select down 1.03. CME Feeder Index is 195.61.

With cash hogs closing out the week on a firm note and product higher, traders are getting renewed hope that the tight supplies are upon us. Pork cutout values were up 2.39. Expect futures to start steady to higher this morning.

Markets as of 4:30 AM CDT          

  • Jul Corn    -4 1/2
  • Jul Beans   -4 1/2
  • Jul Wheat   +1 1/2
  • Jun Cattle  Steady
  • Jun Hogs    Steady-Higher
  • Jun Dlr     +.05
  • Jun S&P     -2.00
  • Jul Crude   +.55
  • Jun Gold    +2.90

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Is June Going To Pass Without A Weather Scare?

Jun 06, 2014

Good Morning! Paul Georgy with early morning comments for June 6, 2014 at 4:30 am CDT.  

Grain futures are mixed with new crop corn and soybeans under pressure again. Funds rolling out of the July contract are expected to be a feature today.

The overall pressure is not coming from a change in weather forecasts as some models are taking out some rain and adding in heat. The pressure is not coming from farmer selling. Elevators and processor bids for corn were steady to higher late yesterday. Gulf bids for soybeans were also firmer.

Export sales were very strong for old crop corn. Net soybean sales were positive when traders are thinking sales have to show net cancellations to make the USDA balance sheet work. Wheat sales were neutral.

US corn quoted at $211 per tonne is very competitive when compared to Argentina prices at $208 per tonne. South American soybeans are $30 to $45 cheaper than US gulf prices.

The Climate Prediction Center, an agency of the National Weather Service, said there is a 70 percent chance of El Nino during the summer and increases to 80 percent during the fall and winter.

Russia’s Institute for Agricultural Market Studies (IKAR) has raised its 2014 grain crop forecast to 96 million tonnes from 95 million tonnes after recent rains, its head Dmitry Rylko said on Thursday. Grain exports may rise to 28 million tonnes during the 2014/15 marketing year which starts on July 1, from 26 million tonnes expected this year.

Informa’s winter wheat estimate of 1.396 billion bushel is slightly below the U.S. Department of Agriculture’s May 9 forecast for 1.403 billion bushels.

Sixteen organizations in the Australia, Canada and the United States, representing producers and millers, publicly confirmed support for innovation in wheat, including the future commercialization of biotechnology.

Tom Vilsack, the US Sec. of Ag., told a crowd at the World Pork Expo that they would be requiring US hog producers to report PED findings. They have devoted a budget of $26 million to the PED problem. On a supply basis this week’s kill is only 1% under last year. That may not be a good predictor of this week’s kill as today is set for an unusually large decline (six plants out). Pork cutout value is done .30.

This week’s cattle slaughter could be down 7% from last year. Cash trade is holding out for late sales today with steady prices expected. Beef values are weaker with choice down 1.12 and select down 1.97.

Markets as of 4:30 AM CDT          

  • Jul Corn    – 3/4
  • Jul Beans   +2
  • Jul Wheat   +2       
  • Jun Cattle  +.35
  • Jun Hogs    +.42
  • Jun Dlr     +.07
  • Jun S&P     +2.00
  • Jul Crude   +.13
  • Jun Gold    -.05

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How Can We Continue to Sell Beans and Not Run Out?

Jun 05, 2014

Good Morning! Paul Georgy with early morning comments for June 5, 2014 at 4:30 am CDT.  

Grain futures are mostly lower in a quiet session. The July/November soybean spread is being watched closely.

Old crop soybeans are looking for possible net cancellations on the Weekly Export Sales report this morning. Traders are still struggling with how the USDA will handle the tight soybean stocks on the June 11 Supply and Demand report.

The current weather forecast is ideal for most of the Midwest row crops.

Wheat harvest is moving north in Oklahoma where yields are starting to improve. The southern portion of the state had yields in the 12 to 15 bushel per acre range.

Ethanol hit its third highest weekly production since the marketing year started on September 1. On a percent basis vs. last year, the gain was only up 6%. We are on the path of balancing out the very strong early year production rates. USDA’s goal of 8.6% more production appears reasonable. Production margins remain very strong. However a negative is ethanol stocks are now 11% more than last year at this time.

(Reuters) – The following are trade estimates for net weekly export sales of U.S. grains and soy for the week ended May 29. The USDA will release report at 7:30 am.

                             Trade estimates for      Trade estimates for
                                        2013-14                     2014-15
 Wheat                 (-50,000)-150,000          325,000-475,000
 Corn                     400,000-550,000          150,000-250,000
 Soybeans          (-100,000)-100,000          500,000-750,000
 Soymeal                 50,000-150,000          175,000-225,000
 Soyoil                              0-25,000                       0-10,000

Russia’s wheat crop is forecast to be 5% larger this year than last. While Ukraine is expected to see a record wheat crop for the second year in a row. This is pressuring Black Sea export prices.

Russia’s agriculture ministry says high debt burden, lack of machinery and fertilizers remain key problems for Russian farmers.

Argentina soybean farmers are expected to move some grain in late June as they need to make credit payments. They will likely go back to hoarding as inflation rate justifies that strategy.

The World Pork Expo started yesterday in Des Moines, IA where the number one topic on pork producer’s minds was PEDv. Fund and technical selling combined with the premium of futures to cash are causing pressure on most lean hog futures contracts. Pork cutout value is down .27.

Spreading is a major feature in live cattle futures as feeder cattle contracts head for the $200 level. Cheaper feed costs, tight supply of feeders and money flow are the drivers. Following the feeder market for years, it would suggest that traders need to be using risk management tools to protect the downside because when feeder cattle futures decide to top they can fall very quickly. Beef values are weaker with choice down .55 and select up .01. The CME Feeder Index is 194.68.

Markets as of 4:30 AM CDT          

  • Jul Corn    -0
  • Jul Beans   -5
  • Jul Wheat   – 3/4    
  • Jun Cattle  +.20
  • Jun Hogs    -.40
  • Jun Dlr     -.09
  • Jun S&P     -1.00
  • Jul Crude   -.40
  • Jun Gold    -.80

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How Low Can Oversold Indicators Go?

Jun 04, 2014

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

Grain futures are in positive territory as bargain hunters provide support. Old crop soybeans gain as traders wait for export sales data tomorrow morning.

Reporting this morning from Fort Wayne, IN where David and Jean Kohli are managers of Allendale’s Branch Office. In the trip across Northern IN we saw corn and soybeans getting off to a great start. There were farmers in the field side dressing corn and spraying soybeans.

Comments from ND farmers who are unable to plant corn prefer to avoid taking Prevent Plant Insurance; instead they will keep trying to plant beans through late June.

The greenhouse like weather conditions across the Midwest are providing the pressure to futures and basis. River terminals and some interior elevators lowered basis after yesterday’s weak futures trade. Farmer activity was very light.

Funds on Tuesday were estimated to be net sellers of 4,000 wheat contracts, 8,000 corn, 8,000 soybeans, 3,000 soymeal and bought a net 2,000 soyoil contracts.

The Ministry of Agriculture in China forecasts an output rise of summer grain and the 11th consecutive bumper harvest. Wheat harvest in China’s Shandong Province is beginning.

China’s government sold 72.7 percent of the soybeans offered at a weekly state auction.

The world weather forecast continues to look good as the models continue to show decent rains for Russia next week.

The US Senate confirmed Timothy Massad as Chairman of the Commodity Futures Trading Commission (CFTC).

(Reuters) – Investors pulled $4 billion from U.S. commodity exchange-traded products in the first five months of the year, extending last year’s negative trend even as the pace of the redemptions from gold slowed, Thomson Reuters’ Lipper data showed on Monday.

Outside markets are waiting for the ADP employment report which is expected to confirm spring labor market recovery. The ECB on Thursday is widely expected to adopt multiple easing moves.

Tuesday was the third day of wholesale pork gains. It now puts pork more than $7 off its May 13th low. On the other hand cash hogs are only about $1 off their May 12 low. Pork cutout values were up .54.

Monday’s cattle slaughter was revised down to 113,000 head. Along with Tuesday’s light run of 118,000 head we are running 8% under last year. Though two days do not make a full week, it is clear this market is still struggling with an artificial lack of supply as producers put on more weight instead of new placements. Beef cutout values were higher with choice up .23 and select up 2.37. The CME Feeder Index is 194.49.

Markets as of 4:30 AM CDT          

  • Jul Corn    +1 3/4
  • Jul Beans   +9
  • Jul Wheat   +5       
  • Jun Cattle  +.17
  • Jun Hogs    -.40
  • Jun Dlr     +.08
  • Jun S&P     -4.25
  • Jul Crude   +.74
  • Jun Gold    +1.50

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Corn Crop Starts In Near Record Condition

Jun 03, 2014

Good Morning! Paul Georgy with early morning comments for June 3, 2014 at 4:30 am CDT.  

Grain futures are lower on US crops getting off to a great start with near perfect weather conditions.

The soybean markets are divided into two segments; old crop and new crop. The tight supplies of old crop soybeans due to aggressive exports and domestic crush are providing support while index funds rolling out of the July contracts is providing some resistance.

New crop soybeans are driven by planting progress and good growing weather which are both negative to price outlooks. Planted acreage from USDA at the end of the month could play a major part in ending stock number.

Corn planting is done, at least in the eyes of the trade with 95% complete versus 94% average. Corn good to excellent ratings, at 76%, blew the doors off the average guess of 70%.

Soybean planting is now 78% complete which surpassed the 75% trade was estimating.

Spring wheat planting was 88% which is on the 5 year average. Winter wheat conditions held steady with 30% of the crop rated good/excellent.

Safras e Mercado said Brazilian farmers have sold 72% of the 2014 soybean crop which is line with last year when farmers had 71% sold.

At the end of each month NOAA updates their monthly weather outlook. During the month of June they are expecting the cornbelt to have near normal temps and normal to slightly above normal precipitation.

The Obama plan to cut greenhouse gas emission from power plants is expected to be unveiled this morning by the EPA.

Brazil’s trade ministry said yesterday that they exported 7.6 mmt of soybeans in May compared to 8.25 mmt during April.

Outside markets have to be watched closely as the US Dollar Index appears to be set for a breakout to the upside. This could cause further pressure on agriculture commodities as it increases export prices.

Livestock futures are waiting for confirmation of less hog supplies due to the PEDv. Many traders are getting tired of waiting and have been liquidating long positions. Heavier weight hogs are going to market, offsetting the lower numbers. Last week wass the first time in recent months where carcass weights were lower than the previous week. Pork cutout value is up 2.23.

The cattle trade is dealing with high feedlot replacement cost and producers feeding cattle to heavier weights. Cheap feed cost is helping support feeder cattle while the breakevens on cattle currently being placed in feedlots are projected to lose several hundred dollars per head using today’s deferred fed cattle values. Beef cutout is weaker with choice down .23 and select down .42. The CME Feeder Index is 193.87.

Markets as of 4:30 AM CDT          

  • Jul Corn    -3
  • Jul Beans   -7
  • Jul Wheat   -1 1/2
  • Jun Cattle  +.42
  • Jun Hogs    +.57
  • Jun Dlr     +.05
  • Jun S&P     -2.75
  • Jul Crude   -.13
  • Jun Gold    +1.70

 Chart of the Day

daily chart

If you have any questions on any of our material, give us a call at 800-262-7538 or email us at service@allendale-inc.com

Are Crop Conditions As Good As 2007?

Jun 02, 2014

Good Morning! Paul Georgy with early morning comments for June 2, 2014 at 4:30 am CDT.  

Grain futures are lower as long liquidation, good weather for growing crops and export competition weigh on prices.

Corn planting progress this afternoon should be about 95%, which from the traders perspective will be considered done. Soybean planting should be in the 75% area. North Dakota planting progress will be watched closely.

The 1st national corn rating of the year may not reach the 2007 record of 78% G/E. Trade estimates are 72 to 75% G/E.

CFTC Commitment of Traders report showed managed money reduced net long positions by 29,253 contracts last week. They increased long positions by 6,118 contracts in soybeans and reduced long positions in wheat by 4,721 contracts.

The well-publicized Goldman roll will begin on Friday.

Crop conditions are improving in Ukraine and Russia which has Black Sea exporters offering new crop wheat at prices more competitive than US.

Corn and soybean basis have improved after weakness in futures on Friday.

China and Europe are on holiday today which could be a cause for light volume in grains.

Economic reports this week could create some volatility as trade will be positioning ahead of the European Central Bank meeting on Thursday and the US May unemployment numbers on Friday.

Beef cutout values were lower on Friday with choice down .99 and select down 1.87.

Pork cutout values were up 2.26. Traders are waiting for any indication that hog supplies are tightening. Hog weights have been able to offset slaughter numbers in recent weeks.

We are calling hogs and cattle steady to higher this morning.

Markets as of 4:30 AM CDT          

  • Jul Corn    -3 3/4
  • Jul Beans   -6 3/4
  • Jul Wheat   -8
  • Jun Cattle  Steady
  • Jun Hogs    Steady-Higher
  • Jun Dlr     +.18
  • Jun S&P     +1.25
  • Jul Crude   +.42
  • Jun Gold    -1.10

 Chart of the Day

daily chart

If you have any questions on any of our material, give us a call at 800-262-7538 or email us at service@allendale-inc.com

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