Aug 20, 2014
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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.

Are Weather Worries Overdone?

Apr 30, 2014

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

Grain futures are lower on profit taking as traders have a risk-off attitude across all commodities.

Allendale Meteorologist, Ryan Martin’s weather comments from last night’s April Ag Leaders Webinar are worth your time to review. He believes planting delays are not an issue as later planting this year may be a benefit due to moisture projections in July. Click here to listen to the recording.

Traders are taking some profits but will likely be expecting a friendly weekly export sales number on Thursday.

Traders are also waiting for the May 9th Supply and Demand Report. The USDA will be giving us their first estimates on yield for 2014. After that report, analysts will be able to tweak acres and come up with their total production estimates.

The results of day one of the Kansas Wheat Quality Tour was 34.7 bushels per acre compared to a year ago number of 43.8. The scouts sampled 271 fields on the first day. Comments from tour participants confirm traders concerns that the wheat crop deteriorates the further west you go.

Funds continue to pour money into the grain markets as they are estimated to have bought a net 10,000 corn contracts, 6,000 soybeans contracts and 3,000 wheat contracts. There is more talk of major banks advising their investor clients to get long the commodity markets as a hedge of the Ukraine/Russia situation.

On May 1st the daily price limits will change to .35 for corn, 1.00 for soybeans and .50 for wheat. Research conducted by CME Group across the entire grain and oilseed complex indicates that a price limit set at seven percent of the underlying futures price will likely capture daily price moves with at least 99 percent confidence. Thus, under normal market conditions, one should expect less than three limit-move days per year under this mechanism. Historically, option price limits are rarely hit and typically just by deep-in-the-money options. Therefore, the elimination of option price limits is not expected to have any major impact.

Funds have added to the volatility in the livestock complex. The cash hog market is trending weaker as packer margins erode. Pork cutout values are down 3.34 on Tuesday.

Spreading in the live cattle contracts are a feature in recent sessions. The April Live Cattle contract goes off the board today at Noon. Beef cutout values were mixed with choice up 1.19 and select down 1.15. The CME Feeder Index is 179.59.

Markets as of 4:30 AM

  • May Corn    -2 1/2
  • May Beans   -2
  • May Wheat   -5 3/4
  • Jun Cattle  -12
  • Jun Hogs    -1.07
  • Jun Dlr     -.04
  • Jun S&P     -3.00
  • Jun Crude   -1.03
  • Jun Gold    -3.80

 Chart of the Day

daily chart

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