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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.

Which Way Is the Money Headed Today?

Apr 03, 2014

Good Morning! Paul Georgy with early morning comments for April 3, 2014 at 4:45 am.  

Grain futures are higher after sharp losses. Technical traders will be watching yesterday’s lows for support.

There is a combination of things causing the extreme volatility we are experiencing this week. Money flow has been the driving force to the upside and profit taking on word that a Chinese importer is trying to resell soybeans and meal. Chinese importers are having issues with financing some purchases which may cause straight out cancellations rather than reselling of their previously purchased soybeans.

Trade talk has several cargoes of South American meal being bought by a major poultry producer. Exporters are getting calls to push back delivery times as the world all of the sudden has more meal than buyers.

Cash movement of corn and soybeans in the US has picked up this week which is causing pressure on basis. Meal basis has eroded rapidly tightening what was a positive crush margin for US processors. Decatur corn basis is steady while river locations have plenty of grain around them.

Funds are estimated to have sold a net 7,000 wheat contracts, sold a net 13,000 corn contracts and sold 9,000 contracts of soybeans on Wednesday.

Ethanol margins remain very strong as proved by last week’s 14% increase in production year over year. 

(Reuters) – Farmland values in Iowa, the top U.S. corn and soybean state, fell 5.4 percent over the past six months, under pressure from lower grain prices, according to a benchmark survey of realtors. The average selling price of farmland across Iowa in March was $8,286 an acre, compared with $8,758 six months before. Prices were down 4.6 percent from $8,690 a year earlier.

Export sales estimates for the 7:30 am report as surveyed by Reuters are:

                          Trade estimates             Trade estimates
                             for 2013/14                    for 2014/15
Wheat              200,000-400,000          200,000-400,000
Corn                850,000-1,150,000                   0-200,000
Soybeans                    0-200,000          350,000-550,000
Soymeal          100,000-200,000                      0-150,000
Soyoil                         0-30,000                        0-10,000

Cash cattle players are in a stand-off as packers are bidding 147 and feedlots are offering at 153. Packer’s margins have been under pressure this week as meat values tumble. However, Wednesday beef cutout values were higher with choice up 1.10 and select up .71.  The CME Feeder Index is 177.56. Futures remain at a discount to cash which should provide underlining support.

Pork packers have filled their needs for the rest of the week either by being aggressive buyers or by cutting work hours. Fund selling combined with technical selling is pressuring lean hog futures. Pork cutout values were up 1.11 on Wednesday.

Markets as of 4:45 AM

  • May Corn    +3 1/4
  • May Beans   +7 3/4
  • May Wheat   +2 1/4
  • Apr Cattle  +.65
  • Apr Hogs    -.95
  • Jun Dlr     +.03
  • Jun S&P     +.50
  • May Crude   -.39
  • Apr Gold    -4.00

Chart of the Day

Daily Chart

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