Sep 2, 2014
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The Allendale Wake-Up Call

RSS By: Paul Georgy, AgWeb.com

Paul Georgy serves as president/CEO of Allendale, Inc., a worldwide agricultural advisory and research firm that provides agricultural commodity price research and risk management alternatives for producers, major food companies, international corporations, foreign governments, and major news vendors.
 

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

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

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

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

 

 

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

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 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

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

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

daily chart

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

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