The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.

The Allendale Wake-Up Call

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.
 

 

Can Exports Inject A Boost?

Oct 23, 2014

Good Morning! Paul Georgy with the early morning commentary for October 23, 2014 at 5:30 am.

Traders Focus: Export data, harvest progress and option expiration.

Grain markets are higher in a light volume session. Macro markets are higher in the equities and steady in the dollar.

Traders are looking for confirmation of talk yesterday that some meal demand was being switched to Argentina. This could cause the meal pipeline to fill rather quickly.

Bean harvest has kicked into full swing and producers are reporting very good yields across most of the Midwest. An example in central MO, 190 acres had average yield of 81 bushels per acre, another producer in north central NE, average 67 bushels per acre across his entire soybean acres. However, not all are getting the super yields, our customers in central MN are harvesting 45 to 50 bushel soybeans when they normally get 60 bushels per acre.

Good harvest weather should continue into next week which will boost soybean harvest on Monday’s progress report. The wet season is expected to start across all of North and Central Brazil late this week with totals of 2.00 to 5.00 inches.

Weekly export estimates for this morning’s report are: Corn 800,000 to 1,000,000 MT, soybeans 800,000 to 1,000,000 MT, soymeal 150,000 to 250,000 MT, soyoil 10,000 to 50,000 MT and wheat 350,000 to 500,000 MT.

As we transition away from supply concerns our focus now deals with what to do about this large corn crop. Allendale has addressed in recent reports the issue that neither exports or ethanol is going to help work through the supplies.

USDA’s current corn for ethanol goal is 5.125 billion bushels which is virtually unchanged from the 5.130 last year. Though we started out with good ethanol production rates in early September, that has fallen now that margins are tightening and production is now equal to a year ago pace at 896,000 barrels per day.

The Chinese government is adding another 40 million tonnes of corn to their reserve in the 2014/15 marketing year. When adding to the inventory increases over the last 2 years they will replenish the government stocks to 100 million tonnes.

Update - Morning Coffee Commentary:

The US Dollar is quiet as it holds gains from Wednesday.

Eggs set were up 3% compared to last year while chick placements were up 1%.

The weakest links in the pork market remains the loins and butts as pork cutout value was down $2.88. Lean hog futures gave us a reversal yesterday out of an oversold condition. The discount of nearby futures to cash hog index is providing some support.

Cattle on Feed Estimates for Friday’s Report: COF: 99.7%, Placed: 101.4%, Marketed: 99.2%.

Beef values were higher with choice up $1.16 and select up $.14. The CME Feeder Index is 240.80.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   1 1/2     
  • Nov Beans   4
  • Dec Wheat   2 1/4
  • Dec Cattle  .20
  • Dec Hogs    -.30
  • Dec Dlr     -.02
  • Dec S&P   7.25
  • Dec Crude   .25
  • Dec Gold   -6.00

Technical 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

Funds Find Bargains in Grains

Oct 22, 2014

Good Morning! Paul Georgy with the early morning commentary for October 22, 2014 at 5:30 am.

Traders Focus: Money flow, technical and computer trade signals, harvest weather and demand.

Grain markets are mostly higher lead by the soy complex.

The strength in the soymeal in recent days has been a major catalyst providing support to the soy complex. The wet weather and reduced harvest progress has crushers caught with meal commitments and can’t crush the beans fast enough. Once the pipeline is filled there should be a plentiful supply due to the bountiful harvest.

Producers are focusing on harvest and trying to figure out what to do with the crop as they weigh selling to storing alternatives.

Money flow and short covering is also a factor. Computer activated buying could trigger even more buying if overhead resistance is broken.

The forecast is virtually unchanged from Monday. The US Corn Belt looks to see only light scattered showers over the next 10 days which should allow rapid harvest progress. South American weather forecast is for wide spread moisture for northern Brazil (the dry area) in coming days.

Oil World estimates Brazilian new crop bean production at 89 mmt, down 3 mmt from previous estimate and 5 mmt below USDA’s latest production estimate.

USDA’s said at the trade data users meeting in Chicago that they had 35% of their soybean field plots harvested for the October report verses 89% for corn. They relied heavily on a farmer survey for the October report and thus many believe that soybean production has much more room to the upside based on yield reports we are hearing.

(U of IL Ag Econ) Lower prices are resulting in lower gross revenue projections for both 2014 and 2015. These lower projections will require lowering or eliminating capital purchases, lowering fertilizer and seed costs, lowering cash rents, and reducing other cash flows.

Update - Morning Coffee Commentary:

Hog weights remain above a year ago although not as dramatically as in recent months. This time a year ago, it became more profitable to feed hogs to a larger size. Slaughter numbers are increasing and pork values continue to slide. Retailers are buying “hand to mouth” as we approach the holiday season. Pork cutout values were down another $2.42.

US Cattle on Feed report for Sept to be released Friday at 2 PM CST. Trade is expecting On Feed at 99.7%, Placed at 101.9% and Marketed during Sept. at 99.1%.

Steer weights have gone from 875 a year ago to 896 last week. There is no question the economics works to feed cattle longer and larger rather than replacing them with lighter feeders. Therefore is the current tight supply of market ready cattle due to lack of numbers or due to cattle being fed longer? Beef values are mostly steady as choice was unchanged and select down $.24. The CME Feeder Index is 240.80.

Markets as of 5:30 AM CDT                                                                     

Dec Corn   0        
Nov Beans   9 1/2
Dec Wheat   1/2
Dec Cattle  .07
Dec Hogs    -.15
Dec Dlr     .21
Dec S&P   -5.00
Dec Crude   .17
Dec Gold   -4.90

Technical 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

Soybean Harvest Slowest Since 2009

Oct 21, 2014

Good Morning! Paul Georgy with the early morning commentary for October 21, 2014 at 4:30 am.

Traders Focus: Harvest progress, harvest weather and demand.

Grain markets are slightly higher, China’s GDP release had minor impact on Macro markets.

The USDA says as of Sunday we are 31% harvested in corn compared to 33% expected by the trade and 53% average. Soybean harvest is 53% complete compared to trader estimates of 53% and 66% average. This is the slowest soybean harvest since 2009. Winter wheat planting is 76% completed which is very close to normal.

Brazil soybean planting was put at 10% by AgRural compared to 19% last year and 20% average.

Export sales are being watched closely as corn sales need to run 12% above a year ago to meet the USDA’s target. Soybean sales are running well ahead of last year and current levels could give reason for increasing USDA’s estimate.

November option expiration is on Friday.

Weather forecast suggests clear conditions for the balance of the week in the Midwest where we should see aggressive harvest progress. South American weather is getting rain where needed.

Ahead of the next weeks FOMC meeting Fed officials are chattering that QE3 will end as scheduled.

China’s GDP grew 7.3% in the third quarter which was down from the 7.5% growth in the second quarter. This is the weakest growth rate since early 2009. Thursday China will release their PMI updates that could provide a glimpse of global growth.

Update - Morning Coffee Commentary:

The World Trade Organization has rejected US rules requiring labels on packaged steaks, ribs and other cuts of meat identifying where the animals were born, raised and slaughtered. In a ruling Monday, they said the requirements put Canadian and Mexican livestock at an unfair disadvantage.

Last week steer carcass weights increased to 896 pounds compared to 875 pounds last year. Beef production remains 6.2% below last year even with this increase.

Cold storage data will be released on Wednesday and trade is expecting stocks in cold storage to drop 24% from last year to 338 million pounds.

Beef values remain firm with choice up .68 and select up .39. The CME Feeder Index is 241.84.

Live hog weight difference is starting to narrow compared to last year but that does not translate into a positive. At this time last year, hog weights began to increase. Hog movement could be a bit lighter as farmers focus on field work. Pork cutout values continue to slide as they were down another 4.55 on Monday.

Markets as of 4:30 AM CDT                                                                     

  • Dec Corn   1/4 
  • Nov Beans   4 3/4
  • Dec Wheat 1 1/4
  • Dec Cattle  .30
  • Dec Hogs    -.20
  • Dec Dlr     .02
  • Dec S&P   2.00
  • Nov Crude   .48
  • Dec Gold    7.10

Technical 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

Harvest Progress Should Improve This Week

Oct 20, 2014

Good Morning! Paul Georgy with the early morning commentary for October 20, 2014 at 5:30 am.

Traders Focus: Harvest progress report this afternoon and weather forecast this week.

Grain markets are lower as the dollar and energies are quiet.

Grain traders are drawing their proverbial line in the sand as the bears continue to focus on the big carryover in 2015, increased harvest pace and improving growing conditions in South America. The bulls are pointing to slow farmer selling, slow planting pace in Brazil and immediate demand for meal. There is a demand for soybeans to meet the near term crush as a lot of boats need to be loaded. Crush margins are firm and it is likely going to take some time to fill the pipeline.

The Midwest was mostly dry over the weekend and dry weather should continue until some light rains start across the Plains and into the far western section of the WCB late this week.

The weather maps for South America are showing rains in the 6-10 day portion for Argentina of .25-1.0 with heavier rains noted across the eastern half of Argentina, while La Pampa (the southwest) is seeing less than .25 inch.

Trade is looking for corn harvest to be near 33% verses average 52% and 23% last week. Soybean harvest is expected to be near 50% verses an average of 65% and 40% last week.

The CFTC’s Commitment of Traders Report showed funds reducing short and increasing long positions. They added nearly 15,000 to the long corn contracts and reduced their short positions in soybeans by 7,500 contracts and wheat by 8,000 contracts.

Update - Morning Coffee Commentary:

 

Economic Data out of China this week will be anxiously watched. Tomorrow they will release Q3 GDP and September retail sales.

Last week was a tough one for hog prices. December futures lost $4.00, cash pork lost $9.00. The weekly slaughter wrapped up at 2.180 million head which was the largest kill since the week ending January 26.

The cattle market story is one of tight supplies but now more moderating demand expectations. The hog story shows increasing supplies, both seasonally and compared with last year, and also now more moderate concerns over demand. Pork cutout values were down 2.71. Beef values were mixed with choice up .24 and select down .14. The CME Feeder Cattle Index is 243.32.

Livestock futures expected to have a mixed opening.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   -3 3/4     
  • Nov Beans   -9 3/4
  • Dec Wheat   -8 1/4
  • Dec Cattle  Steady-Lower
  • Dec Hogs    Steady-Firm
  • Dec Dlr     .02
  • Dec S&P   2.00
  • Nov Crude   -.01
  • Dec Gold    2.90

Technical 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

Markets Show Money Managers Anxiety

Oct 17, 2014

Good Morning! Paul Georgy with the early morning commentary for October 17, 2014 at 5:30 am.

Traders Focus: Money movement by fund managers is a major factor affecting commodity pricing.

Grain markets are higher. The US Dollar is quiet, however, equities and energies are sharply higher.

Slow soybean harvest and low crush usage during September are creating a lag in refilling the pipeline for the aggressive soymeal export demand. This is causing basis to be volatile in some areas as processors have meal commitments to make.

The rain is expected to move out of the Midwest today with several days of harvest weather ahead. News wires are starting to write about the dryness in northern Brazil which is stressing some of their early planted soybeans. More attention will be paid to Brazil weather in coming weeks.

Weekly export sales are to be released at 7:30 today. Trade is estimating corn sales at 800,000 to 2,000,000 MT, soybeans 700,000 MT, wheat 350,000 to 550,000 MT, soymeal at 200,000 to 400,000 mmt and soyoil 15,000 to 30,000 MT.

Ethanol production in the latest week was 885,000 barrels per day which is 2% higher than last year. This seems great as USDA’s whole-year goal is for no change, however, we have serious concerns about future production levels.

Macro Market news: traders will be waiting for the Housing Starts data later this morning.

The USDA reported broiler egg set in the latest week at 104% of a year earlier, down from 105% last week and compared to 102% in the week ended September 27th. Broiler chicks placed were 103% of a year earlier, up from 102% last week and compared to 102% two weeks ago.

Update - Morning Coffee Commentary:

Average beef prices in grocery-store advertisements continued to moderate this week, declining for a second consecutive week after a prolonged rise, according to the latest Wall Street Journal retail-meat survey. The 15-cut average for beef prices this week was $5.16 a pound, down from $5.77 a pound last week, but still lofty compared with the $4.59-a-pound average in the same period a year earlier. The five-cut average for pork rose after posting a decline a week ago. The average price was quoted at $3.79 a pound in the latest period, up 12 cents from $3.67 a pound last week, and well above the $2.74 a pound average at the same time last year. The average price for chicken in the latest week was up to $2.10 a pound, after last weeks decline to $2.04. The average a year-ago price was $1.91.

Beef values are weak with choice down 1.57 and select down .52. The CME Feeder Index is 243.81. Pork cutout values are down another 3.27.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   1 3/4     
  • Nov Beans   1 1/4
  • Dec Wheat   3 3/4
  • Dec Cattle  -1.22
  • Dec Hogs    -.92
  • Dec Dlr     -.06
  • Dec S&P   -26.50
  • Nov Crude   1.68
  • Dec Gold   -3.70

Technical 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

Crude Oil Slide Impacts Grains

Oct 16, 2014

Good Morning! Paul Georgy with the early morning commentary for October 16, 2014 at 5:30 am.

Traders Focus: Outside market volatility, Weather forecast for US harvest, and fund activity.

Grain markets are slightly lower as dollar rallies and crude oil retests the $80 level.

Weekly export sales data will be released tomorrow due to the recent government holiday.

Producers should return to the field today in the west and tomorrow in the eastern cornbelt. The weather forecast is suggesting open weather into early next week. Harvest is behind normal and producers are trying to deal with the wet conditions and the large crop in much of the Midwest.

With all the movement in the equities and financial markets on Wednesday the funds were estimated to have sold 12,000 contracts and 9,000 soybean contracts while be even in wheat.

Rosario Grain exchange is expecting farmers in Argentina to plant 20.6 to 20.9 million hectares this year up from 20.2 million hectares last season.

Strategie Grain Group raises EU wheat and corn production compared to last months estimate.

NOPA Crush data showed US Processors used the lowest amount of soybeans since August 2004. The tight ending stock and slow start to harvest were the reasons for low usage.

The 0.3% September retail sales drop, an October Empire State plunge to 6.17 from 27.54, and a lean 0.2% August business inventory rise combined caused economic analysts to trim our GDP forecasts to 2.6% for third quarter and to 3.0% for fourth quarter. This news caused investor panic around the world.

Update - Morning Coffee Commentary:

President Dilma Rousseff and her pro-business challenger Aecio Neves are still running neck and neck ahead of the Oct. 26 runoff to Brazil's presidential election, a new poll showed Neves gaining ground.

Hall Commodities LLP, a London-based $100 million hedge-fund firm run by Tony Hall and Arno Pilz, told clients it’s shutting down at the end of the month citing poor performance.

Pork production is expected to drop only 140 million pounds from the 4th to 1st quarter, which would match the smallest decline in 17 years.

Hogs have the same problem as beef on the demand side. This market had been artificially supported in the past three weeks on the expectation of very good consumer demand. However unlike beef, supplies are increasing more rapidly. Hogs are being hit by fund liquidation caused by nervousness in outside markets. Pork cutout value is down .24.

The economic news yesterday has exacerbated the problem concerning beef demand. Will consumers support the historically high beef values? Cash cattle traded at 163 to 164 which would be down 1.00 from previous week. Beef values were mixed with choice up 1.08 and select down .64. The CME Feeder Index is 244.04.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   -1 3/4     
  • Nov Beans   - 1/4
  • Dec Wheat - 3/4
  • Dec Cattle  .40
  • Dec Hogs    -1.12
  • Dec Dlr     .18
  • Dec S&P   -16.50
  • Nov Crude   -1.31
  • Dec Gold   -1.50

Technical 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

Does Crop Size Really Matter?

Oct 15, 2014

Good Morning! Paul Georgy with the early morning commentary for October 15, 2014 at 5:30 am.

Traders Focus: Harvest progress, improving weather in US, rains in Brazil, technical signals and money flow.

Grain markets are lower as dollar firms. Crude oil tests $80 level.

Harvest progress for soybeans was 40% compared to trade estimate of 31% and 5 year average of 53%. Corn harvest is 24% complete verses trade estimate of 25% and the 5 year average of 43%. Winter wheat planting is 1% higher than the 5 year average of 67%.

The northern states of ND, SD, MN, WI and IA had excellent harvest progress last week.

The December corn contract broke the 50 day moving average and tested the 62% retracement from the August highs. The next level of resistance should cross at 3.69 then 3.80 in the December contract.

November soybeans has technical resistance near 9.75 and then at 10.00. The 50 day average crosses at 9.94 today.

This wet weather could hang around for a few more days in the eastern cornbelt but by the weekend the Midwest should be drying out and harvest should get back to full swing. South American weather conditions are looking great for Argentina. Brazil has some dry areas but rain is on the way.

Traders are talking about the funds moving money out of crude oil and the stock market in to the corn and soybean complex. They appear to be buying historically cheap grains and selling the high priced livestock. On Tuesday funds bought an estimated net 10,000 corn contracts, 8,000 soybeans contracts and 4,000 soymeal contracts. They were estimated to be flat wheat and sold a net 3,000 soyoil contracts.

US soybean crush margins are phenomenal. For every one bushel that a soybean crushing plant buys from a farmer they are receiving an extra $2.01 over the soybean cost due to the current value of soyoil and soymeal sales (estimate based on futures prices with plant costs). The chart using futures is conservative as the IL Department of Ag shows using their cash price method $3.16 per bushel plus margin.

8:00 AM Update - Morning Commentary:

The National Oilseed Processors Association's monthly soybean crush data is scheduled for release at 11:00 am should show the U.S. crush for September at 107.553 million bushels. If realized, that would be the lightest crush since September 2009, when processors crushed 107.379 million bushels.

(Reuters) - Shortages of hogs and packing plant workers in Canada, exacerbated by recent government restrictions, may severely cut hog processing and pork exports, helping to keep North American retail pork prices near record highs.

The December Lean hog futures found support as the October contract expires due to its deep discount. Pork cutout was down 4.34.

Cattle traders are concerned about beef demand at the retail counter. Competitive meats are becoming more plentiful, however, cheaper gas prices should improve consumers spendable income. Packer margins are in the red as beef values have not kept up with live cattle prices.

Beef values were mixed with choice up 1.10 and select down .33. The CME Feeder Index is 243.49.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   -3 1/2     
  • Nov Beans   -3 3/4
  • Dec Wheat   -4 3/4
  • Dec Cattle  .60
  • Dec Hogs    -.95
  • Dec Dlr     .09
  • Dec S&P     -2.50
  • Nov Crude   -.98
  • Dec Gold   -11.00

Technical 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

Money Flow Supports Grains

Oct 14, 2014

Good Morning! Paul Georgy with the early morning commentary for October 14, 2014 at 4:30 am.

Traders Focus: US currency relationships, harvest delays, other commodity trends and short covering.

Grain futures are mixed as US dollar bounces off of lows. Energies are lower, metals are higher.

US DollarThe value of the US Dollar is having a big impact on the US export price competition. As an example, the US Dollar has gained 58% on the currency of Ukraine, 45% on Argentina and 24% on the Russian Ruble year over year. This is the reason our customers for corn and wheat have went elsewhere in recent months.

Corn exports sales are 1% above normal when we need a 9% increase to meet USDA’s goal.

Ethanol processors estimated profit margin is 3 to 5 cents per gallon. Weak corn prices have not been able to offset the drop in ethanol values resulting in the sharp profitability decline.

Allendale is looking ahead to the November WASDE report and we expect USDA to add 1 to 1.5 bpa to their corn yield just released. It is likely they will add .5 bpa to the soybean yield (Big crops keep getting bigger).

Harvest progress will be released today due to the Columbus Day Holiday in Washington. Trades early estimate is for 30% to 32% of soybeans harvested compared to 57% average. Corn harvest could be running 10% to 12% behind the normal of 38%.

Soybean imports by China during September came to 5.03 mmt. That was down from 6.03 mmt in August. This was a 7% increase over last year in the same period which ends their old crop marketing year, Oct 2013 – Sep 2014, with 70.366 mmt of imports. USDA was only expecting 69 mmt.

China will suspend weekly state soybean sales from this week as its harvest starts. The China National Grain and Oils Information Center (CNGOIC) said Beijing has started monitoring domestic soy prices and the suspension would help avoid interruption of domestic prices. The government has set a target price for soybeans this year and will subsidize soy farmers when domestic market prices fall below its target price.

Update - Morning Coffee:

 

This week’s hog slaughter will show another increase as Smithfield’s Tar Heel, NC plant, the biggest in the nation, will return to a full five day work week instead of the four day. Monday’s 427,000 head run is the biggest start to the week since March. Pork cutout was down 1.06 on Monday.

In cattle, the average basis (cash to futures relationship) during the last week in October normally has cash premium of 1.86 over futures. At Monday’s October futures price it would suggest cash cattle would be at 169 at the end of October. Last week cash cattle averaged 164. The trade is asking the question; Are futures too high or is cash too low? Beef values are firm with choice up .64 and select up 1.67. The CME Feeder Index is 242.58.

Markets as of 4:30 AM CDT                                                                     

  • Dec Corn   – 1/4      
  • Nov Beans   6 1/2
  • Dec Wheat   -3 3/4
  • Dec Cattle  -.15
  • Dec Hogs    -.22
  • Dec Dlr     .11
  • Dec S&P     .25
  • Nov Crude   -.99
  • Oct Gold    6.60

Technical 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

 

Better Harvest Weather Late In Week

Oct 13, 2014

Good Morning! Paul Georgy with the early morning commentary for October 13, 2014 at 5:30 am.

Traders Focus: After report analysis, money flow and outside market direction.

Grain futures are recovering after a lower opening as corn and soybeans are slightly higher and wheat just below unchanged.

Harvest progress will be released on Tuesday due to the Columbus Day Holiday in Washington. Trades early estimate is for 30% to 32% of soybeans harvested compared to 57% average. Corn harvest could be running 10% to 12% behind the normal of 38%.

The weather forecast is favorable for harvest in the US the last half of the week. South American weather is being watched closely as some areas are drier than normal. However, futures will not be getting much support from current forecast.

Market analysts are already expecting the USDA to add another 1 to 2 bushels to their 174.2 bpa on the November report. Traders also believe they will add at least another bushel to the soybean yield of 47.1.

Yields from harvest results continue to come in higher than expected. Although North central Iowa soybean yields are being reported less than average due to too much rain.

Managed futures reduced long positions in corn by 11,993 contracts to a net long position of 73,093. In soybeans they increased their short position by 9,243 contracts to 24,457. Money managers bought 3,331 contracts of wheat but are short 67,970.

Russian President Vladimir Putin has ordered approximately 17,600 troops to return home from Rostov, a southern region that borders east Ukraine, where pro-Russian insurgents have been battling government troops since April.

China is ready to allow 8 more companies to supply pork to Russia following Russia's embargo on products from the EU, the U.S., Canada and Australia.

8:00 AM Update:

 

"If foreign growth is weaker than anticipated, the consequences for the U.S. economy could lead the Fed to remove accommodation more slowly than otherwise," said a Fed official over the weekend. His comment is affecting investor confidence in the US Dollar.

The U.S. government on Friday raised its pork production forecast for the calendar year ending September 2015 that shows pork surpassing beef for the first time since 1952. In the monthly World Agriculture Supply and Demand Estimates (WASDE), the U.S. Department of Agriculture raised the commercial pork production forecast for 2015 to 23.9 billion pounds.

The pork numbers are a 2.6 percent increase revision from last month's data, a 5.0 percent production increase over 2014. USDA projected 2015 beef output at 23.8 billion pounds, with a marginal upward revision from the September report and a 2.3 percent decline versus last year's production.

The December contracts of cattle and hogs are near levels that should find technical support.

Beef values were mixed on Friday with choice up .61 and select down .11. The CME Feeder Index is 239.35. Pork cutout values were down .82.

Early calls would have to be steady-lower for the opening.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   1/4      
  • Nov Beans   2 1/4
  • Dec Wheat   -1 3/4
  • Oct Cattle  Steady-Lower
  • Oct Hogs    Steady-Lower
  • Dec Dlr     -.40
  • Dec S&P     4.00
  • Nov Crude   -1.15
  • Oct Gold    6.50
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

Risk Off Attitude On Report Day

Oct 10, 2014

Good Morning! Paul Georgy with the early morning commentary for October 10, 2014 at 5:30 am.

Traders Focus: USDA Reports at 11:00 AM and outside market selling.

Grain futures are lower as crude oil sets new contract lows and the equity markets extend sell-off.

The data released by USDA later this morning will likely have something for everybody. Some of the key points are:

  • The average yield for corn and soybeans
  • Total US production of corn and soybeans for the 2014/15 crop year
  • Adjustments to planted and harvested acres in corn and soybeans
  • How the USDA adjusts usage in the 2013/14 marketing year for soybeans to arrive at a 92 million bushel carryover
  • Total export projections for 2014/15 in soybeans
  • Soybean and corn production in southern hemisphere
  • Spring wheat production
  • World wheat production and ending stocks

Allendale is looking for the soybean yield to come in at 48 bpa. It should be noted that the average increase from Sept to October report is 4.4% when they raise yields which would suggest the yield could come in at 48.7. The average trade guess for bean yields is 47.589 bpa. Call your Allendale Representative to discuss last minute strategies going into the report.

Egypt's General Authority for Supply Commodities (GASC) set a tender on Thursday to buy an unspecified amount of wheat from global suppliers for shipment from Nov. 11 to 20.

(Reuters) - The European Commission has raided ethanol companies in two EU countries as part of investigations into alleged price-fixing. The Commission, which acts as the competition watchdog in the 28-member bloc, said on Thursday it had concerns that companies may have colluded in submitting price information used to set industry benchmarks for trading in Europe and globally.

Russia was the top buyer of Brazilian beef last month, purchasing 35,122 tonnes worth $153 million, Abiec said in a statement. That was an increase of 13-percent in volume to Russia from a year earlier and 25-percent in value.

Update -

 

After several days of rallying livestock, traders went to bank some profits and found willing buyers were limited yesterday especially in the cattle complex. Beef values have risen to levels that packers could pay up for cattle this week. However the sharp reversal in live cattle and feeder cattle futures may open the feedlot gates today, we have heard of cash trading at $164 in KS. Choice beef is up .51 and select is up .37. The CME Feeder Cattle Index is 238.72.

Technical traders will be concerned about a lower close today after large outside day range on Thursday. Key technical support in the December cattle is 165.05.

The strong uptrend in the cash hog index is providing underlying support to lean hog futures. The discount of October and December contracts have traders bull spreading. Traders believe there are greater hog supplies on the horizon but are concerned about the strong product demand. Pork cutout is down 1.09 but packer margins are estimated at over $100 per head on integrated operations.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   -3         
  • Nov Beans   9 1/4
  • Dec Wheat   -2 1/4
  • Oct Cattle  .67
  • Oct Hogs    -.02
  • Dec Dlr     .16
  • Dec S&P     -11.50
  • Nov Crude   -1.25
  • Oct Gold   -7.60
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

Dollar Drops on Feds Concern

Oct 09, 2014

Good Morning! Paul Georgy with the early morning commentary for October 9, 2014 at 5:30 am.

Grain futures are mixed as dollar sees further correction.

Traders Focus: USDA reports and outside market reactions to Fed Policy.

Weekly export sales will be released this morning at 7:30. Trade estimates are: corn 550,000 to 750,000 tonnes, soybeans 500,000 to 900,000 tonnes and wheat 400,000 to 600,000 tonnes (results will be posted here after 8:00 AM).

USDA’s Monthly Supply and Demand report tomorrow will give us a new fundamental base from which to trade.

FOMC Meeting Minutes raised concern over the strength in the US Dollar and its impact on world economy causing a sell-off in the US currency. This reaction is providing support to soybeans and livestock futures

CONAB will issue its first projection of next year’s Brazilian corn and soybean production later this morning.

Lanworth, a unit of Thomson Reuters, raised its U.S. corn yield estimate to 175.5 bushels per acre from 174.9 on Sept. 29. The firm pegged U.S. corn production at 14.647 billion bushels, above its previous forecast of 14.596 billion, and a record high if realized.

Ethanol production rose last week. We should expect this to continue as new crop supplies surge into the pipeline and cash prices fall. Production is running 6% higher than last year due to the strong September pace. USDA expects the year to end with no change compared to 2013/14.

The fall in ethanol prices has more than offset the falling corn prices. Allendale’s Plant Profitability Model shows a net loss now that corn is off its lows. Additionally, we remain concerned about crude prices which are at the lowest level since June 2012.

8:00 AM Update:

 

Argentina will use “all the tools” at its disposal to end financial speculation by grain producers and exporters, Cabinet chief Jorge Capitanich said on Wednesday. Soy producers in Argentina, the world’s No. 3 soybean exporter, have been holding onto the oilseed in view of low global prices and financial uncertainty at home, depriving the cash-strapped government of critical tax revenue from export charges.

Reports of Canadian idle farrowing barns that were taken out of production three years ago are starting to come back into production.

The World Organization for Animal Health said that an animal-feed supplement suspected of spreading a deadly pig virus is not likely to transmit the disease if manufacturers follow proper safety measures.

Cash hogs have traded lower in six of the past eight days. Cash pork has been down in the past two days. The market may finally be reacting to the higher supplies hitting the market. This week’s kill is about 20,000 head over last week. Pork cutout values are down .22.

Cattle futures continue to move higher in anticipation of firmer cash prices. Trade is now thinking cash cattle could trade this week at $164-$165 in the south and $254-$256 in the north. Beef product strength has increased packer margin to near breakeven. Choice is up 2.67 and select is up 2.22. The CME Feeder Cattle Index is 238.01.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   -1 1/4     
  • Nov Beans   3 1/4
  • Dec Wheat   -6 1/2
  • Oct Cattle  .60
  • Oct Hogs    .87
  • Dec Dlr     -.21
  • Dec S&P     4.25
  • Nov Crude   -.04
  • Oct Gold    19.60
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 We See More Fund Short Covering?

Oct 08, 2014

Good Morning! Paul Georgy with the early morning commentary for October 8, 2014 at 4:30 am.

Grain futures are mostly steady ahead of reports.

Traders Focus: USDA report, fund activity, direction of the US Dollar and weather forecast for the weekend in US and Brazil.

Trade is beginning to hone in on dry conditions in Brazil. We had the same concerns last year at this time and went on to produce a record crop in Brazil. US weather has heavy moisture falling across the cornbelt starting later today through next week. The amounts are yet to be determined and will be a concern to soybean harvesting.

The Chinese are back from a week holiday which could bring more volatility ahead of Friday’s report.

Lack of export demand and a large harvest has river basis falling.

Funds were estimated to have bought a net 8,000 wheat contracts, 13,000 corn contracts, and were even in soybeans on Tuesday.

U of IL - “Weekly estimates from EIA indicate that ethanol production in September 2014 was about 6.5 percent larger than in September 2013. The large increase, however, reflects the relatively low level of production in September 2013 so that rate of expansion will not likely be maintained.”

US Attaché comments on Argentina: Production costs have increased and commodity prices are down, but farmers view production as less a function of these variables and more a function of the exchange rate and government export policies. With this logic, farmers are not producing soybeans per se but rather hedging as best they can on future currency devaluation(s).

8:00 AM Update:

Eco calendar has the September FOMC Meeting minutes being released today. Trade will be looking for any indication when the Fed will cease QE.

Hog supplies are building and weights are heavier than a year ago. Wholesale pork since mid-September is up $15. The question is who is buying pork? August pork exports were 13% under last year. With the continued advancement in the value of the US dollar, which hurts exports, we doubt that the export situation has improved which leads us directly to the US consumer. Has the lower price of pork compared to beef caused the consumer demand to pick up sharply over the past three weeks? Gas pump prices have declined in recent weeks which are providing more dollars for food. Pork cutout value is down .70.

Beef product values jump again on Tuesday with choice up 2.74 and select up 3.09. The CME Feeder Index is 237.57.

Markets as of 4:30 AM CDT                                                                     

  • Dec Corn   -1         
  • Nov Beans   2
  • Dec Wheat   1/2
  • Oct Cattle  .15
  • Oct Hogs    .07
  • Dec Dlr     .06
  • Dec S&P     .50
  • Nov Crude   -1.01
  • Oct Gold    6.20
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

What is Cheap to Importers of US Grains?

Sep 22, 2014

Good Morning! Paul Georgy with the early morning commentary for September 22, 2014 at 5:30 am.

Grain futures are mostly lower as corn and soybeans set new lows and wheat finds support on Ukraine’s quality issues.

Traders Focus: USDA Crop Progress report this afternoon, weather forecast a bit warmer, September 30th Stocks report, and waiting for new sales announcements from USDA due to low prices.

South American Weather, Grain Stocks, and Small Grains Summary are topics that will be discussed on Tuesday, September 23rd at 8:00 PM CDT at the next Allendale Ag leaders Webinar, Sign up Now!

Harvest numbers should improve on this afternoons report in corn to 15% and soybeans to 3% to 4%.

Weather forecast looks warmer and drier which could allow for dry down and further harvest progress.

China buys 200,000 tonnes of corn from Bulgaria due to price and ongoing GMO problems with US corn. They also bought corn from Ukraine last month.

Reports out of Ukraine suggests the quality of their wheat crop will produce 13% less milling-quality wheat than last year.

Managed Money Funds increased long positions in corn by 5,579 to 87,045, they increased short positions in wheat by 5,380 to a net short position of 67,266 and they were net buyers of 6,057 soybeans to be net short 33,729.

Other Analysts are adjusting their crop yield estimates: Informa puts U.S. 2014 corn production at 14.024 billion bu based on yield of 171.8 bu/acre, they put U.S. 2014 soybean crop at 3.857 billion bu based on yield of 46.5 bu/acre.

Pro Farmer confirms it has raised its estimate of the U.S. corn yield to 172 bu/acre from 169.3 on Aug. 22, after its annual crop tour. They trimmed their corn crop estimate to 14.063 billion bushels from 14.093 in August. For soybeans, they raised production estimate to 3.884 billion from 3.812 billion in August on a yield of 47.0 bu/acre compared to 45.35 in August.

Financial markets will be looking for a reaction to the outcome of the weekend G-20 meeting of finance ministers and central bankers in Australia. President Obama will be in New York City this week on Thursday for the UN Climate Summit and various other meetings. Congress has now adjourned until after the November 4 elections.

Cattle-on-Feed report was very slightly bearish for February and April. The placement number was 97.1%, while analysts were expecting August placements at 96.0% of last year. Beef value continues to be pressured by slow retail demand. Choice was down 1.17 and select was down 2.48.

Wall Street Journal retail meat survey showed the 15-cut average for beef prices last week was $5.73 a pound, up from $5.70 a pound last week and higher than the $4.45-a-pound average in the same period a year earlier. The five-cut average for pork prices was $3.37 a pound last week, up 2 cents from an average of $3.35 a pound in the previous week. A year earlier it was $2.99 a pound. The two-cut average for chicken prices declined, falling to less than $2 a pound after a one-week gain last week. The average in the latest week was $1.93 a pound, compared with last week's average of $2.29 a pound and $2.03 a pound in the same period last year.

Lean hog futures were sparked by rumor china had made a large purchase of pork which pushed prices into technical buy points. There has been no confirmation as of yet which could cause for a lower opening. Livestock futures called lower for the opening.

Markets as of 5:30 AM CDT                                                                     

  • Dec Corn   -1 1/2     
  • Nov Beans   -14 1/2
  • Dec Wheat   5
  • Oct Cattle  Lower
  • Oct Hogs    Lower
  • Dec Dlr     -.04
  • Dec S&P     -6.50
  • Oct Crude   -.19
  • Oct Gold   -2.80

Technical 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 Frost Put Bears To Sleep?

Sep 12, 2014

Good Morning! Paul Georgy with the early morning commentary for September 12, 2014 at 5:30 am.

Grain futures are mixed on short covering and waiting for official low temperature reports.

Traders Focus for today: Trade analysis of yesterday’s USDA Report, temperature reports from western cornbelt and social media’s pictures of crop damage.

Hat’s off! To the farmers that participated in the Allendale Yield Survey and the staff that compiled and processed the data. The USDA's result for corn yield was 171.7 bushels per acre (bpa) and the Allendale estimate was 171.9 bpa. USDA's Soybean yield was 46.6 bpa and the Allendale survey September estimate was 46.4 bpa. Thanks to all for an outstanding job.

Daily technical chart for October Hogs. Click for larger view.

Get all the weather info you need by checking with Ryan Martin’s comments at www.Allendale-Inc.com.The weather forecast is for late October temps to move across the northern Midwest over the next 48 hours. We should be seeing the coldest temps over the next hour. Expect to see pictures on social media reporting damage from frost. Will the damage be widespread enough to activate an extended rally in corn and soybeans?

The major take away from yesterday’s supply and demand report is that it is likely the USDA will increase yields and production into the January 2015 report.

Harvest reports from customers: Lee County IA producer first field on sand averaged 200 and another producer on first field harvested 220. Most corn yields are running 20 to 40 above average.

Moultrie County IL harvested 251 acres that average 220 dry. Producer was a little disappointed with the results.
Soybean harvest in Central IN has resulted in 75 to 80 bpa which is well above normal.

Algeria bought 400,000 tonnes of EU origin wheat and France has bought 100,000 tonnes of milling from Germany.

Update - Morning Coffee Commentary:

 

Cash cattle are establishing trade at steady prices with last week. Futures trader’s ideas of $2.00 to $3.00 higher are now waning. Beef values continue to find resistance as wholesalers have inventory to clean up and retailers do not want extra inventory at current prices. Choice beef was up .08 and select down 1.83. The CME Feeder Index is 226.98.

Chart watchers should be aware of the potential double top in October cattle which a weak weekly close could accelerate selling pressure.

Lean hog futures had spreaders trading volume impact prices again on Thursday. Hog supplies are trending higher with weights still running 10 to 12 pounds above a year ago. Pork cutout values are up 1.38. High prices of competitive meats are supporting pork at the retail counter. Grocery stores are also accumulating pork in preparation for October "Pork Month".

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   - 3/4     
  • Nov Beans   +3
  • Dec Wheat   -4 3/4
  • Oct Cattle  -.02
  • Oct Hogs    -1.10
  • Dec Dlr     -.02
  • Dec S&P     -.25
  • Oct Crude   +.50
  • Oct Gold   -1.30

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 Rally After The Report?

Sep 11, 2014

Good Morning! Paul Georgy with the early morning commentary for September 11, 2014 at 5:30 am.

Grain futures are lower as traders prepare for a bearish report. Results from today’s USDA Supply and Demand report are available here.

Traders Focus for today: Export sale data at 7:30am, USDA Supply and Demand report at 11:00 am with an eye on yield and old crop ending stocks. After the report the focus will switch to frost fears over the next 3 days.

Trade estimates for weekly export sales last week: wheat 250,000 to 450,000 mt, corn 450,000 to 650,000 mt, soybeans 750,000 to 1,000,000 mt, soymeal 100,000 to 200,000 mt and soyoil 0 to 20,000 mt.

Update - Morning Coffee Commentary

 

The weather forecast and actual temps will determine yield loss and play into market action shortly after the USDA report. Make sure to read Allendale’s Meteorologist Ryan Martin’s Blog this morning and listen to his audio broadcast at midday to stay in touch with weather probabilities.

Our Friends at World Weather Inc. have the following thoughts: The surge of cold expected in the Canadian Prairies, northern Plains and upper Midwest Thursday into Sunday will result in widespread freezes in in Canada. Most of the crop damaging cold will only affect areas outside of key grain and oilseed areas in the U.S. Midwest. Very few corn or soybean production areas will be threatened by temperatures near or below 28 degrees Fahrenheit and that should minimize the potential for production losses.

A study performed by Allendale’s Research suggests the USDA will not give us the full yield increase on the September report and use this report as a stepping stone to the final number in January.

Trade Average guess:

                      Corn                  Soybeans                                                                          

            Production     Yield     Production    Yield

Avg estimate    14.288     170.7          3.883     46.2

U.S. ending stocks     2013/14               

                    Corn     Soy       

Avg estimate       1.191   0.136  

U.S. ending stocks   2014/15     

              Wheat        Corn         Soy

Avg estimate  0.667       2.012       0.453

We'll have a full analyis  of the report after it's release at 11:00 am CDT. 

An observation which you must be aware of is that the grain markets are oversold technically and market psychology is bearish going into an expected bearish report. Will the concern over frost give us enough reason for a short covering rally? Talk to your Allendale Brokers about strategies to protect hedges.

Chinese soybean crush margins are running at a 2 year low while US crushers are profitable and are looking for soybeans to fill the gap before harvest.

Ethanol production last week averaged 927,000 bpd vs 921,000 bpd the previous week. Cheap corn and strong crush margins drive processor incentive to produce more ethanol.

The Rosario exchange estimated farmers in Argentina plant 3.7 million hectares (9.1 million acres) of corn, down 700,000 or 16 % from the 2013/14 season due to high inflation pushing up production costs.

Light cattle trade in cash market at steady with last week. Cutout values have not kept up with fed cattle values putting packer margins at near breakeven. Tight supplies in feedlots are the driver and should provide support to nearby futures. Beef values are mixed with choice up .38 and select down .50. The CME Feeder Index is 226.38.

Spreaders dominated the trading volume in the lean hog futures on Wednesday. It was thought to have been liquidation of bear spreads by a few large players which drove deferred contracts to near limit down. Hog supplies should trend higher into fall with weights still running 10 to 12 pounds above a year ago. Pork cutout values are up .87.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   -1 3/4    
  • Nov Beans   -3 3/6
  • Dec Wheat   -3 1/4
  • Oct Cattle  -.30
  • Oct Hogs    -.07
  • Dec Dlr     -.04
  • Dec S&P     -3.50
  • Oct Crude   -.60
  • Oct Gold   +.30

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

How Many Bushels Could Be Lost To Frost This Weekend?

Sep 10, 2014

 Good Morning! Paul Georgy with the early morning commentary for September 10, 2014 at 5:30 am.

Grain futures are mixed in a narrow trading range overnight.

Traders Focus for today: USDA S+D Report Thursday at 11:00, forecasts verses actual temps for this weekend and money flow from outside influences.

Thanks to all who attend the Allendale Ag Leaders Webinar last night. If you were unable to listen in live, the recording is available now, here.

The discussion on frost and its impact on production were very informative and specific. Ryan Martin discussed the factors affecting a frost formation: cloud cover, soil temperatures, wind speed, moisture and vegetation/heat transfer. Listen to last evening’s webinar and get all the details. Bottom line he is expecting cold air moving in to upper Midwest but not expecting very much damage to crops. Rich Nelson addressed the potential corn production loss and the impact on soybeans.

Update - Morning Coffee Commentary:

 

The USDA National Yield for corn and soybeans will be important in projecting overall supply and ending stocks. The study performed by Allendale’s Research suggests the USDA will not give us the full yield increase on the September report and use this report as a stepping stone to the final number in January.

Trade Average guess:              Corn                       Soybean

                        Production      Yield       Production      Yield

Average trade estimate      14.288    170.743            3.883     46.293

Trade is expecting an increase in ending stocks for both corn and soybeans for 2014/15 marketing year compared to USDA’s August estimate.

Allendale’s customer early harvest yields are coming in: east central IN, first 24 acres, 311 dry bushels per acre. Central IL short season corn averaged 241 bushel per acre, 23.5 to 28.6% moisture. You can forward any harvest results to me at pgeorgy@allendale-inc.com.

Brazilian farmers have equipment ready to go to the field on September 15. This the first day they are allowed to plant soybeans. They are preparing for a third consecutive year of record soybean production. An early start to soybean planting gives them the opportunity to double crop corn after harvest.

Grain warehouse workers in Argentina will strike for 24 hour starting today. These stoppages will slowdown loadings at the busiest time of the year.

The stronger US Dollar is driving investors out of commodities. The CRB Index set new lows yesterday. Watch for a change in investor attitude which could provide support to grains even with a record crop.

Cash cattle are expected to trade higher this week. Futures prices continue to work higher as tight market ready supplies and tight feeder cattle supplies support buying frenzy. Demand for light weight calves has been aggressive with corn prices dropping. Beef values are not keeping up with cash cattle. Choice beef is down .31 and select is up .84. The CME Feeder Index is 225.95.

The recent drop in lean hogs and pork product is providing a benefit as retailers feature the lower priced meat. Pork cutout values are up 1.74. Larger supplies of market ready hogs are expected to hit the market as we move into October. However, the overall demand for meat has been good due to some exporter and retailer need of inventory.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   - 3/4     
  • Nov Beans   +1
  • Dec Wheat   -2 1/2
  • Oct Cattle  +1.65
  • Oct Hogs    +.27
  • Dec Dlr     -.11
  • Dec S&P     +.50
  • Oct Crude   +.15
  • Oct Gold   +5.70

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

Traders Jittery Over Potential Frost

Sep 09, 2014

Good Morning! Paul Georgy with the early morning commentary for September 9, 2014 at 4:30 am.

Grain futures are lower as traders wait for USDA’s September Supply and Demand report on Thursday.

Traders Focus for today: Upcoming USDA report, price movement of the US Dollar Index, any changes in frost forecast and the oversold condition based on technical indicators.

Tonight we’ll discuss the September 11th USDA Supply & Demand report, taking into account the newest corn and soybean yield projections from our yield survey. We’ll also have meteorologist Ryan Martin on hand to discuss frost potential and harvest delays. Register Here.

Observations from the Allendale Strategy Session yesterday afternoon:

—The September USDA report is a stepping stone for increasing yields. In the past 20 years the USDA increase yields by 2% or more only twice. The trade average estimate at 170.7 or a 2% increase.

—The export sales of new crop corn on the books is close to average and not record sales which would be expected with a record crop.

—Old crop soybean exports and crush are seen 20 and 10 million higher than USDA’s August report respectively. We do not expect USDA to make those changes on this report. It is likely they hold from adjusting the old crop balance sheet until the Sep 30 Grain Stocks report. That report will likely show a higher revision for the 2013 production. For new crop the 25th annual survey suggested yields of 46.4 for the September report.

You can get more details by contacting your Allendale Broker and find out the similar year projection date of the seasonal lows in corn.

Update - Morning Coffee Commentary:

 

Corn ratings were unchanged at 74% good to excellent. These are incredible conditions for this time of year (best since 1994). Dent increased from 35% to now 53% which is just behind the five year average of 59%.

Soybean ratings were unchanged at 72% good to excellent. There are only two other years, in the 28 year ratings history, with better conditions for this week. Soybeans dropping leaves has been seen on 5% of ground which is near the 7% five year average.

Wheat, corn and soybeans shipment inspections on Monday were lager than trade was expecting.

Due to the increase in soybean acres in Brazil local trade groups are estimating this year soy production at 95.1 mmt compared to USDA at 91.0 mmt.

(Reuters) U.S. policymakers and bankers had feared a repeat of the 1980’s break in farmland values this year, but instead, U.S. farmland prices are already up 8 percent as of Aug. 1 according to the U.S. Department of Agriculture (USDA).

Livestock markets are very choppy as tight supplies of market ready cattle and feeder cattle support cash markets. Product values of beef try to keep up with last weeks rally in cash cattle. Choice is up 2.72 and select is up 1.59. The CME Feeder Index is 225.41.

Russia has eased its ban on imports of some U.S. meat products, including chicken and turkey liver, heart and gizzards and pork liver, heart, kidneys and pork fat, according to USDA’s Food Safety and Inspection Service. Pork cutout values are up .38.

Markets as of 4:30 AM CDT                                                                    

  • Dec Corn   – 3/4     
  • Nov Beans   -2 1/2
  • Dec Wheat   -2 1/2
  • Oct Cattle  +.50
  • Oct Hogs    +.42
  • Dec Dlr     +.14
  • Dec S&P     -1.75
  • Oct Crude   +.55
  • Oct Gold   +2.30

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

Major News Event Needed To Change Trend

Sep 08, 2014

Good Morning! Paul Georgy with the early morning commentary at 5:30 am.

Grain futures are mixed as short covering provides support.

Traders Focus for this week: The USDA crop conditions report this afternoon, frost jitters for late this week, USDA supply and demand report on Thursday, cease-fire in Ukraine, possibility of further sanctions against Russia and economic data affecting US dollar index.

File you early yield results by emailing me at pgeorgy@allendale-inc.com.

The Managed Money Funds increased longs in corn by 12,523 while increasing short positions in soybeans by 3,634 and in wheat by 5,062. The chart below is an example of the COT charts available in Allendale Advisory Report.

Crop conditions this afternoon are expected to be steady to better which would be record highs for this week in September. With the crop beginning to mature the seasonal tendency would lean toward lower good/excellent numbers.

Going into Thursday’s September Supply and Demand Report has traders focused on national average yield for corn and soybeans.

Check Allendale Meteorologist Ryan Martin’s weather comments and follow his chances of frost. The models are pushing the chance of cold weather further north and putting more rain in the forecast for the northern cornbelt. Traders are worried about the crop maturing in time for a high quality harvest. Listen in to our webinar tomorrow night about yields, the Supply and Demand Report, and frost potential. This event is no cost to you – register here.

Update - Morning Coffee Commentary:

 

NATO estimates more than 3,000 Russian troops with tanks are inside Ukraine and their numbers are growing, and NATO supreme military commander Philip Breedlove said Russian President Putin’s peace offer "lacks credibility" and is a ploy to take control over rebel-held Ukrainian territory.

Mid-Autumn Festival in China today therefore all of their markets are closed. China’s August CPI report on Wednesday night is expected to ease to +2.2% from +2.3% in July.

US Congress gets back to work in Washington with the job of keeping the government open past the October 1 deadline.

Early harvest yields are rolling in out of the southern cornbelt. Some yield descriptions are: this is a whooper crop, have never seen anything like this in my lifetime and dry bushels are 45 bushels higher than average.

The National Animal Health Laboratory Network (NAHLN) reports 63 positive accessions out of 731 tested at nine veterinary diagnostic labs for the week ending 30 August, according to the American Association of Swine Veterinarians (AASV). For the most recent week (week of 23 August), the state reporting the most new positive tests was Iowa with 11, followed by Minnesota with nine and Illinois with seven. Also reporting one or more positive results were California, Indiana, Kansas, Michigan, Missouri, North Carolina, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Wisconsin and Wyoming.

Beef values were firm on Friday with choice up .55 and select up 1.56. The CME Feeder Index is 224.28. Pork cutout values are down .32. Livestock futures are expected to open steady lower but look for two sided trade.

Markets as of 5:30 AM CDT

  • Dec Corn   -2 1/4    
  • Nov Beans   +1 1/4
  • Dec Wheat   -2 3/4
  • Oct Cattle  Steady-Lower
  • Oct Hogs    Steady-Lower
  • Sep Dlr     +.19
  • Sep S&P     -3.50
  • Oct Crude   -.77
  • Oct Gold   +.01

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

Grains Struggle To Rally As Record Harvest Starts

Sep 05, 2014

Good Morning! Paul Georgy with the early morning commentary for September 5, 2014 at 5:30 am.

Grain futures are higher on short covering after post-holiday selloff. Nearby contracts in livestock add more strength.

Traders Focus Today: Direction of the US Dollar, oversold condition of grain futures, Ukraine/Russia talks and next week’s USDA reports.

We have been drawing attention to the US dollar Index in recent days. Yesterday’s strength in the dollar was triggered by the European Central Bank interest rate cut from a negative .1% to negative .2%. The following chart depicts the dollar’s negative correlation to the CRB Index (or commodity prices).

090414-us dollar and commodity prices

The USDA weekly export sales report will be released later this morning at 7:30.The following trade estimate have be gather by Reuters.

                          2013-14                 2014-15

Wheat                        N/A          250,000-450,000

Corn           (-100,000)-100,000         550,000-750,000

Soybeans             (-150,000)-0       900,000-1,100,000

Soymeal                 0-100,000         100,000-300,000

Soyoil            (-5,000)-10,000                0-15,000

The weather models have been disagreeing on frost potential for mid next week. However, the use of the frost word is not enough to support the grain futures. The rains across the Midwest are slowing maturity and could cause some harvest problems later in the season.

China’s cornbelt has received rain easing crop stress from drought. They sold 27% of the corn offered at this week’s state auction.

Yield reports are coming in are much bigger than normal and have many producers in awe about the size of their crops. If you are harvesting corn, beans or wheat and want to share your results you can email them to me at pgeorgy@allendale-inc.com.

EIA ethanol production remains strong coming in at 921,000 barrels per day compared to 913,000 last week.

Update - Morning Coffee Commentary:

Cash soybeans have been extremely choppy as processors need soybeans on any given day. Decatur, IL beans basis went from 3.50 over Nov to 2.50 over Nov late yesterday.

Ukraine/Russia peace talks continues while NATO leaders prepare to force Russia back to its borders.

Economic calendar for today: Retail Sales and Business Inventory at 7:30.

Livestock futures have been extremely volatile in recent session. There are many reasons influencing this movement such as: the strength in dollar which limits export competitiveness, the release of the vaccine for PEDv will increase pig production for deferred contracts and current tight supplies of market ready cattle and hogs provide support for October contracts.

Average beef prices in weekly grocery-store advertisements showed 15-cut average for beef prices this week was $5.51 a pound, up from $5.39 a pound last week and well above the $4.41-per-pound average in the same period a year earlier.

The five-cut average for pork prices dropped to $3.24 a pound from $3.54 last week, pushed lower by discounts on bacon in cities like Los Angeles and Kansas City, Mo. The five-cut pork average price was $3.01 a pound.

Beef values were higher with choice up .54 and select up .75. The CME Feeder Index is 222.91.

Pork cutout values are up 1.89.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   +1 1/2    
  • Nov Beans   +3 1/4
  • Dec Wheat   +4
  • Oct Cattle  +1.20
  • Oct Hogs    +1.35
  • Sep Dlr     -.05
  • Sep S&P     -7.50
  • Oct Crude   +.24
  • Oct Gold   -.50

Chart of the Day

daily chart

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Can This Market Rally Before Harvest?

Sep 04, 2014

Good Morning! Paul Georgy with the early morning commentary at 5:30 am.

Grain futures are mixed led by short covering in corn and soybeans. Wheat remains under pressure as the Ukrainian situation cools-off.

Traders Focus Today: More yield estimates, actual harvest results, and changes in weather forecast.

The USDA weekly export sales report will be released tomorrow morning at 7:30 due to Monday’s holiday.

Informa is expected to release their yield and production estimates today at 10:30.

Crop forecaster Lanworth on Wednesday lowered its forecast for the U.S. 2014 corn yield to 173.7 bushels per acre (bpa) from 174.5 previously. For soybeans, they left their forecast at 46.7 bpa and estimated soybean production at 3.852 billion bushels, down from 3.855 billion previously.

Everyone should have received the results of Allendale’s 25 Annual Yield Survey by email yesterday morning. Thank you for all your help on making this year’s survey a success.

Update - Morning Coffee Commentary:

Chinese Delegation will be in Chicago next week. Trade expects them to sign a purchase agreement for soybeans as they have done in the past on their annual visits.

Funds were estimated to be sellers of 8,000 wheat, 10,000 corn, 5,000 soybean, 4,000 soymeal and 2,000 soyoil contracts on Wednesday.

The world’s largest refinery that will take corn residue and turn it into ethanol began production in Emmetsburg, IA. There were dignitaries from around the world present at the opening ceremonies yesterday. This $250 million project is a venture between POET and a Netherlands bio-tech company. The goal is to produce 25 million gallons of ethanol a year.

Argentina’s AFIP is requiring farmers to provide the location where they are storing soybeans, and corn. There are still about 27 mmt of soybeans from this year’s record harvest being held by farmers in silo bags. Farmers are worried that GPS data will be used to force them to sell grains as government needs revenue from exports.

Zoetis Inc., the world's largest animal-health company, has received a conditional license from the U.S. Agriculture Department for its vaccine against a deadly piglet virus PEDv and will begin selling it this month in the United States.

Pork product values are getting cheap enough for retailers to feature pork again. Seasonal tendencies are for hog futures to rally in September. However, increasing slaughter numbers could keep a lid on prices. Pork cutout values are down .85.

Cash cattle are set to trade steady to higher this week. Tight supplies of feeder cattle and cheap grain prices are providing some support. Beef values are stronger with choice up 1.47 and select up .11. The CME Feeder Index is 221.35.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   + 3/4     
  • Nov Beans   - 1/2
  • Dec Wheat   -3 1/4
  • Oct Cattle  +2.65
  • Oct Hogs    +1.35
  • Sep Dlr     +.02
  • Sep S&P     +2.75
  • Oct Crude   -.40
  • Oct Gold   +2.90

Chart of the Day

daily chart

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Soybean Conditions Improve Against Seasonal Odds

Sep 03, 2014

Good Morning! Paul Georgy with the early morning commentary for September 3, 2014 at 5:30 am.

Grain futures are lower due to counter seasonal crop conditions results.

Traders Focus Today: Weather forecasts, World political events, Allendale’s Survey Results and technical support/resistance points.

Allendale's 25th Annual Yield Survey results are available now. Get the results here.

082914-aldl survey historyThe track record of this survey has been very close to the final USDA number.

Crop conditions for soybeans improved 2% last week to 72% good/excellent. The seasonal trend is for conditions to be declining at this time of year as crops mature. 95% of the soybean crop is setting pods which is in line with the 5 year average of 95%. 5% of the crop is dropping leaves compared to 7% average.

The huge soybean yields of 65-90 bu/acre coming out of the delta have some in the trade talking about some enormous national average yields.

The trade was looking for corn conditions to decline due to normal seasonal maturation. However the USDA said the corn crop improved by 1% to 74% good/excellent vs. 73% last week. Corn in the dough stage was 90% vs. 89% on average while corn dented was at 53% vs. 59% and corn mature was at 8% vs. 16%. The concern of frost will be on the traders mind for a few more weeks.

The only real threat of frost/freeze is seen in the middle of the month in northern regions of the Canadian growing regions. However the models disagree with that forecast as the GFS is the colder model calling for a freeze north of a line from Edmonton to just north of the northern edge of Lake Winnipeg. The Euro keeps the freezing temps a good 200 miles farther north.

The Russian/Ukrainian situation is being closely monitored by the trade. There have been no shipping disruptions yet as both Ukraine and Russia are exporting as fast as they can to move grain to the ports. The Russian separatists did seize a port town over the long weekend. Look for volatility to continue even with bearish fundamental news for wheat supplies.

"The investment binge in U.S. agriculture funds has ended as record crops and the promise of improving meat supplies send prices plunging. After taking in more money than precious metals or energy funds during the first five months of 2014, exchange-traded products backed by agriculture had a net outflow for the year of $57.7 million as of Aug. 29, down 2.9 percent, data compiled by Bloomberg show."

The US Dollar is slightly lower after yesterday’s sharp rally. Factory Orders data will be released at 9:00 am.

Update - Morning Coffee Commentary:

Cattle show lists are estimated to be slightly higher than last week. Early calls for the cash cattle market this week is steady higher. Currently offers are 158 to 159 with no packer bids. Beef values continue on their slide with choice down .19 and select down .56. The CME Feeder Index is 221.07.

Hog futures are firmer as product demand shows some improvement. Hogs have a strong seasonal suggesting higher trending prices from early September into October. Pork cutout values are up .72.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   -2 3/4    
  • Nov Beans   -5 3/6
  • Dec Wheat   -6 3/4
  • Oct Cattle  +.77
  • Oct Hogs    +.95
  • Sep Dlr     -.11
  • Sep S&P     +7.75
  • Oct Crude   +.79
  • Oct Gold   +3.20

Chart of the Day

daily chart

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Crop Maturity Now A Concern To Trade

Sep 02, 2014

Good Morning! Paul Georgy with the early morning commentary for September 2, 2014 at 4:30 am.

Grain futures are higher on short covering and beginning of the month buying.

Traders Focus Today: Weekend rains, crop conditions report this afternoon and world political unrest.

Allendale's 25th Annual Yield Survey results will be released tomorrow at 7:30 am.

Weekend rains across the Midwest are adding yield questions to both corn and soybeans. The warmer temps in the forecast should allow for seasonal maturation.

Some early harvest reports from 3rd hand sources are seeing corn yields of 225+ bu per acre in Southern IL. Eastern KS yields are 190 bu per acre.

The International Grain Council has increased world corn production by 4 million tonnes and raised total wheat production to 713 mmt from 702 mmt.

Update - Morning Coffee Commentary:

 

Russian domestic wheat prices have risen due to aggressive export shipments. In August they shipped 4.5 mmt of grain to world buyers. The Russian Ruble fell to an all-time low against the US dollar. This is giving the advantage to Black Sea wheat verses US origin.

The EU and US are considering more aggressive sanctions against Russia for moving troops into Ukraine.

Managed Money Funds increased long positions in corn by 2,874 contracts and reduced short positions in wheat by 3,870 contracts. They increased short positions in soybeans by 9,354 contracts last week.

November soybeans have established a trading range between 10.20 and 10.36. Watch for a move in the direction of the breakout.

The US Dollar index closed out the month of August at new highs for the move. The dollar strength is impacting US product competitiveness in world trade.

Talk of China needing more pork by the end of the year had hog traders covering short positions last week. The question that will be discussed for weeks is whether China will import pork or feed products. Pork cutout value on Friday was up 1.10.

South Korea has lifted a ban on the use of animal feed additive zilpaterol in beef, opening the door to imports containing the growth enhancer.

Beef values closed out the month of August weak with choice down .59 and select down .88. The CME Feeder Index is 218.51.

Markets as of 4:30 AM CDT                                                                    

  • Dec Corn   +1 3/4    
  • Nov Beans   +5 3/4
  • Sep Wheat   + 1/4
  • Oct Cattle  Steady-Higher
  • Oct Hogs    Steady-Higher
  • Sep Dlr     +.22
  • Sep S&P     +3.75
  • Oct Crude   -.74
  • Oct Gold   -9.80

Chart of the Day

daily chart

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Allendale’s Yield Survey Results On Wednesday

Aug 29, 2014

Good Morning! Paul Georgy with the early morning commentary at 5:30 am.

Grain futures are mixed with corn lower, soybeans and wheat are higher. The volume is light and markets have been in a narrow trading range.

Traders Focus Today: Russian forces in Ukraine, SDS in soybeans and possibly too much rain for WCB. Traders will also be adjusting positions before the long weekend.

Today is the last day to input your farms yields to be counted in the Allendale 25th Annual Yield SurveyThe results of the survey will be released on September 3rd at 7:30 am.

Randy Melvin from the Allendale Branch office in Buffalo, ND says his clients are finding high levels of deoxynivalenol (DON) in the harvested spring wheat crop. Most early planted spring wheat is coming in at 3-7ppm. Many elevators are discounting about 40-60 cents for a DON of 4-5 ppm. There is also some concern about wheat sprouting in the head with the weather we are having. Wheat harvest is not progressing at a very fast pace due to cool cloudy and wet weather.

Update - Morning Coffee:

Valero Renewable Fuels has resumed production at an ethanol plant in the Port of Indiana-Mount Vernon along the Ohio River that was shut down more than two years ago by its previous owner.

Today is first notice day for the September grain contracts. We should be getting that data any minute.

Americans are more anxious about the economy now than they were right after the Great Recession ended despite stock market gains, falling unemployment and growth moving closer to full health. Seventy-one percent of Americans say they think the recession exerted a permanent drag on the economy, according to a survey being released Thursday by Rutgers University.

We still have plenty of chances for rain across the Corn Belt today through midweek next week. Total rains can easily be half to 2" additional over what we have seen already. Coverage will be around 80%. There can be some embedded thunderstorms that create some locally higher amounts, but those will be the exception rather than the rule…Continue reading weather

Weekly Egg sets were up 2% from the same week a year ago while Broiler placements also came in up 2% from a year ago.

EU plans storage aid for butter, skimmed milk powder and certain cheeses to alleviate the impact of Russian restrictions on imports of EU dairy products, the European Commission says today.

August Cattle contract expires at noon today.

Beef values remain under pressure ahead of the holiday. Choice is down .52 and select is down 2.33. The CME Feeder Index is 218.23.

Pork cutout values are up .44. Futures traders are short covering before long weekend and hopes of good clearance at the retail counter due to its competitive value with beef.

Livestock markets open at 9:05 on Tuesday.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   -1 1/4    
  • Nov Beans   +3 1/4
  • Sep Wheat   +3 3/4
  • Oct Cattle  +.17
  • Oct Hogs    +.92
  • Sep Dlr     -.04
  • Sep S&P     +4.25
  • Oct Crude   +.41
  • Oct Gold   -4.60

Chart of the Day

daily chart

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Low Prices Wake-Up World Buyers

Aug 28, 2014

Good Morning! Paul Georgy with the early morning commentary at 5:30 am.

Grain futures are higher on short covering. Lower prices are encouraging some export interest. The dollar and metals futures are higher.

Traders Focus Today: Export Sales report, early yield results and outside market action.

You have only a few days left to get your farms yields counted in the Allendale 25th Annual Yield SurveyThe results of the survey will be released on September 3rd at 7:30 am.

Ethanol production averaged 913,000 barrels per day compared to last week of 937,000 barrels per day. This was a bit of a surprise as traders were expecting higher production due to excellent profit margins. However, we have to remember some plants shut down for maintenance this time of year.

Update - Morning Coffee Commentary:

 

The USDA will release the Weekly export sales at 7:30 AM.

(Reuters)      

         Trade estimates for     Trade estimates for

                     2013-14                 2014-15

Wheat                    N/A         300,000-500,000

Corn       -100,000-+100,000         450,000-750,000

Soybeans          -150,000-0       750,000-1,100,000

Soymeal       25,000-100,000         100,000-200,000

Soyoil              0-20,000           10,000-20,000

CBOT September contract first notice day is Friday. Trade is expecting no deliveries in meal, soybeans and corn. There could be light deliveries in wheat.

South Korea MFG is tendering for 280,000 of optional origin corn.

Net farm income is forecast to be $113.2 billion in 2014, down about 14 percent from 2013’s forecast of $131.3 billion by USDA/ERS. The 2014 forecast would be the lowest since 2010, but would remain $25 billion above the previous 10-year average. Lower cash receipts for crops and, to a lesser degree, higher production expenses and reduced government farm payments, drive the expected drop in net farm income.

Russia has not supplied grain to Brazil due to its unfavorable duties, which it agreed to decrease if Brazil raised meat supplies to Russia. Now the meat supplies have already grown due to the western sanctions, and Zlochevky thinks Brazil will reciprocate by easing conditions for the Russian grain.

China's grain cupboard is overflowing. As this year’s harvest looms, the country is on track for an 11th year of bumper grain production. But this years crop production may be too much with warehouses bursting at the seams and posing a dilemma for policy makers.

Agriculture market’s day session will be closed on Monday but grains will reopen at 7:00 pm central time.

On a lighter note we saw a report today announcing that scientists have modeled how sheepdogs herd their livestock. Apparently the dogs focus more on the gaps within a group. When they run back and forth in a particular spot they are encouraging the animals near there to close the gap. Read more in Rich Nelson’s cattle commentary from last night.

Beef values are under pressure again with choice down 1.07 and select down .88. The CME Feeder Index is 217.35. Packer bids have firmed up to 151 which could lead to a steady trade for the week.

Pork cutout values are down 2.98. Retailers are reluctant to have excess inventory after the Labor Day Holiday.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   + 3/4     
  • Nov Beans   +3 1/2
  • Sep Wheat   +6 1/4
  • Oct Cattle  -.22
  • Oct Hogs    -1.20
  • Sep Dlr     +.10
  • Sep S&P     -7.50
  • Oct Crude   -.19
  • Oct Gold   +8.80

Chart of the Day

daily chart

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Harvest Yields Start To Roll In

Aug 27, 2014

Good Morning! Paul Georgy with the early morning commentary at 5:30 am.

Grain futures are quiet with corn and wheat slightly lower and soybeans higher.

Traders Focus Today: Weather for finishing growing crops, technically oversold conditions going into a long weekend, and end of month position squaring. Traders will be watching for more news of Russian troop movement.

You have only a few days left to get your farms yields counted in the Allendale 25th Annual Yield SurveyThe results of the survey will be released on September 3rd at 7:30 am.

Traders are crediting the sell-off in the September soybean and meal contracts to large trader position limit adjusting going into first notice day. Large trader’s net positions must be 600 contracts or less by the close on Thursday.

Cash bean basis had a wide range of changes yesterday with a central IL processor dropping its bids from 3.75 over the Nov to 2.00 over the Nov. An IN processor raised its bids by .85 to 3.75 over the Nov.

Update - Morning Coffee Commentary:

Harvest reports coming in from the delta with Mississippi finding soybean yields 75 to 90 bu. /acre and Louisiana 65 to 100 bu. /acre. Corn yields are coming in at 170 to 190. Some very early yield results on small acreage in Kansas and Missouri are reported as 50 to 60 bushel above 5 year average.

The CME Group will leave the maximum storage rate for deliverable Chicago Board of Trade wheat unchanged next month at roughly 8 cents a bushel per month, the exchange said in a statement on Monday.

Algeria’s grain agency says they will reject wheat containing different origins after France announced it was importing high quality wheat from other countries to blend and make milling grade.

Russian Ag Ministry continues to raise its grain export goals this year because of a big harvest. This news continues to weigh on world wheat values.

Morning Weather: Scattered showers and thunderstorms are building in nicely again over the western corn belt, and this morning there really is nothing that shows any change in the forecasted pattern through the rest of this week and weekend. The cold front that was working...read more of today's weather.

August live cattle contract expires at noon on Friday. Cash trade this week is expected to be 1 to 2.00 lower than last week. However the strength in futures is providing some support to feedlot manager’s bias. Retail demand for this last holiday weekend of the cookout season will be important to how we start out the month of September. Beef values are weak with choice down 1.21 and select down .59. The CME Feeder Index is 217.68.

The Chinese Ministry of Agriculture reported recently that the June hog herd totaled 428.18 million head. This is 4.8% lower than last year at the same time. The trade’s focus is on the sow herd at 45.39 million head, it is now 9.1% lower than last year. Pork futures are relieving some of the oversold condition after the sharp sell-off. Pork cutout values are up .48.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   -1 1/4    
  • Nov Beans   +4 1/2
  • Sep Wheat   - 1/4
  • Oct Cattle  +.22
  • Oct Hogs    +.87
  • Sep Dlr     -.13
  • Sep S&P     +1.00
  • Oct Crude   +.27
  • Oct Gold   +1.80

Chart of the Day

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Crop Conditions Remain Near All-Time Highs

Aug 26, 2014

Good Morning! Paul Georgy with the early morning commentary at 4:30 am.

Grain futures are quiet with corn and wheat up slightly and soybeans down a bit.

Traders Focus Today: Weather forecast, technical support and resistance, position adjusting ahead of first notice day and Black Sea tensions.

Allendale's 25th Annual Yield Survey has only a few days left to gather data. We will be releasing the results on September 3rd at 7:30 am.

Here is a peek at early data from the Allendale Farmer Yield Survey after the first week. From the raw data the average of producer yields in Illinois is 193 bu. /acre compared to Pro Farmer of 197 and USDA of 188. Iowa’s early data after one week of survey is 195 bu. /acre compared to Pro Farmer’s yield of 179 and USDA’s 185. Nebraska’s early average yield is 180 bu. /acre verses Pro Farmer’s 164 and USDA’s 173.

After the data collection is closed on Friday, Rich Nelson will review the data and make his normal adjustments. We will release final numbers on Wednesday, September 3 at 7:30 am.

Update - Morning Coffee Commentary:

 

The weekly crop conditions showed 73% of the crop rated G/E which was an improvement of 1% from last week and a counter seasonal move as the tendency is for lower ratings at this time of year. The corn crop is maturing with 83% in dough stage verses 5 year average of 78%.

The USDA lowered soybean conditions by 1% to 70% G/E. Despite this reduction it is the best crop rating since 1994.

Spring wheat conditions declined by 2% to 66% G/E. Harvest is running behind with only 27% complete verses the 5 year average of 49%.

Long range weather forecasts have no frost, little warmer temps and plenty of moisture to finish out the row crops.

Watch the direction of the US Dollar index as a clue to trader’s bias in grains and livestock.

Export demand seems to have moved to a "hand to mouth" approach by buyers as they are aware of a big US crops and competition from feed quality wheat around the world.

A take away from Friday’s Cattle-on-Feed report is that even with record closeout profitability feeder cattle were not placed in feedlots. We believe there are 3 major reasons: pasture conditions are excellent, heifers are being held out to build breeding herds and there is just not enough supply of feeders to fill demand. Beef values are weak with choice down .08 and select down .59. The CME Feeder Index is 217.64. Cash cattle are expected to trade steady lower this week at 151 to 152.

October 2014 futures contract has now fallen to nearly the same price we were a year ago in the October 2013 contract with 5 to 6% less hogs. Larger weight and a demand shift have to be key reason for the current weakness. Pork cutout values are down .92.

Markets as of 4:30 AM CDT                                                                    

  • Dec Corn   + 1/4     
  • Nov Beans   -3 1/2
  • Sep Wheat   + 1/4
  • Oct Cattle  -.05
  • Oct Hogs    -.25
  • Sep Dlr     -.04
  • Sep S&P     -.75
  • Oct Crude   +.18
  • Oct Gold   +9.70

Chart of the Day

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Demand For Old Crop Soybeans Provides Support

Aug 25, 2014

 Good Morning! Paul Georgy with the early morning commentary at 5:30 am.

Grain futures are mostly lower except for the September contract of soybeans.

Traders Focus Today: Demand for old crop soybeans and meal, good crop development weather and "frost watch" is on the agenda.

Allendale's 25th Annual Yield Survey is underway - only 5 more days of collecting data.

Your help will make a difference. You can add your farms information by going to www.allendale-inc.com. We will be releasing the results of the survey on September 3rd at 7:30 am.

The CME had order routing problems which delayed the opening in grain markets until 9 pm.

Cash soybean and meal demand is strong. Soybean basis at processors in central IL went from 3.10 to 3.25 over the November contract.

Update - Morning Coffee Commentary:

 

ProFarmer released their survey estimate on Friday afternoon. They put the corn yield at 169.3 verses USDA last month’s estimate of 167.4 bushels per acre. Total corn production was set at 14.093 billion bushel compared with USDA’s 14.032 billion bushel.

Their soybean yield was estimated at 45.35 which was close to USDA’s estimate of 45.4 bushels per acre. ProFarmers estimate for total production was 3.812 billion bushel compared to USDA’s 3.816.

This weekend saw heavy rains across Nebraska, Iowa, Illinois and Indiana with more to come this week. Traders will be watching for any chance of early frost. There is nothing in the 15 day forecast suggesting a frost concern, however.

The wheat market will be concerned about the rains in North Dakota and Canada, the Russian/Ukraine situation and the technical posture of the charts.

Grain traders will be concerned about first notice day for the September contracts, end of month and Labor Day weekend ahead of us.

The US dollar Index is continuing to rally which increases price competition for US exports.

Cattle on Feed report showed July Marketings at 90.7% of a year ago. That was smaller than the average guess of 92.5% and Allendale’s 92.4%. This was the smallest July Marketing since the data series started in 1996. At 92.6% of a year ago, placements were the smallest of all previous Julys since 1996.

Cold storage numbers released by USDA on Friday showed larger than expected supplies of beef and pork in storage August 1.

Beef cutout values were weak on Friday with choice down .69 and select down 1.16. Cash cattle are expect to trade steady-lower this week. The CME Feeder Index is 218.18. Pork cutout values are down 2.58. Early calls for the CME opening would be steady to lower.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   -2 1/4    
  • Nov Beans   -6 3/4
  • Sep Wheat   - 1/2
  • Oct Cattle  Steady-Lower
  • Oct Hogs    Steady-Lower
  • Sep Dlr     +.15
  • Sep S&P     +6.00
  • Oct Crude   +.18
  • Oct Gold   -2.20

 

Chart of the Day

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Can Grains Rally as Tour Week Comes to a Close?

Aug 22, 2014

Good Morning! Paul Georgy with the early morning commentary at 5:30 am.

Grain futures are higher in a quiet overnight session. Tight old crop soybean supplies are providing buying incentive in the September futures. Corn and wheat are finding more prices adjusting in their established trading ranges.

Traders Focus Today: September option expiration, technical support and resistance, no weather forecast includes frost but the 10 to 15 runs suggest below normal temps.

Allendale 25th Annual Yield Survey is underway. We will be collecting data from you for 1 more week. You can add your farms information by going towww.allendale-inc.com. We will be releasing the results of the survey on September 3rd at 7:30 am.

Morning Coffee Commentary:

 

Technical support and resistance becomes important in corn because of the trading range that has been established. One has to assume stops are building just above resistance and just below support. Soybeans are drifting lower and notching new contract lows as rain falls across the Midwest. Old crop soybeans continue to get support from nearby demand.

Commercial buying in wheat against recent lows is providing support. However wheat has been the follower and any directional move in corn will likely drag it along.

ProFarmers Midwest crop Tour will be releasing their final survey estimates at 1:30 today. The tour results for Iowa were 178.75 compared to 171.94 bushels per acre last year. The Minnesota corn crop was projected at 170.76 down from last year’s 181.09 bushels per acre.

Canadian wheat production was below trade expectation. The 2014 production is 27.70 mmt verses last year’s 37.73 mmt. Canola output was down 22.6% from last year at 13.91 mmt.

Brazil’s largest co-operative released their plans to plant 8% more soybeans this year and reduce corn plantings by 151,000 hectares or about 9%.

Russia will allow imports from neighboring Belarus and Kazakhstan of food processed from Western raw materials as Moscow seeks to keep domestic food prices from rising after it had ban food imports from the West. This news has stirred some interest in lean hog futures buyers. The October contract had an outside day yesterday and a close above yesterday’s highs today could trigger more buying. Pork cutout values were down 1.07.

Cash cattle traded this week at 152 to 153. Futures are struggling with liquidation, technical selling and week beef demand going into the Labor Day holiday. Beef values are weak with choice down 1.09 and select down 2.25. The USDA cattle on feed report will be out this afternoon. The trade is looking for 97.4% on feed, 90.9% placed and 92.5% marketed. The CME Feeder Index is 218.27.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   + 1/4     
  • Nov Beans   +5
  • Sep Wheat   +3
  • Oct Cattle  +.12
  • Oct Hogs    +.85
  • Sep Dlr     +.04
  • Sep S&P     -4.25
  • Oct Crude   -.44
  • Oct Gold   +7.70

Chart of the Day

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Bounce in Grains While Livestock Remain Weak

Aug 21, 2014

Good Morning! Paul Georgy with the early morning commentary at 5:30 am.

Grain futures are higher on short covering ahead of the weekly export sales report.

Traders Focus Today: Traders will be waiting for NOAA forecasts and key data releases from Canada and USDA.

Allendale’s 25th Annual Yield Survey is underway. You can add your farms information by going to www.allendale-inc.com. We will be taking data through August 29th and will release the finds on September 3rd.

Weather forecasts will be watched closely today as NOAA will be updating their outlook for September and the 90 day outlook later this morning.

The ProFarmer tour puts the IL yield at 196.96 compared to 170.48 last year. Western IA corn yields were estimated at 177.48 to 180.90 compared to last year’s 160.12 to 175.65.

Update - Morning Coffee Commentary:

Weekly export sales estimates gather by Reuter’s news service are:

          Trade estimates for      Trade estimates for

                      2013-14                  2014-15

Wheat                     N/A          350,000-500,000

Corn                0-150,000          650,000-850,000

Soybeans            0-100,000        850,000-1,050,000

Soymeal        50,000-125,000          150,000-250,000

Soyoil               0-10,000                 0-10,000

Ethanol outpaces last week with average daily production of 937 thousand barrels per day. Cheaper corn prices are supporting excellent profit margins. Currently total ethanol production for the year is 11% higher than last year and USDA goal is 10.1%.

Statistics Canada will give us their estimates on wheat and oil seed production at 7:30 this morning.

China sold 24.3% of their weekly soybean reserve offerings. That rate is a little higher than last week’s rate of 23.07%.

Argentine farmers are expected to cut the planting area of corn by 10 percent to 3.2 million hectares in the 2014/15 season due to low international prices for the crop and high sowing costs, the Buenos Aires Grains Exchange said.

Friday is option expiration of September contracts of grains and oilseeds.

From this morning’s weather blog: Warm and humid air expands across the Corn Belt over the next few days, as cooler air starts to move into the northern plains and the western plains. We see plenty of thunderstorm action firing off in the warm sector through the weekend, but action will be very hit and miss, as thunderstorms usually are….continue reading weather.

Russia has stopped trucks that were hauling US poultry through Kazakhstan. India is offering beef supplies to meet the needs for Russian Far East Market.

Cattle on Feed report will be released Friday at 2:00 pm. The trade is looking for 97.4% on feed, 90.9 placed and 92.5% marketed.

August cattle futures are now pricing in $149 cash at the end of the month and September and October prices are suggesting $147/$148. Cash this week is expected to be $151 to $152 which is $3 to $4 less than last week.

Beef values are weak with choice down 1.36 and select down .84. The CME Feeder Index is 219.46

Hog futures remain under pressure for the re-occurring reason of too much pork and too high of price. Pork cutout values are down 2.41.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   +2 3/4    
  • Nov Beans   +7
  • Sep Wheat   +4
  • Oct Cattle  -.27
  • Oct Hogs    -1.05
  • Sep Dlr     +.01
  • Sep S&P     +3.50
  • Oct Crude   -.63
  • Oct Gold   -11.6

Chart of the Day

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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

Watch the Dollar Index And Headlines

Aug 20, 2014

Good Morning! Paul Georgy with the early morning commentary for at 5:30 am.

Grain futures are mixed with corn and soybeans lower wheat higher.

Traders Focus Today: More tour information and technical support and resistance. Old crop tight supplies in soybeans will be watched closely.

Allendale 25th Annual Yield Surveyis underway. We will be taking producer information through August 29th and will release the finds on September 3rd.

Weather forecasts are beneficial to final stages of crop development. No warning’s of frost in long range forecasts.

Update - Morning Coffee Commentary:

Midwest crop tour projects the Nebraska corn yield at 163.77 nearly 20 bushels above 3 year average. Soybean pods are less than a year ago and the 3 year average in Nebraska.

Indiana corn crop is a record yield at 185.03 which is approximately 17 bushel above last year and 44 bushel above the 3 year average. Soybean pod counts are greater than last year.

Traders have been following social media and continue to tally the list of problems and diseases the tour is finding intraday. Some attribute any rallies in row crops to algo traders keying on the friendly spin from this chatter.

Gulf corn and SRW wheat basis offers are steady but Texas Gulf hard red wheat basis slipped again due to quiet export interest. Soybean basis is steady firm due to tight supplies at the gulf.

Midwest soybean and corn basis is higher for immediate delivery due to tight supplies of old crop beans and lack of farmer selling in corn.

Grain buyers are reporting high levels of vomitoxin found in freshly harvested wheat in North Dakota and northward into Canada.

Wheat futures are finding support on news that the Ukrainian wheat millers are asking the government to slow or halt milling wheat exports until they know how much quality wheat they have as harvest continues.  Bread prices are up in Ukraine as milling wheat is quickly moving to the export market as farmers sell their production on fears that interest rates may be rising quickly.

Economic calendar for today: the EIA will release ethanol data and the July 29-30 FOMC minutes will be released.

The technical breakout in the September Dollar Index is worth watching. A strong dollar will increase export values of US grains and livestock against world competitors.

The hog futures are very sensitive to what is happening with the dollar. Pressure in futures is coming from liquidation of longs amid week cash values. Pork cutout values are down 1.36. The October futures contract is still about $20 under the cash index which a normal comparison would be around $12.

Consumer demand for primal cutouts of beef has been stifled. I went to the grocery store meat counter over the weekend and watched what consumers were picking up. They would pick up and look at the beef steaks and then lay it down and take chicken home with them. This is certainly a reason why beef values are sliding going into the last big cookout weekend of the season. Beef cutout values are lower with choice down 2.19 and select down 2.66. The CME feeder Index is 220.11.

Markets as of 5:30 AM CDT
Dec Corn    -1 3/4
Nov Beans   -3
Sep Wheat   + 1/2
Oct Cattle-1.02
Oct Hogs-.35
Sep Dlr     +.22
Sep S&P     -2.25
Sep Crude   +1.32
Oct Gold    -3.40
 
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Markets Drift Lower Overnight

Aug 19, 2014

Good Morning! Paul Georgy with the early morning commentary at 4:45 am.

Grain futures are lower as traders can’t seem to find supportive news. Weather forecasts remain beneficial for finishing out a record production.

Traders Focus Today: Crop tours by news media and industry participants. Trade is waiting for final numbers on Friday.

Allendale’s 25th Annual Yield Survey is underway. We will be taking producer information through August 29th and will release the findings on September 3rd.

ProFarmer Midwest crop tour projects Ohio corn yield at 182.11 bushels per acre, up from tour estimate of 171.64 bpa last year and three-year tour average of 146.13. The South Dakota corn crop was estimated to be smaller than last year but above the 5 year average.

Update - Morning Coffee Commentary:

The Midwest crop tour projects Ohio average soybean pod count at 1,342.42 pods in 3-foot area, up from 1,283.61 last year and three-year tour average of 1,190.18 pods. South Dakota soybeans had more pods than last year.

Not everyone is having a bumper crop this year. A customer of Allendale sent pictures of his cornfields in south central MN where he is expecting yields less than in 1988 because of no rain since mid-June.

Corn crop conditions dropped 1 point to 72% good/excellent according to the USDA. Corn in the dough stage is at 70% verses the 5-year average of 63%, and corn dented estimated at 22% vs. 5-year average of 27%.

Soybean crop conditions improve by 1 point to 71% good/excellent. Pod setting is 83% vs. the 5-year of 79%, and blooming was 95% which was right at the 5-year average.

Weekly crop progress showed spring wheat is 17% harvested vs. the 5-year average of 33%. The un-harvested crop was 68% good/excellent conditions, down 2 points from last week.

Weekly corn export inspections were 970.8 TMT above expectations of 775 to 925 TMT. Soybean export inspections were in line with expectations of 56.2 TMT. Wheat export inspections are running 30.4% behind a year ago.

Stats Canada will release their production numbers on Thursday.

The German Farmers Association is estimating the German wheat crop at 26.2 MMT up from 24.6 MMT in 2013.

Pork cutout values continue their slide on Monday by being down .78 to 111.02. Lean Hog futures traders are looking for a short covering bounce as technical indicators are oversold.

Market ready cattle supplies are tight but weights are growing. Futures prices are at a discount which should provide some support. Beef prices remain weak with choice down .44 and select down 1.81. The CME Feeder Index is 220.75.

Markets as of 4:45 AM CDT

Dec Corn    -4 1/2
Nov Beans   -8
Sep Wheat   -4 1/2
Oct Cattle+.17
Oct Hogs+.57
Sep Dlr     +.10
Sep S&P     +3.25
Sep Crude   +.26
Oct Gold    +2.10
 
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Headlines Will Add Excitement This Week

Aug 18, 2014

 Good Morning! Paul Georgy with the early morning commentary at 5:30 am.

Grain futures are mixed with row crops higher and wheat lower.

Traders Focus Today: Crop tour by news media and industry participants.

ProFarmer will be starting their annual Midwest crop tour today and give the final results on Friday. The tour will be covered on social media and by newswire reporters. Expect trade to have volatility based on their pictures and findings.

Allendale 25th Annual Yield Survey starts today. We gather your farms information over the next 2 weeks and release the findings on September 4th.

Update - Morning Coffee Commentary:

 

Weather forecasts will be watched closely as long-term forecast reach into early frost date potential.

Weather forecasts start the week with near normal temps for the next 10 days (except for Dakotas/NW MN), the 80% Midwest coverage of precipitation over the next 5 days will keep the production outlook for a record crop.

Stay updated on weather by reading and/or listening to Allendale’s Meteorologist Ryan Martin.

Crop conditions this afternoon are expected to be steady with last week.

Stats Canada will update their 2014 production on Thursday.

Friday’s higher than expected NOPA crush for July suggests USDA may be understating 2013/14 US total soybean crush by 10 million bushel which may be the reason for the sharp increase in immediate delivery soybeans.

Ukraine and South American corn is priced at a discount to US due to last week’s price rally.

The situation in Ukraine intensifies after Ukraine said it destroyed Russian military vehicles that crossed the border into Ukraine.

Economic calendar has housing starts on Tuesday and existing home sales on Thursday.  Traders will be watching for any change in Fed policy when Fed Chairman Janet Yellen speaks this Friday at the Kansas City Fed’s annual conference in Jackson Hole.

The near-term technical picture for cattle appears to be suggesting a top is in place. However, the long-term continuous chart still shows live cattle in a bullish up-trend. Beef values were lower on Friday with choice down 1.20 and select down .19. It would appear cash cattle this week would be steady to lower. The CME Feeder Index is 222.21.

Lean hog futures as well as cash markets are being pressured due to supply impact from heavy weight hogs, high prices at the retail counter and competition from poultry. Pork cutout values were down 4.39 on Friday.

Markets as of 5:30 AM CDT

Dec Corn    +3 3/4
Nov Beans   +2 1/2
Sep Wheat   -4 1/4
Oct CattleSteady-Lower
Oct HogsSteady-Lower
Sep Dlr     +.01
Sep S&P     +9.00
Sep Crude   -1.07
Oct Gold    -2.70
 
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Can Corn Closeout Week With Largest Gain In 4 Weeks?

Aug 15, 2014

 Good Morning! Paul Georgy with the early morning commentary for August 15, 2014 at 5:30 am.

Grain futures are mixed with corn and wheat higher soybeans lower. A strong close today in Dec corn could be the best weekly performance in a month.

Traders Focus Today: NOPA crush, Russian actions on Ukraine border and weather forecasts.

Stay updated on weather by reading or listening to Allendale’s Meteorologist Ryan Martin.

NOPA crush for July will be released today at 11:00 am. Trade estimate is 115.82 million bushels of soybeans used for domestic crush during July 2014 and oil stocks at 1.628.

Old crop soybean supplies are very tight and processors are scrambling to get enough inventories until new crop beans can be harvested. This is providing support to the entire complex. However, when harvest begins it will be a completely different story. The last time we had ending stock at 430 in soybeans was 2004/05 and November soybeans had a low with an 8 in front of it.

Update - Morning Coffee Commentary:

 

(AP) – In a diplomatic game of chicken, a large Russian aid convoy rolled toward the Ukrainian border on Thursday – but it was heading toward a crossing controlled by pro-Russian rebels instead of a government post as Ukraine had demanded.

Next week the ProFarmer crop tour begins and will create volatility in the futures market as reporters on the tour use social media to release field data.

Allendale’s 25th Annual Yield Survey starts on Monday call us or go to our website and fill out the survey on line. You know your fields better than anyone. Thanks for your input in advance.

December corn has major technical resistance at the chart gap starting at 3.77 ½. A close above this level could trigger some short covering and could push prices to next resistance near 3.90.

November soybean futures remain in a down trending channel trading range with support at 1040 and resistance at 1090.

December wheat has support at 5.42 with a close below that level pointing to a downside target of 5.00.

The Eco calendar has Industrial Production and Capacity Utilization out later this morning.

Can lean hogs hold overnight strength? Lean hog futures are struggling with weak fundamental news such as: increasing weights, possible vaccine for PEDv and Russian ban of poultry which increases competition at the retail counter. Lean hog futures have been under heavy liquidation pressure in recent sessions. The large historical discount of Oct futures to cash is not enough to provide support. Pork cutout values have finally traded higher as cutout values are up 1.71.

Cattle futures would like to rally but weak pork futures and lower cash prices this week has weighed on futures. Cash cattle have traded at 155 which is $5.00 lower than last week. Cattle supply fundamentals are still very positive but the beef consumers are shell shocked by beef prices as the last big cookout weekend approaches. Beef values are weaker with choice down .14 and select down .98. The CME Feeder price is 222.78.

Markets as of 5:30 AM CDT

Dec Corn    – 1/4

Nov Beans   -5

Sep Wheat   +1 3/4

Oct Cattle+.05

Oct Hogs+.37

Sep Dlr     -.04

Sep S&P     +4.50

Sep Crude   +.01

Oct Gold    +2.10

Chart of the Day

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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

Markets Quiet Overnight

Aug 14, 2014

Good Morning! Paul Georgy with the early morning commentary for August 14, 2014 at 5:30 am.

Grain futures are lower as weather forecast increase chances of rain.

Traders Focus Today: USDA yield estimates too low for corn and soybeans, large world wheat supplies and weather forecasts seen as more of the same.

Stay updated on weather by reading or listening to Allendale’s Meteorologist Ryan Martin.

Rich Nelson, Allendale’s Chief Strategist, studied other record production years for corn, and suggests we have a larger increase on the horizon. The small increase of 1.3% from July to August set the stage for a 5.2% increase by January which equates to a final yield of 176.

NOPA crush for July will be released on Friday at 11:00 am. Trade estimate is 115.82 million bushel domestic crush for July 2014.

Trade estimates for weekly exports range from 100,000 to 200,000 tonnes of old crop and 500,000 to 700,000 tonnes of new crop. In soybeans estimates for old crop sales to be 0 to 100,000 tonnes and new crop sales of 850,000 to 1,050,000 tonnes. Wheat sales are estimated at 450,000 to 650,000.

Get the export sales results in our Morning Coffee update:

China’s import of soybeans during 2013/14 is likely to be over 70 mmt which would be a year over year 17% increase.

USDA increased its old crop corn for ethanol estimate from 5.075 to 5.120 billion bushels. This is a year over year increase of 10.2%. Year to date production is 9.8% higher. Cheap corn prices and profitable ethanol crush margins are keeping processors at full capacity.

Transportation bottlenecks are creating major problems for elevators and ultimately the farmer. The wide basis in the northwestern cornbelt has cash prices in some location at $2.50 per bushel. Midwest elevators are concerned about getting old crop corn moved before new crop harvest starts. The bumper harvest will not be easily captured.

Allendale’s 25th Annual Yield Survey starts on Monday call us or go to our website and fill out the survey on line. You know your fields better than anyone. Thanks for your input in advance.

The changing of political policy can change meat supplies by a stroke of pen. When Russia banned US poultry it was like increasing pork supplies by 2.4%. When you add in the heavier weights and a backlog of market ready hogs it helps to understand the weakness in hog prices.

Last trading day for August Lean Hog Futures and Options is today. Pork cutout value is down 2.54.

Beef values are weak with choice down 1.27 and select down 3.58. CME Feeder Index is 222.97.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   -1 3/4    
  • Nov Beans   -3
  • Sep Wheat   + 3/4
  • Oct Cattle  -.05
  • Oct Hogs    -1.82
  • Sep Dlr     -.07
  • Sep S&P     +3.00
  • Sep Crude   -.12
  • Oct Gold   +1.50

Chart of the Day

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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

Dealing With Record Crops

Aug 13, 2014

Good Morning! Paul Georgy with the early morning commentary for August 13, 2014 at 5:30 am.

Grain futures are up slightly on short covering. Technical indicators are showing oversold although rallies will be met with selling after USDA’s record crop projection.

Traders Focus Today: Reality of a record corn and soybean production. And the expectation of further yield increases on the September Report.

Update - Morning Coffee Commentary:

 

The USDA increased yield in by 2 bushels per acre to 167.4. The increase puts total production at 14.032 billion bushel of corn.

Soybean yields were raised by .2 of a bushel to 45.4 bushels per acre which projects total production at 3.816 billion bushel. Ending Stocks estimate for the 2014/15 crop year is 430 million bushel.

US wheat production was raised by 38 million bushel but offset in the balance sheet by an increase in exports.

The USDA raised the Russian wheat crop by 6 mmt and the Ukraine wheat crop by 1 mmt.

The average farm price was lowered by 10 cents in new crop corn (3.55-4.25) and 15 cents in new crop soybeans (9.35-11.35).

Looking past the USDA report the trade will have to bide its time until next month’s report. The concern over an early frost due to cool temps and slow maturity of crops is on trader’s minds.

Weather models are putting a little more moisture in the 6 to 10 day forecast for the Midwest. Temperatures are trending a little warmer for the 6 to 15 day timeframe.

The US attaché in China says the soybean crop is expected to be 1.6% less than last year.

The drought in central China is the worst in a decade but not expected to have a huge impact on total corn production due to the increase in acres this year.

Economic news such as Retail Sales and Business Inventories is on the docket for 7:30 this morning.

China has barred pork imports from six U.S processing plants and six cold storage facilities effective on Wednesday to enforce its ban on the use of a feed additive that promotes lean muscle growth, the U.S. Department of Agriculture said on Tuesday.

Livestock futures are be bombarded with technical selling and weak demand fundamentals causing futures traders to cover long positions. The lean hog contracts are dealing with the heavier hog weights and an increase in supply. The cattle complex is dealing with the "sticker shock" consumers are finding at the retail counter. Beef values were mixed with choice down 1.29 and select up 1.51. The CME Feeder Index is 222.55. The Pork cutout value is down 3.50.

Markets as of 5:30 AM CDT          

  • Dec Corn   + 1/4
  • Nov Beans   +3 1/2
  • Sep Wheat   +5
  • Oct Cattle  -.67
  • Oct Hogs    -.77
  • Sep Dlr     +.14
  • Sep S&P     +7.50
  • Sep Crude   -.00
  • Oct Gold   +.20

 

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Trade Not Believing Lower Than Expected Yield

Aug 12, 2014

Initial Report Reaction:

 

August-14-WASDE-US-World-CornOld Crop Corn:It is normal for the focus on this report to be all about new crop production. There were some old crop demand changes to discuss though. Corn for ethanol was raised by 45 million bushels and exports by 20. That is not out of bounds. Feed/residual was left unchanged. Ending stocks were lowered moderately from 1.246 billion to 1.181. This helped offset much of the new crop numbers.

New Crop Corn: USDA’s numbers would appear to be bullish but it is unlikely the market will trade it so. Yields were increased from 165.3 bpa to now 167.4. This was under all yield numbers submitted by the 26 analysts surveyed by newswires. Over the past 21 years USDA has increased yields on the August report 10 separate times. Today’s increase, of only 1.3%, is the third smallest increase of those 10 years. Yields are determined by four separate factors. You have the number of plants per acre, the number of ears on those plants, the number of kernels on those ears, and the weight/size of those kernels. This survey, and even the September one, is only a partial look at the crop due to the lack of mature plants. The only real surveys including kernels are in the far South. In the Cornbelt, the field checks are covering plant populations and ear checks. The real jewel of this year’s corn is the incredibly successful pollination. That won’t be reflected until the September or October reports. Corn production, of 14.032 billion, was under the 14.253 average guess but still an increase over USDA’s July 13.860. Even USDA’s low production is still a record. Ending stocks were increased only from 1.801 to 1.808.

World Numbers: Old crop ending stocks were lowered from last month’s 173.4 million tonnes to now 171.1. New crop was lowered from 188.1 mt to now 187.8.

Price Expectations: USDA lowered its estimate of the average marketing cash price from $4.00 to $3.90. Allendale suggests very clearly that today’s report was a small step of the process of supply determination. It is likely no one in the industry believes the crop is this small and will therefore not trade it. On the positive end today’s report could allow for a small rebound in prices this month.

August-14-WASDE-US-World-BeansOld Crop Soybeans: Minor changes to demand were made but there was no change in the final ending stock estimate of 140 million bushels. Exports were raised by 20 million bushels, domestic crush was left unchanged, and imports were lowered by 5. On the bearish end residual use was lowered by 25 million. Don’t forget that USDA will likely revise up the fall 2013 harvest on the September 30 Grain Stocks report. That will take the place of their odd looking -94 million bushels of "residual use" that is in the balance sheet. Final stocks will end in the 130 – 150 mb range, not a market mover.

New Crop Soybeans:USDA did confirm that big soybean stocks are right around the corner. Yields were raised a bump from 45.2 to 45.4 bpa. The trade was expecting a small increase to 45.6. Production was raised to 3.816 billion, near the 3.823 average guess. Ending stocks were raised from 415 to 430 million bushels with no changes in demand.

World Numbers: Old crop world stocks were lowered from 67.2 million tonnes to now 67. New crop was increased from 85.3 to now 85.6.

Price Expectations: USDA lowered their marketing year average cash price by 25 cents to now a $10.50 estimate. Note this is not a futures price or even a target. This is a "marketing year average". Much of that number assumes pre-harvest sales at higher prices.

August-14-WASDE-US-World-WheatNew Crop Wheat: Production was raised by 38 million bushels today. The trade was expecting a 5 million increase in winter wheat and was surprised by the 30 million increase. Minor increases for "other spring" and durum filled the remainder. Including a 10 million increase for feed/residual they brought ending stocks up from 660 million last month to now 663. That was right on the average guess.

World Numbers: Along with a bigger US crop USDA also added 1.5 million tonnes to its EU crop estimate. New crop ending stocks were raised from 189.5 million tonnes to now 193.0.

Price Expectations: USDA lowered its marketing year average cash price from $6.60 to now $6.30.

For more information on pricing implications, give us a call at 800-262-7538, or visit us at www.Allendale-Inc.com

 
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