Jul 10, 2014
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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.
 

What will USDA Adjust on Supply and Demand Report?

Jul 10, 2014

 Good Morning! Paul Georgy with early morning comments for July 10, 2014 at 5:15 am CDT.

Grain futures are higher as short-covering ahead of reports ttys to relieve the oversold condition.

Allendale’s Ag Leaders Conference "Summer Update" will be presented in less than 2 weeks. Get answers on the following topics: Temperature and Precipitation Outlook through Crop Maturity. US Harvest Weather outlook, what is the potential for Early Frost? Where is El Nino? South American Planting Weather Outlook and an update on price directions for grains and livestock markets.

The weather session takes place July 22nd at 2:00 PM CDT. The series will continue July 23rd and 24th at 2:00 pm with our grain and livestock outlooks. All sessions will be recorded for your viewing convenience.

Below normal temperatures during pollination has historically produced big corn yields. The production years of 2004 and 2009 were years where cool temps produced yields well above trend. Traders expect USDA to raise yield on average to 166.1 per acre. However, history suggests USDA is very reluctant to change yields from June to July. They have only changed yields 3 times since 1990.

Allendale thinks the standout adjustments on Friday’s Supply and Demand report for old corn could come in feed use, ethanol use and exports with a net increase in Ending Stocks. New crop corn will likely see adjustments in planted acres, harvested acres and possibly yield.

The USDA is less likely to change soybean yields on the July report as they have made adjustments only one time out of the last 28 years. Ending stocks for new crop soybeans could reach 400 million bushels, more than 3 time current year ending stocks.

Old crop soybeans are being watched closely on how the USDA will handle the stocks situation due to actual export sales and domestic crush usage already above previous targets.

The Weekly export sales will be released at 7:30 this morning. Trade estimates from Reuters are:

                                  2013-14                 2014-15:

Wheat                            0                      400,000-635,000

Corn                 225,000-400,000          375,000-650,000

Soybeans         -100,000-100,000        300,000-500,000

Soymeal            30,000-150,000             0-125,000

Soyoil                  0-20,000                         0-10,000

There is more talk circulating that China is offering to resell beans out of Brazil. Also concerns that as many as 4 cargoes have reach china and buyers were unable to produce a letter of credit.

Last trading day for the July grain contracts is Monday.

CONAB in Brazil once again raised their old crop corn production estimate a bit to 78.2 mmt, up 300K while the USDA is still using 76 mmt.

Index Funds continue to roll out of the August contracts pressuring cattle futures already a discount to cash. The nearby cattle closed below key moving average support and posted a reversal day on the charts. This action will likely give packers a reason to hold out as long as they can before buying, especially with an increase in showlist numbers. Beef values were mixed with choice up .59 and select down .36. The CME feeder Index is 214.09.

Spreaders are providing volatility in the pork complex. Trade analysts are looking for hog supplies to get extremely tight over the next 60 days as it is the time where PEDv should have the greatest effect. We expect to see very choppy markets in livestock futures during this period. Pork cutout values are up 1.05.

Markets as of 5:15 AM CDT          

  • Sep Corn   +1       
  • Aug Beans   +9
  • Sep Wheat   +2 3/4
  • Aug Cattle  +.40    
  • Aug Hogs    -.32
  • Sep Dlr     +.07
  • Sep S&P     -16.00
  • Aug Crude   -.66
  • Aug Gold   +19.10

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

Spreads Dominate Volume Ahead of WASDE

Jul 09, 2014

 Good Morning! Paul Georgy with early morning comments for July 9, 2014 at 5:30 am CDT.

Grain futures are lower as traders wait for USDA reports.

Cash bids firm up slightly due to lack of farmer selling. The sell-off in futures has farmers waiting for a bounce to clean out bins for the new crop grain. However, weather forecasts are not providing any friendly bias. The cool temps and plenty of moisture is ideal for corn pollination.

Trade average estimates for Fridays report are adding more corn and soybeans to the ending stocks. Call your Allendale Broker and ask for the 2009 corn chart, it may be giving us a road map for price movement during a big crop year.

Sign up Today for the Allendale Ag Leaders "Summer Outlook Conference", Click HERE.

Reports out of the FSU are suggesting wheat yields in the south of Russia were 18% higher than last year. Kazakhstan wheat production is expected to rise due to good weather conditions.

FOMC meeting minutes released today will be scrutinized for any hints on the timing of the Fed’s first rate hike.

The new May beef trade numbers were disappointing. Beef exports ran 4% over last year. While that is still a very good pace, it is a slower pace than the 5% and 15% increase posted in the previous two months. Beef imports were very strong at 20% over last year. Beef cutout values were firmer on Tuesday as Choice was up 1.80 and select was up 1.39. The CME Feeder Index is 213.85.

Hog markets have some slightly negative news to digest. The May US pork exports totaled 430.836 million lbs. That was almost equal to last year and below the previous two months which showed gains of 22% and 10% respectively over the previous year. Imports were also disappointing as they ran 15% over last year in May. Pork cutout values were down .19.

Markets as of 5:30 AM CDT          

  • Sep Corn   -2       
  • Aug Beans   -12 1/2
  • Sep Wheat   -2
  • Aug Cattle  +.42    
  • Aug Hogs    +.25
  • Sep Dlr     +.01
  • Sep S&P     +.50
  • Aug Crude   +.00
  • Aug Gold   +8.50

 

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

Old Crop Bean Demand In Spotlight Again

Jul 08, 2014

Good Morning! Paul Georgy with early morning comments for July 8, 2014at 4:45 am CDT.

Grain futures are mixed with corn and wheat are higher on bargain hunting; soybeans are lower.

The forecast for temperatures to be below average for the next 10 days throughout the Midwest sets the stage for excellent pollination conditions. If the forecast comes true it would make it the fourth coolest pollination period since 1980. This would put this year in the category with 2004 and 2009 when record yields were set in corn.

Crop ratings for corn are 75% good/excellent which is the 5th best in the last 28 years.

Soybean ratings came in at 72% good/excellent which out of the last 28 years there was only 1 year that had a higher rating during this week.

Winter wheat harvest advances 14% to 57% complete versus 60% average. Spring wheat ratings were steady with last week at 70% good/excellent. Pasture and range conditions were down 2% to 56% good/excellent compared to 49% last year.

The Goldman Index Roll out of the August contracts begins today.

Yesterday funds sold 9,000 wheat, 11,000 corn and 3,000 bean contracts.

Demand bulls are getting concerned as there is more talk of China trying to resell several cargoes of soybeans out of Brazil and one load out of the US gulf. Also there are reports that South Korea bought 60,000 tonnes of soymeal from South America with a Chinese origin option.

USDA Supply and Demand Report on Friday should put the final touches to old crop ending stock picture for soybeans. The corn balance sheet has the potential for a lot of adjusting but ultimately finishing with higher ending stocks than last month.

The economics calendar is light this week as the Dow is testing all-time highs of 17,000. US Consumer Credit is expected to show a big increase on today’s report.

Lean hog futures are being driving by the strength in product. Pork cutout values were up another .32 to 134.52. Even with tight hog supplies packer margins have improved to over $91.00 per head. Look for profit taking to provide setbacks in futures as cash hog supplies from now through September should be the tightest of the season.

Live cattle futures are being watched as yesterday’s sharp rally and then a sell-off could be construed as a reversal. However cash trade is expected to be steady to higher this week with a possible 160 trade. Product values are firm as retailers restock shelves after the holiday. Choice was up .06 and select up .11 on Monday. The CME Feeder Index is 214.58.

Markets as of 4:45 AM CDT          

  • Sep Corn   +1 1/2   
  • Aug Beans   -3 1/4
  • Sep Wheat   +4     
  • Aug Cattle  +.30    
  • Aug Hogs    +.07
  • Sep Dlr     +.05
  • Sep S&P     -2.75
  • Aug Crude   -.15
  • Aug Gold   +2.60

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

Is Too Much Water Hurting Crops?

Jul 07, 2014

Good Morning! Paul Georgy with early morning comments for July 7, 2014at 6:30 am CDT.

Grain futures looking at a weaker opening as weather conditions are ideal.

Crop ratings out this afternoon are looking for further improvement in corn and soybeans on a national basis however we are hearing of water logged fields in IA/MN.

CFTC Commitment of Traders report show managed money increased selling last week in corn and soybeans.

Starting the week, a mix of weather is expected while soil moisture is mostly favorable to induce very good crop development potential and allow for some fieldwork to advance around the precipitation. Chinese weather remains mostly good, but some net drying is expected in the North China Plain that is likely to generate some crop stress over time.

The USDA July Supply and Demand Report will be released on Friday at 11:00.

On the economic front, the June 18 FOMC meeting minutes and China’s June CPI will be released on Wednesday

The livestock markets closed at the high-end of trading ranges on Thursday. Tight supplies of market ready of cattle and hogs should keep bulls in control. The question livestock traders will have to wrestle with later this month is how prices will be affected by a seasonal down turn in demand. Beef values were firm with choice up .46 and select up 1.00. The CME Feeder Index is 216.43. Pork cutout values are up 1.03.

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 Prepare For Post-Holiday Fireworks!

Jul 03, 2014

Good Morning! Paul Georgy with early morning comments for July 3, 2014 at 5:30 am CDT.

Grain futures are higher on bargain hunting and short covering ahead of long weekend.

Grain markets close at 12:00 today and will reopen at 8:30 am CDT Monday morning. Livestock markets close at 12:15 today and reopen at 9:05 on Monday.

Weekly Export sales to be released at 7:30 am:

(Reuters) Trade estimates for     Trade estimates for

                                  2013-14                       2014-15:

Wheat                           0                   300,000-450,000

Corn               200,000-350,000         300,000-450,000

Soybeans                 0-150,000         300,000-500,000

Soymeal                   0-100,000                     0-150,000

Soyoil                       0-20,000                       0-10,000

What will the long weekend hold for us come Monday? There have been years where the first trading day after July 4 is when the fireworks explode at CBOT due to the weather forecast. Currently the weather appears to be ideal for corn and soybean growth.

Grain traders will likely be watching events unfold on the global stage where the Iraq and Ukraine situations are worsening. Russia is preparing troops along the border to defend the Russian people in Ukraine.

Ethanol production remains strong at 953,000 barrels per day which is the second highest weekly rate of this marketing year. Processing margins have slipped but they are still positive. USDA is projecting 5.050 billion bushels of corn for ethanol which is 8.6% higher than last year. Currently the pace is 9.9% over last year and the crop year ends August 31.

The CGT labor organization announced that the port workers in Rosario will go on an indefinite strike starting Friday.

Wheat held January low which is long term technical support and closes higher on Wednesday. Is this the beginning of a retracement rally?

Next week crop conditions on Monday afternoon will be watched for a drop in G/E due to heavy rains. Friday the USDA will release the July Supply and Demand report with likely adjustments for acres, quarterly stocks, exports, corn for ethanol usage and don’t forget about the feed/residual category. Should be an interesting report.

Economic Calendar today: Unemployment report expected to illustrate ongoing spring labor market improvement. Unemployment claims expected to remain favorable.

High meat prices have not stopped restaurant demand. National Restaurant Association released information that shows the foodservice industry is performing at levels not seen since the recession of 2008-09. Cash cattle trade higher, packer’s struggle finding cattle to fill retail demand. Beef values were mixed with choice down .47 and select up .62. CME Feeder index is 217.20.

Lean Hog futures continue their spread adjusting after last week’s USDA Hogs and Pigs Report surprises. Demand for meat is strong at the retail level. Pork cutout values are up 2.53.

Allendale wishes everyone an enjoyable and safe Independence Day Weekend.

Markets as of 5:30 AM CDT          

  • Jul Corn   +1 1/2   
  • Jul Beans   +7
  • Jul Wheat   + 3/4
  • Aug Cattle  +2.17   
  • Jul Hogs    +.45
  • Sep Dlr     +.08
  • Sep S&P     +1.75
  • Aug Crude   -.50
  • Aug Gold   +8.80

 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

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