Sep 20, 2014
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July 2014 Archive for 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.
 

Export Sales and Weather Forecast on Today’s Docket

Jul 31, 2014

Good Morning! Paul Georgy with the early morning commentary for July 31, 2014 at 5:30 am CDT.

Grain futures are lower as quiet markets follow the long-term trend.

The weather model runs were basically the same as yesterday. They expect rains expanding to all of cornbelt late next week.

Update - Morning Coffee Commentary:

Lack of new news is keeping grain futures in a trading range. Traders are waiting to see if it is going to rain across the cornbelt. Farmers are telling us one more good rain will put the final touches on an outstanding crop.

Ethanol production last week was 954 million barrels per day which was 5,000 barrels less than last week. Current corn usage pace is below the amount needed to meet USDA target.

Spot cash basis bids for soybeans was steady to lower at U.S. Midwest processors and elevators on Wednesday as farmers remain uninterested in selling soybean crops. Corn bids were steady with limited farmer movement.

Weekly export sales data released at 7:30 this morning: Corn exports sales estimates are 300,000 to 400,000 tonnes for 2013/14 and 500,000 to 800,000 tonnes for 2014/15.

Old-crop soybean export sales estimates range from 100,000 to 200,000 tonnes and new-crop export sales estimates range from 800,000 to 1.1 million tonnes.

Trade estimates for weekly sales of wheat are 350,000 to 550,000 tonnes.

Russia has been an aggressive competitor in the export sales of wheat, however, this may change as new sanctions put in place this week could have an impact on further sales. The sanctions will make it harder for the Russian Ag Bank to be involved in international trade.

The 2nd quarter U.S. GDP climbed 4%, which was much higher than the 3% growth rate expected. Growth in inventories contributed 1.66 percentage points. The higher than expected GDP number was a boost to the US Dollar, which makes US products more expensive on the world market.

The Federal Reserve did exactly what investors expected. It scaled back its support for the economy, while pledging to keep short term interest rates low "for a considerable time" after it stops buying bonds. The Fed reduced the QE funding by 10 billion per month to $25 billion.

Tight supplies of market ready cattle and strong retail demand equals higher prices. There is no fundamental change that says the top is in. However, the saying "All things that go up must come down" is true, but from what price? Maybe it is time to use some risk management to lock in profits. Beef values continue their run with choice up 1.52 and select up 1.80. The CME Feeder Index is 224.95.

It is difficult to point to the exact reason for the sharp sell-off in lean hog futures but several factors are influencing the move: lower cash markets, lower product values, fund liquidation, end of month margin selling and technical sell stops. Pork cutout values are down .90.

Markets as of 5:30 AM CDT          

  • Sep Corn   -2 1/4
  • Aug Beans   – 1/2
  • Sep Wheat   -2 3/4
  • Aug Cattle  -.25
  • Aug Hogs    -.85
  • Sep Dlr     +.06
  • Sep S&P     -12.50
  • Sep Crude   -.86
  • Aug Gold   -.50

 

Chart of the Day

daily chart

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

Weather Forecast Controls Grain Direction

Jul 30, 2014

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

Grain futures are mostly lower with corn and soybeans weak and wheat up slightly.

Traders are looking at the charts for guidance but in reality the weather will be the major influence on markets over the next 2 weeks. Most traders believe a wide spread rain across the cornbelt sometime before the middle of August would make the corn crop and add bushels to soybean production.

Update - Morning Coffee Commentary:

Current weather forecasts are suggesting rain moving into the greater Midwest late next week with chance of rain for the northern cornbelt this weekend.

Discussion on what yield the USDA uses on the August 12 report will pick up as we approach the date. Allendale is expecting a174.1 bushels per acre average for the US.

Soybean basis fell .10 in Decatur while bids were steady at other locations. Corn basis was steady on very light trade on lack of farmer selling.

Tomorrow is first notice day for the CBOT August contracts.

German wheat harvest becomes crucial to European wheat quality. Rains that downgraded the quality of wheat in France have moved into southern Germany. Poor quality wheat in EU will compete with corn demand.

President Xi Jinping has made his strongest move to date targeting elite party corruption in China. On Tuesday, the Communist Party announced that former security chief Zhou Yongkang will be investigated on formal corruption charges.

AGCO lowered expectations for all the major farm machinery markets, ditching last hopes of a flat North American market, and forecasting a slump of up to 20% in South America, where "weak demand from sugar producers", facing increasing financial pressures from low prices, has dented demand.

Feeder cattle traders see no reason for prices to work lower (although we know there will be a setback at some time) because feedlot profits are unprecedented driving demand, pasture conditions are excellent and building the cowherd could be profitable. Bottom line is there are only a few cattle to go around. Retail demand is staying strong, beef values continue to set new highs. Choice is up 2.04 and select is up 2.86. The CME Feeder Index is 224.19.

Cash hog and futures markets are under pressure as hog supplies are increasing while packers are cutting back on hours. Pork product has finally found some strength with cutout values up .19.

Markets as of 5:30 AM CDT          

  • Sep Corn   -2 1/2
  • Aug Beans   -9
  • Sep Wheat   +1
  • Aug Cattle  +.30
  • Aug Hogs    -.87
  • Sep Dlr     +.07
  • Sep S&P     +4.00
  • Sep Crude   +.36
  • Aug Gold   +.10

Chart of the Day

daily chart

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

Crop Conditions Down Slightly

Jul 29, 2014

Good Morning! Paul Georgy with early morning comments for July 29, 2014 at 4:30 am CDT.

Grain futures are mostly lower for a typical turnaround Tuesday.

Update - Morning Coffee Commentary:

 

Weather forecasters have pushed the rain for the western cornbelt back a few days however the second week of forecast is suggesting good rains for the cornbelt.

Crop conditions released by USDA late yesterday showed the corn crop dropping from 76% to 75% G/E. Last year we had 63% G/E and 60% in the 10 year average. The poor to very poor category was raise by 1% to 6%.

Soybean conditions fell by 2% to 71% G/E compared to 63% last year and 58% is the 10 year average. Poor to very poor was raised by 1% to 6%.

Spring wheat conditions stayed the same as last week at 70% G/E.

Export sales of soybeans to China have been very active in recent weeks. When calculating the current crush margin in China, yesterdays rally has turned it to the negative side. It is believed the improvement in China’s economy and the uncertainties of Argentina’s economic stability have sent the Chinese buyers to the US to book 2014/15 needs.

Chart analysts are suggesting the November soybeans may be headed to the gap starting at 11.29 ½.

Research suggests that USDA has a higher than normal probability of raising yield on the August report (due to be released August 12). The Reuters survey has traders estimating an average yield improvement of 5.2 bushel per acre.

Low interest rates did not help the number of existing homes under contract as it fell by 1% when Wall Street economists were predicting a .5% increase.

Mitsui’s United Grain Corp has shut its export terminal at the Port of Vancouver which is among the largest on the U.S. West Coast because of labor disputes and their inability to get ships loaded.

McDonalds in Japan is considering buying meat from Brazil since their Chinese supplier has been shut down.

Cattle markets react to USDA reports, tight supply of market ready cattle and strong retail demand. Beef values are higher again with choice up 1.92 and select up 1.84. The CME Feeder Index is 221.95. The asking prices by feedlots are expected to be higher again this week.

Cattle traders should be on the lookout for a correction especially if packers don’t pay up for cattle this week. Manage risk, call your Allendale Strategist.

The pork complex is being pulled lower by larger than expect production mostly due to heavier weights. Technical selling has weighed in on the pressure as key chart support levels are taken out. Pork cutout values are down .85.

Markets as of 4:30 AM CDT          

  • Sep Corn   -1 3/4
  • Aug Beans   -2
  • Sep Wheat   -2
  • Aug Cattle  +.17
  • Aug Hogs    -.85
  • Sep Dlr     +.01
  • Sep S&P     -1.75
  • Sep Crude   -.08
  • Aug Gold   +4.70

 

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

Rains Missed Some Areas, Forecast Drier

Jul 28, 2014

 Good Morning! Paul Georgy with early morning comments for July 28, 2014 at 5:30 am CDT.

Grain futures are higher on strong demand for new crop soybeans after the recent selloff.

8:00 AM Update - Morning Coffee Commentary:

 

The forecast for a dry spell is supporting short covering in corn and soybeans. It now looks like it will be late in the 6 to 10 day period before good moisture coverage. Check out Ryan Martin’s weather to stay on top of any changes in the forecast.

Reuters poll of analysts puts 2014 US corn yield estimate at 170.5 bushels per acre verses USDA’s last estimate of 165.3 bushels per acre.

Safras pegs 2015 Brazil soy crop at 94.5 mmt vs. USDA 91 mmt and 87.5 mmt last year.

Trader’s view on US crop ratings this afternoon for corn and beans are unchanged to higher after last week’s 76% and 73% respectively.

Russia’s ban of Ukrainian milk and milk products takes effect today.

Dry weather conditions in Russia are starting to impact the production of soybeans and sunflowers.

Australian wheat producers are becoming concerned about dryness and the development of El Nino. Producers in New South Wales and Queensland are already dealing with sporadic showers and low subsoil moisture.

Tyson Foods plans to close 3 plants in Cherokee, Iowa; Buffalo, New York; and Santa Teresa, New Mexico during first half of calendar 2015. Age of plants, renovation costs and product demand changes are cited as the reason for closure.

USDA says July 1 all Cattle on Feed were 98.0% (trade est. 98.3%), June Placed 94.0% (trade est. 96.6%), and June Marketed 98.0% (trade est. 98.0%). The Cattle on Feed is slightly supportive for today’s cattle opening. Beef values higher on Friday with choice up 1.82 and select up 1.49. The CME Feeder Index is 214.13.

Pork cutout values were up .48.

Markets as of 5:30 AM CDT          

  • Sep Corn   +2 1/2
  • Aug Beans   +6 1/4
  • Sep Wheat   -4 1/4
  • Aug Cattle  Steady-Higher
  • Aug Hogs    Steady-Higher
  • Sep Dlr     -.02
  • Sep S&P     -1.25
  • Sep Crude   -.56
  • Aug Gold   +1.60

 

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

Quiet Before The Next Storm

Jul 25, 2014

Good Morning! Paul Georgy with early morning comments for July 25, 2014 at 5:30 am CDT.

Grain futures are mostly lower in a quiet overnight session. The potential size of this year’s corn and soybean harvest is keeping traders bearish.

Spring wheat crop tour sees US 2014 spring wheat yield at 48.6 bushels per acre verses a year-ago of 44.9 bushels per acre, prior five-year tour average was 44.7 bushels per acre.

8:00 AM Update:

 

White House adviser John Podesta has indicated the administration plans to raise the amount of ethanol and other biofuels that must be blended into the nation’s fuel supply, Sen. Al Franken (D-Minn.) said Thursday.

The U.S. House Republicans are weighing changes to the federal biofuel mandate, but serious efforts to overhaul the renewable fuel program will likely wait until next year.

China now wants imports of U.S. distiller’s dried grains, a livestock feed, to carry certification they do not contain the MIR 162 GMO strain, according to letters from trade groups seen by Reuters, after it had earlier halted import permits.

Western European wheat farmers are holding back grain in an attempt to fight low prices.

Dry weather is likely to persist across eastern Australia for the next three months, the Bureau of Meteorology (BOM) said on Thursday, exacerbating stress on cattle and adding to concerns that wheat yields could suffer in the world’s third largest exporter.

China’s protein and corn demand has decreased during the last quarter due to their smaller hog herd. China’s sow herd has dropped 8.2% in the past year (4 million sows) and market inventory down 4.8% (21 million hogs). About 1.5 million sows of the 4 million sows were taken out in April through May period.

New-home sales fell in June and May’s reading was revised significantly lower, signs that the U.S. housing recovery is failing to build momentum heading into the second-half of the year.

Remember it is not too late to get this information from the Allendale Ag Leaders "Summer Update" Conference. These Presentations were recorded and are available by clicking here.

The USDA July 1 Cattle on Feed report will be released this afternoon.

Wall Street Journal survey:

                    Average          Range

                    of estimates     of estimates

On-feed Jul 1       98.2             97.2- 99.2

Placed in Jun       95.6             91.9- 103.5

Marketed in Jun     98.1             97.0- 100.4

Placements are expected to decline again when compared to last year due to lush pastures and short supplies of feeder cattle.

The US consumer is showing they have a strong preference for beef and they are willing to pay for it. Cash cattle have put in a strong performance this week as retailers buy product and prepare for first of month demand. Beef values are up sharply with choice up 2.97 and select up 4.13. The CME Feeder index is 212.98.

The August Lean Hog contract is a tough one to figure out as it expires on the 14th and currently a 9.00 discount to the CME hog index. Yesterday’s conference Rich Nelson suggested possible price retracements for lean hogs could move to $125 for August, $104 for October, and $92 for December. Pork cutout values are down 1.29.

Markets as of 5:30 AM CDT          

  • Sep Corn   -1 2/4
  • Aug Beans   +4 3/4
  • Sep Wheat   +2
  • Aug Cattle  +.47
  • Aug Hogs    -.30
  • Sep Dlr     +.06
  • Sep S&P     -4.00
  • Sep Crude   +.00
  • Aug Gold   +3.80

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 Releases Corn Yield Estimate

Jul 24, 2014

Good Morning! Paul Georgy with early morning comments for July 24, 2014 at 5:30 am CDT.

Grain futures are higher as old crop soybeans lead the charge due to tight supplies and firm farmer holding. Corn and wheat are tagging along for the ride.

Rich Nelson releases Allendale’s estimate for US corn yield at 174.1 bushel per acre. He said "Our belief is that the trade is not trading a number this high." Talk to your Allendale Broker to get the strategies released at yesterday’s meeting.

The first 2 sessions have been well attended by traders and producers from all around the world. Remember it is not too late to get this information. The presentations were recorded and are available by clicking here.

8:00 AM Update - Morning Coffee Commentary:

The final session of Allendale’s Ag Leaders Conference "Summer Update" will start at 2:00 pm TODAY. Signup now!

Weekly export sale will be released at 7:30. Reuter’s survey estimates are:

              Trade estimates for      Trade estimates for

              2013-14                  2014-15:

Wheat         0                        350,000-550,000

Corn          300,000-500,000          400,000-600,000

Soybeans      150,000-250,000          1,200,000-1,450,000

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

Soyoil        0-20,000                 0-10,000

Ethanol production continues at an aggressive pace because of profitable crush. Last week ethanol production was 959,000 thousand barrels compared to previous week of 943,000.

Egypt had been tendering for wheat which they bought the cheapest priced from the Black Sea Region.

August grain options expire on Friday July, 25.

Cash grain bids were steady-lower on Wednesday with limited farmer selling. We are hearing farmers are taking the deferred pricing option (DP) which usually is not a bullish sign.

Scott O’Malia, a CFTC Commissioner announced on Monday he would leave his post on Aug. 8. The International Swaps and Derivatives Association (ISDA) said yesterday that he would become the trade group’s next chief executive officer on Aug. 18.

October live cattle put in a hook reversal on the charts, Wednesday. However the strong cash market is providing support and a retest of yesterday’s highs overnight. Technical support is the 20 day moving average of 154.30. August futures contract should be well supported as cash trade this week could be several dollars higher than a week ago. The USDA July 1 Cattle on Feed report will be released on Friday afternoon.

Wall Street Journal survey:  

                    Average           Range

                    of estimates      of estimates

On-feed Jul 1       98.2              97.2- 99.2

Placed in Jun       95.6              91.9- 103.5

Marketed in Jun     98.1              97.0- 100.4

Beef values are mixed with choice down .21 and select was up 2.92. The CME Feeder index is 210.64.

Lean hog futures took a tumble yesterday. Market ready hog supplies are tight but not as tight as many traders thought. Hog carcass weights are 10 pounds heavier than last year which is making up for the numbers decline. The technical picture has turned weak and a close above Monday’s low of 111.15 in the October contract is needed to keep the uptrend intact. Pork cutout values are down 1.24.

Markets as of 5:30 AM CDT          

  • Sep Corn   +2 1/2
  • Aug Beans   +14 1/4
  • Sep Wheat   +5 3/4
  • Aug Cattle  +1.87   
  • Aug Hogs    -.75
  • Sep Dlr     -.04
  • Sep S&P     +2.00
  • Sep Crude   -.33
  • Aug Gold   -4.70 

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

Grain Downtrend Hard To Break

Jul 23, 2014

Good Morning! Paul Georgy with early morning comments for July 23, 2014 at 5:30 am CDT.

Grain futures are steady to higher as bottom pickers are on the sidelines.

With the trend down in corn, soybeans and wheat the path of least resistance is lower. Markets are oversold and trade is looking for and expects a short covering rally. However without a dramatic shift in weather it is difficult for bulls to gather any momentum.

8:00 AM Update - Morning Coffee Commentary:

Thanks to all who attended the weather portion of the Ag Leaders "Summer Update". Those who were unable to attend you can access the recorded session at your convenience.

Traders and analysts are trying to get a handle on just how big the corn crop could be. Rich Nelson will be discussing this issue in detail during today’s session of the Allendale’s Ag Leaders Conference starting at 2:00 pm. Get access here.

August grain options expire on Friday July, 25.

The annual Wheat Quality Council hard red spring wheat tour started yesterday in Fargo, North Dakota. For three days scouts will sample fields across North Dakota, far western Minnesota and far northern South Dakota and the tour will wrap up in Fargo Thursday afternoon.

Doane’s crop tour of corn and soybeans suggests corn yield checks averaged 193 in western IL and topped 200 in southeast IA. They said these were the highest yields ever record during their field checks in that area.

From USDA’s Ukraine attaché: As of July 14, 2014, of the main agricultural crops grown in Ukraine, about 7.6 million metric tons (MMT) of wheat was harvested, a little over 4.3 MMT of barley, 13,000 MT of rye, as well as almost 0.9 MMT of rapeseed. At the same time corn, sunflower and soybeans were developing well and receiving plenty of moisture from regular rains.

Transportation cost for grain to the gulf is higher. Old crop soybean basis is firm on lack of farmer selling. Corn basis is steady.

EIA report this morning is expected to show further drawdown in crude oil inventory. US production of oil is at 27 year high.

Cattle on Feed report will be released on Friday afternoon. Trade estimates are for On-Feed to come in at 98%, Placed at 96% and Marketed at 98%.

Fed cattle auction markets are firmer this week which leads to expectation of higher direct trade by end of week. Beef values are strong Tuesday afternoon with choice up 2.28 and select up 1.71. The CME Feeder Index is 210.48.

Lean hog futures reversed yesterday after breaking some key technical levels. The August contract sharp discount to cash index should provide support on setbacks. Pork cutout values are lower was down 1.15.

Markets as of 5:30 AM CDT          

  • Sep Corn   + 3/4
  • Aug Beans   +2 1/4
  • Sep Wheat   +0
  • Aug Cattle  +.22    
  • Aug Hogs    -.90
  • Sep Dlr     -.03
  • Sep S&P     +3.75
  • Sep Crude   +.02
  • Aug 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

Can the National Corn Yield be 185 Bushels per Acre?

Jul 22, 2014

Grain futures are higher on bargain hunting in technically oversold markets.

Update - Morning Coffee Commentary:

Crop conditions remain steady at 72% G/E for corn and Soybean conditions improve by 1% to 73% G/E.

Traders and analysts are trying to get a handle on just how big the corn crop could be. Rich Nelson will be discussing this issue in detail on Wednesday during the Allendale’s Ag Leaders Conference.

Allendale’s Ag Leaders Conference "Summer Update" will start TODAY. Signup now!

What kind of yield adjustments will the USDA make on the August report? History suggests they will not give us the highest yield until the crop is harvested and in the bin.

Ryan Martin, Allendale’s Meteorologist and Branch Office Manager will discuss weather patterns and the likelihood of an early frost this afternoon as we start the conference series.

Export shipments for soybeans were 3.6 million bushel which is about one million less than last week. We need to ship 6 to 7 million bushels per week to meet USDA total export goal for soybeans. Corn exports are running short of the pace needed to meet the USDA’s estimate.

New crop corn bookings as of July 10 is about 64% of the pace set last year. It appears world buyers are waiting for the price to work even lower before they step in to buy.

Soybeans have seen China and other countries buy last week which suggests they are satisfied with current price levels. Currently export bookings for 2014/15 are near last year’s pace as of July 10.

Cattle on showlist are down 27,000 head from previous week. Cash trade is expected to be steady to higher as tight supply of market ready cattle is the driver. Beef values rebound on Monday as choice is up 2.07 and select is up 1.43. The CME Feeder Index is 210.88.

Hog slaughter for the week ending July 19 is down 8.90% from last year and total pork production is down only 3.97% for the same period. So far this year pork production is down only 1% compared to last year. Trade is expecting hog numbers to remain tight into Sep due to effects of PEDv. Pork cutout values were down 2.57.

Markets as of 4:30 AM CDT          

  • Sep Corn   +1
  • Aug Beans   +11 1/2
  • Sep Wheat   +1 1/4
  • Aug Cattle  +.35    
  • Aug Hogs    -.02
  • Sep Dlr     +.18
  • Sep S&P     +6.25
  • Aug Crude   +.57
  • Aug Gold   -6.10

 

Chart of the Day

daily chart

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

Weather Changes Needed to Shift Price Trends

Jul 21, 2014

Good Morning! Paul Georgy with early morning comments for July 21, 2014 at 5:30 am CDT.

Grain futures are lower as weather conditions remain excellent for a potential bumper crop of corn and soybeans. Seasonal heat is on the way this week, but the forecast does not see it staying around very long.

Allendale’s newest long-term weather outlook, grain and livestock price outlooks, and trade strategies will be released this week in our Ag Leaders Conference Series. Sign up to take part.

Update - Morning Coffee Commentary:

Traders and analysts are preparing yield estimates for the August USDA report and they are rising. Many estimates are now above 170 bushels per acre for corn.

Transportation issues in the US are pushing export prices higher and bringing Argentina back into the competitive mix.

Trade is expecting crop conditions to be steady to better this afternoon. That would be counter seasonal as crops begin to mature.

The CFTC Commitment of traders show managed money funds reducing long positions by 14,499 to a net long position of 93,101 in corn. In soybeans they sold 8,310 to leave them net short 6,089 contracts. Funds are now net short 46,495 contracts in wheat.

Negotiations between Argentina’s government and striking workers in the Rosario grains hub were scheduled for Friday but pushed back until today. The major Port of Rosario remains paralyzed.

Ukraine blames Russia for helping destroy airliner crash evidence. More sanctions will be imposed on Russia on Tuesday. The question remains, will Putin buckle or will he provide more support to the separatist?

Beef values are lower with choice down 1.36 and select down 1.59 on Friday. The CME Feeder Index is 214.48.

Cattle traders will have the July Cattle-on-Feed report this week. We are approaching the summer period where beef demand struggles. Futures traders are anticipating this slowdown in demand but cash prices continue to stay firm due to tight supplies.

"There has been a lot of talk in the industry about falling hog weights. It is true weights fell from 215 dressed out in May down to 211 currently. What has not been addressed correctly is that this is a normal seasonal issue. Weights normally bottom from late July through August. In actuality we have done nothing to address the real problem. Weights were 5% over last year a few weeks ago and are 5% over last year right now," says Rich Nelson, Allendale’s Chief Strategist.

Pork cutout values closed out the week up .47.

Allendale’s Ag Leaders Conference "Summer Update" will start tomorrow. Signup now!

Markets as of 5:30 AM CDT          

  • Sep Corn   -5 1/4   
  • Aug Beans   -5 1/4
  • Sep Wheat   -6
  • Aug Cattle  Steady-Lower     
  • Aug Hogs    Steady
  • Sep Dlr     +.00
  • Sep S&P     -2.75
  • Aug Crude   +.02
  • Aug Gold   +5.80

 

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

Heat on the Way for Next Week

Jul 18, 2014

 Heat on the way for next week

 

Good Morning! Paul Georgy with early morning comments for July 18, 2014 at 5:30 am CDT.

Grain futures are mixed with old crop higher on tight supplies. Warmer weather is on the way next week. Some are trying to spin it as bullish other are suggesting it is what the crop needs to reach maturity.

8:00 AM Update - daily Morning Coffee commentary:

Cash corn basis was weaker on Thursday and farmer selling was light around the Midwest. The prices are unattractive for North Dakota producers where basis is 1.20 to 1.30 under September futures.

Ryan Martin, Allendale’s Chief Meteorologist will be giving the first presentation at the Ag Leaders Conference "Summer Update". You also can listen to his daily forecast by clicking here. His morning blog on weather is available as a FREE subscription. Review It today!

All work was at a standstill as multiple strikes paralyzed all grain exports from Argentina's Rosario export hub on Thursday. The Argentine grain inspectors in the agricultural export hub lifted their strike over wages due to a government request. However other unions are still on strike.

Funds bought a net 6,000 wheat contracts, were even in corn, sold 5,000 in soybeans on Thursday.

Argentine Agriculture Ministry says forecasts 2013/14 corn harvest is 33 mmt vs their June estimate of 32.1 mmt. They are looking for the 2013/14 soybean harvest to be 53 mmt vs June estimate of 54 mmt.

(Reuters) - An impasse between U.S.-based Monsanto Co MON.N and soybean buyers in Brazil over royalty payments on a new seed technology may complicate the country's sales of the upcoming oilseed crop.

Microsoft announced it will lay off nearly 18,000 people in the next 6 months. This equates to nearly 15% of its workforce as the new Microsoft CEO is taking the first step to building the right organization.

Pew Research Center says about 23.6% of people age 25 to 34 live with their parents, grandparents or both. That’s up from 18.7% in 2007, just prior to the global financial crisis and from 11% in 1980.

Cow slaughter continues to run 15 to 20% below a year ago levels due to excellent pasture conditions and profitability of cow-calf operation. Feeder cattle prices at record high prices are huge incentive for building cow herds.

Cash cattle traded in TX and CO at 155 and 157.50 respectively. Volume was light with no sales reported in KS. Beef values were mixed with choice down 1.01 and select up 1.38. The CME Feeder Index is 214.11.

Nearby lean hog futures closed below the 20 day moving average for the second time and found support at the 50 day average. A lower close today could accelerate the downward bias. The Pork cutout value is up 1.20.

Allendale’s Ag Leaders Conference "Summer Update" will start on Tuesday. Signup now!

Markets as of 5:30 AM CDT          

  • Sep Corn   -1 1/2   
  • Aug Beans   +4 3/4
  • Sep Wheat   -5 1/4
  • Aug Cattle  -.27    
  • Aug Hogs    -.55
  • Sep Dlr     +.02
  • Sep S&P     +1.00
  • Aug Crude   +.28
  • Aug Gold   -5.50

 

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Has Corn Made Near-term Lows?

Jul 17, 2014

 Good Morning! Paul Georgy with early morning comments for July 17, 2014 at 5:30 am CDT.

Grain futures are lower in a quiet overnight trading session. Weather conditions and potential record yields for row crops keep pressure on the market while buyers continue to search for reasons for a rally.

cool temperature during pollination study says that we are having the 3rd coolest pollination period since 1980. In those cool years yields set new records. Get all the details at next week’s Allendale's Ag Leaders Update. Contact your Allendale Representative discuss a marketing strategy based on this study. Register for the Ag Leaders Update, here.

7:45 AM Update - Morning Coffeee Commentary:

 

The Weekly Export Sales data will be released today at 7:30 (View Results, Here):

Reuters Survey:

               Trade estimates for      Trade estimates for

                           2013-14                 2014-15:

Wheat                            0          400,000-550,000

Corn               250,000-350,000          350,000-450,000

Soybeans          (-50,000)-75,000          500,000-700,000

Soymeal              20,000-90,000           25,000-150,000

Soyoil                    0-20,000                 0-10,000

After the recent price drop, end users are stepping up to the plate with USDA announcing new sales yesterday. As of July 3rd corn bookings are 28% less than a year ago. Soybean sales are running about 8% behind last year’s pace.

USDA raised its estimate of old crop corn for ethanol by 25 million bushels last week. The USDA’s whole-year goal is now a 9.2% increase over last year. Currently the year-to-date numbers are 9.7% over last year.

Yesterday’s November soybeans close above the pre-report level is being watched as an indicator a near-term bottom is being made.

The Chicago Mercantile Exchange has started a review of electronic trading hours in its cattle and hog contracts, and some think the focus will be on reducing hours to keep the contracts attractive.

The October contract of lean hog futures is in a consolidation phase and a move through recent highs or recent lows could provide a sizeable move in the direction of the breakout. Pork Cutout values are up .71.

Traders have been waiting for some good news to support futures prices. The cash trade at 155 yesterday would be steady with last week and better than expected price. Beef values are mixed with choice up .29 and select down .60. The CME Feeder index is 216.12.

Only a few days until Allendale’s Ag Leaders Conference "Summer Update" begins. The weather session will be presented by Ryan Martin, Allendale’s Meteorologist which takes place July 22nd at 2:00 PM CDT. The series will continue July 23rd and 24th at 2:00 pm with our grain and livestock outlooks. All sessions will be recorded for your viewing convenience.

Markets as of 5:30 AM CDT          

  • Sep Corn   -1 1/4   
  • Aug Beans   -1 3/4
  • Sep Wheat   +0
  • Aug Cattle  +2.05   
  • Aug Hogs    -.02
  • Sep Dlr     -.05
  • Sep S&P     +7.75
  • Aug Crude   +.93
  • Aug Gold   +3.20

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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

Bargain Hunters Try Picking a Bottom

Jul 16, 2014

Good Morning! Paul Georgy with early morning comments for July 16, 2014 at 5:30 am CDT.

Grain futures are higher on bargain hunting and short covering. Technical indicators are oversold and an unexpected bounce is possible at any time.

8:00 AM Update - Morning Coffee Commentary:

Allendale’s weather model was run earlier this month and returned a crop yield of 167.8 bpa.

Given the much cooler than normal temperatures this week it will return a higher number when run before next week’s Allendale web conference. The AgLeaders Conference will be run on July 22 – 24. Brought to you on your own computer, signup is now available via our website.

Our North Dakota branch office is reporting that most cash bids for fall delivered corn now has a 2 in front of the price. We are hearing Midwest producers are moving some old crop corn as they are concerned about basis getting wider. Our Minnesota customers are surprised how quickly the corn has caught up and much of the corn is beginning to tassel at a normal time.

The battle between production bulls and those who think it is too early to believe the yield could be near or over 170 is beginning. We will hear a lot more talk from each side before the August USDA report.

Bargain hunters are stepping in and buying corn and soybeans. However it is believed rallies are made to be sold at least until we find a reason for a significant yield loss.

NOPA pegs June soybean crush at 118.7 mil bushel vs. 128.8 million bushel in May and 119.5 million bushel the trade was expecting.

Janet Yellen the Federal Reserve Chairwoman signaled in her semiannual report to Congress on Tuesday, that the U.S. economic recovery is "not yet complete" and too many Americans remain unemployed which makes it necessary to continue with low interest rates.

EIA report expected to show another decline in crude oil inventories.

The EU Leaders will discuss further sanctions against Russia in a meeting today.

As we see the effect of PEDv in the current slaughter mix, we must also point out the seasonality of hog slaughter during the summer. Typically the lowest non-holiday kill week is either the second or third week of June. Slaughter levels then generally stay low through the third week of July. Then numbers begin their build into the heavy November/December peak. This year may be a tougher one to guess due to the effect of PEDv. Pork Cutout values are up .33.

There is talk that some cash cattle may trade at 154 this week $1.00 to $2.00 lower than last week. After seeing august futures sharp decline over the last week only a $2.00 decline could be seen as a victory. Beef values are weaker with choice down .61 and select down .96. The CME Feeder index is 216.77.

Markets as of 5:30 AM CDT          

  • Sep Corn   +5       
  • Aug Beans   +7 1/2
  • Sep Wheat   +3 1/2
  • Aug Cattle  -.15    
  • Aug Hogs    +.02
  • Sep Dlr     +.14
  • Sep S&P     +5.50
  • Aug Crude   +.76
  • Aug Gold   +1.50

Chart of the Day

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Corn Crop Improves Last Week

Jul 15, 2014

 Good Morning! Paul Georgy with early morning comments for July 15, 2014 at 4:30 AM.

Grain futures are lower as crop conditions improve for corn and hold steady for soybeans.

Allendale’s Ag Leaders Conference "Summer Update" will start next week. 

Update - Morning Coffee Commentary:

Corn good/excellent ratings increased by 1% last week to 76% while the trade was expecting no improvement. This is the fourth best number for this week in the 28 year ratings history. Corn silking advanced from 15% last week to now 33% with the five year average at 33%.

Soybean ratings were left unchanged at 72% good/excellent. There are only two other years, in the last 28 years with better numbers for this week. Both years resulted in big yields.

Wheat harvest is now ahead of average at 69%. The spring wheat remains at 70% good/excellent. Blooming advanced from 24% complete last week to now 41%.

History suggests we are normally approaching the hottest week of the growing season and our current forecasts are projecting below normal temps for most of the Midwest during this period.

The NOPA Crush for June is estimated at 119.5 which is not a bullish number since the USDA raised it’s total domestic crush estimate on last Fridays report. This number could be looked at as neutral with an attainable slowdown through year end.

Ukrainian wheat is dragging world export prices down as buyers are looking for a discount to offset the domestic unrest risk.

Comments Issued by Darrel Good, University of Illinois…"We have previously argued that the average price for the new era of prices that began in 2006-07 would be about $4.60, so that $2.00 in 2005-06 is equivalent to $3.82 in the current era. An average price in the year ahead near $3.75 would be consistent with similar supply-consumption scenarios of the recent past. It appears that the market has already priced in an average yield of at least 170 bushels."

Last week’s PEDv findings have dropped to 143. Hog slaughter was down over 8% last week and when adding in the heavier weights, pork production was down more than 4%. Are we finally going to see the effects of last winter’s PEDv? July hog contracts go off the board today at noon. Pork cutout values are down .48.

Cattle futures are anticipating the pickup in market ready supplies as showlist increases another 4,000 head on top of the 35,000 increase last week. We also are approaching the time of year where retailers back-off on featuring the primal cuts with only one big cookout holiday weekend left. Beef values were weaker as choice was down .65 and select down .42. The CME Feeder Index is 217.62.

Get our newest price projections and trade strategies, here.

Markets as of 4:30 AM CDT          

  • Sep Corn   -2       
  • Aug Beans   -9 1/2
  • Sep Wheat   – 3/4
  • Aug Cattle  +.20    
  • Aug Hogs    +.30
  • Sep Dlr     +.07
  • Sep S&P     -2.50
  • Aug Crude   -.45
  • Aug Gold   +5.90

 

Chart of the Day

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Can grains rally without production taking a hit?

Jul 14, 2014

 Good Morning! Paul Georgy with early morning comments for July 14, 2014 at 5:30 am CDT.

Grain futures are lower on follow through selling after Friday’s report.

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

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

After Fridays report traders are now focused on the 3.50 level for corn and soybeans below 10.00. Many are thinking ending stock will go up once USDA makes yield adjustments.

Crop conditions report out this afternoon where early estimates are for an unchanged to up 1% in the G/E categories. My out the window observations from this weekend: traveling to northwest IL and southwest WI, we saw corn and soybeans stressed from too much rain. However the sides of hills and tops were dark green. Corn will begin tasseling in that area this week.

I invite subscribers to listen to the Allendale weekly in-house broker meeting with Rich Nelson this afternoon. He will be breaking down the report and what it means to prices going forward.

CFTC commitment of traders report showed Managed Money Funds net long 107,600 contracts of corn which was a decrease of 5,412. They reduced long positions in soybeans by 20,062 last week to be net long 2,142. Funds also increased net short positions in wheat by 3,582 contracts to 44,296.

NOPA June crush data will be released tomorrow at 11:00 am. Trade is expecting 119.5 Mil. Bu. of soybeans used last month.

The economic calendar this week is filled with reports in the US and China that could have an impact on the stock market. Fed Chairman will present to Congress later this week and earnings reports by major companies get into full swing.

Cattle and hog futures reversed on Friday after a several day decline. Today trade will be watching product movement as well as changes in showlist for market ready cattle. Outside markets and money flow will be keys to maintaining uptrend in livestock markets. Beef values were mixed as they closed out the week with choice down .38 and select up 1.32. The CME Feeder Index is 214.58. Pork Cutout value was up .57.

Markets as of 5:30 AM CDT          

  • Sep Corn   -1 3/4   
  • Aug Beans   +6 1/4
  • Sep Wheat   + 3/4
  • Aug Cattle  Steady-Higher    
  • Aug Hogs    Steady-Higher
  • Sep Dlr     -.05
  • Sep S&P     +6.25
  • Aug Crude   -.39
  • Aug Gold   -14.10

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 atservice@allendale-inc.com

Update-USDA Surprises Trade in Supply-Demand

Jul 11, 2014

 

 

 

WASDE Video Commentary

 

Full Analysis of the July 11th USDA Report

Corn

July-14-WASDE-US-World-corn

Old Crop Corn: The real changes made to the corn balance sheet came from old crop. USDA raised its estimate of ending stocks (August 30, 2014) up from 1.146 billion last month to now 1.246. This was just over the trade’s estimate of 1.232. We knew they would be raising old crop due to the bigger than expected stocks count from the June Grain Stocks report. USDA lowered feed/residual by 125 million and raising corn for ethanol by 25 million.

New Crop Corn: The bearish sentiment from the new crop numbers is mostly due to the increase in old crop. This was carried over into the new crop numbers in the beginning stocks category. New crop production was actually lowered by 75 million due to the June 30 Planted Acreage report. You may remember that report actually lowered their harvested estimate. No change to USDA’s 165.3 bpa yield was made. The trade, and certainly Allendale, feels we are actually running higher than that. The only demand change was a 50 million bushel drop in feed/residual. New crop stocks were raised from 1.726 billion last month to now 1.801. This was just over the 1.774 average guess. The trade is pricing corn under the assumption of a yield increase on the August report.

World Numbers: Old crop ending stocks were raised from last month’s 169.1 million tonnes to now 173.4. New crop was increased from 182.7 mt to now 188.1. Aside from changes from the US, USDA raised Canada’s crop by a small amount and the Chinese crop by 2 mt to now 222.

Soybeans

July-14-WASDE-US-World-Beans

Old Crop Soybeans: Based on the finding of more stocks in the June Grain Stocks report USDA raised its August 30 ending stock estimate today. The move, from 125 million last month to now 140, was bigger than the 128 guess. Note that USDA did raise crush and exports by 45 million today. To make their numbers work they brought seed/feed/residual down by 65 million bushels and imports by 5. Don’t forget that USDA will make these numbers work even better with a revision of the fall 2013 harvest. That will be shown on the upcoming September 30 Grain Stocks report.

New Crop Soybeans: The big jump in new crop stocks, from 325 million last month to now 415 was largely expected (418 average guess). USDA added that big acreage change from the June 30 Planted Acreage report. No change was made for yield. The trade is not as sure on soybean yields as they are for corn. The big jump in supply from higher production and higher beginning stocks was partially offset by a 90 million bushel increase for crush and exports.

World Numbers: Old crop world stocks were increased slightly, from 67.17 million tonnes to 67.24. New crop was increased from 82.9 mt to now 95.3. The only other changes, aside from higher US numbers, was 1 million increase for Chinese imports that was offset by 1 million increase for domestic use.

Wheat

July-14-WASDE-US-World-Wheat

Old Crop Wheat: The old crop marketing year ended on May 31. This report simply adjusted the stocks to the June physical count in the Grain Stocks report. Stocks declined from 593 million bushels to now 590.

New Crop Wheat: USDA surprised the trade by increasing new crop stocks from last month’s 574 million to now 660. The trade was looking at 591. Acreage was increased due to the June survey. Production was increased by 50 million bushels. The winter wheat harvest was adjusted down from 1.381 billion last month to now 1.367. Increases were made for spring wheat and durum. Along with higher production USDA lowered usage by 40 million from feed/residual and exports.

World Numbers: New crop ending stocks were raised from 188.6 million tonnes to now 189.5. There were active changes in other areas with increases for the crops in Australia, Brazil, and Ukraine and decreases for Canada and Kazakhstan.

For more information on today's report, give us a call at 800-262-7538

What will be market focus after Eleven O’clock?

Jul 11, 2014

 Good Morning! Paul Georgy with early morning comments for July 11, 2014at 5:30 am CDT.

Grain futures are slightly higher on short covering and position adjusting ahead of the USDA Report.

Allendale’s Ag Leaders Conference "Summer Update" will be presented in less than 2 weeks. Get our newest weather outlook, grain and livestock price projections, trade strategies and complete fundamental analysis. Reserve your spot here.

8:00 AM Update - Morning Coffee Commentary:

For ending stocks estimates for todays report, check out of July USDA WASDE page. It will also be updated after 11:00 AM CDT with report results and analysis.

Allendale thinks the adjustments on today’s Supply and Demand report for old corn could come in feed use, ethanol use and exports with a net increase in Ending Stocks.

New crop corn will likely see adjustments in planted acres, harvested acres and possibly yield. The USDA is less likely to change soybean yields on the July report as they have made adjustments only one time out of the last 28 years.

Ending stocks for new crop soybeans could reach 400 million bushels, more than 3 time current year ending stocks.

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

Cash cattle traded $1 to $2 lower so far this week. The break in futures has given the packers the upper hand.

August cattle futures broke the 20 day moving average but should find support at the $148 level. Beef values remain firm with choice up 1.60 and select up 1.26. The CME feeder Index is 214.82.

Lean hog futures continue to see some profit taking and liquidation by funds. Pork cutout values were down .62.

Markets as of 5:30 AM CDT          

  • Sep Corn   +1       
  • Aug Beans   +5
  • Sep Wheat   + 1/4
  • Aug Cattle  -.05    
  • Aug Hogs    -.42
  • Sep Dlr     -.04
  • Sep S&P     +3.75
  • Aug Crude   -.38
  • Aug Gold   -1.50

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What will USDA Adjust on Supply and Demand Report?

Jul 10, 2014

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

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

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

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

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

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

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

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

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

                                  2013-14                 2014-15:

Wheat                            0                      400,000-635,000

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

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

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

Soyoil                  0-20,000                         0-10,000

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

Last trading day for the July grain contracts is Monday.

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

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

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

Markets as of 5:15 AM CDT          

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

Chart of the Day

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Spreads Dominate Volume Ahead of WASDE

Jul 09, 2014

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

Grain futures are lower as traders wait for USDA reports.

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

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

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

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

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

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

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

Markets as of 5:30 AM CDT          

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

 

Chart of the Day

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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

Old Crop Bean Demand In Spotlight Again

Jul 08, 2014

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

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

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

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

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

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

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

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

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

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

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

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

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

Markets as of 4:45 AM CDT          

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

Chart of the Day

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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

Is Too Much Water Hurting Crops?

Jul 07, 2014

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

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

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

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

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

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

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

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

Chart of the Day

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Traders Prepare For Post-Holiday Fireworks!

Jul 03, 2014

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

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

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

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

(Reuters) Trade estimates for     Trade estimates for

                                  2013-14                       2014-15:

Wheat                           0                   300,000-450,000

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

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

Soymeal                   0-100,000                     0-150,000

Soyoil                       0-20,000                       0-10,000

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

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

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

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

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

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

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

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

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

Allendale wishes everyone an enjoyable and safe Independence Day Weekend.

Markets as of 5:30 AM CDT          

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

 Chart of the Day

daily chart

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

What Can Cause A Soybean Rally?

Jul 02, 2014

 Good Morning! Paul Georgy with early morning comments for July 2, 2014 at 5:30 am CDT.

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

Late yesterday, there was a flurry of buying in the soybean complex. Many think it was the beginning of the month and quarter buying. Funds are expected to still be carrying a long position in beans and meal. Liquidation could provide more selling if we don’t see a quick turnaround. The weekly export sales report is out tomorrow morning; expect prices to be supported in old crop soybeans ahead of this data.

Corn futures may be in for a short covering bounce ahead of the weekend but traders struggle with a good reason for a rally as weather is beneficial to production.

Ryan Martin, Allendale Inc.’s meteorologist believes the warm bias and struggle for heat to build in the Midwest during pollination is unlikely.

The majority of Midwest corn is expected to be pollinating between the 10th and 20th of July. The lack of heat should improve chance for a record yield.

Egypt's state grain buyer, the General Authority for Supply Commodities bought 240,000 tonnes of Romanian and Russian wheat for shipment Aug. 11.

China is expected to scrap its corn stockpiling by as early as next year as it battles to reduce mammoth state reserves that account for more than half of global stocks.

It was reported yesterday afternoon that the Mississippi River is closed at St Louis due to a towing vessel sinking with 10,000 gallons of diesel fuel aboard.

There were a few corn and soybean contracts delivered this morning. However there were 54 KC wheat and 51 contracts of Chicago wheat delivered against the July futures.

Economic reports out today: ADP employment expected to indicate continued decent growth in U.S. labor market and EIA report expected to show -2.4 million bbl. drop in crude oil inventories.

Cattle feeding margins exploded last week. Week ending June 28, margins hit $280 compared to previous week of $194 and a negative $162 a year ago. Beef values remain strong as retailers feature steaks for the July 4th Cookout. However the concern is whether or not demand post-holiday will be able to sustain the recent strength. Choice beef is up .85 and select is up .59. CME Feeder Index is 216.92. Livestock markets close early on Thursday and will reopen on Tuesday at 9:05.

Live hog futures continue to adjust prices after last week’s report. The deferred contracts are setting new contract highs due to breeding herd and farrowing estimates. Look for the discount of the Dec and Feb to narrow against nearby contracts. The pork cutout values are down 2.89.

Markets as of 5:30 AM CDT          

  • Jul Corn   -1 3/4   
  • Jul Beans   +7
  • Jul Wheat   + 3/4
  • Aug Cattle  +.60    
  • Jul Hogs    +.02
  • Sep Dlr     +.03
  • Sep S&P     +1.00
  • Aug Crude   -.33
  • Aug Gold   +1.30

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

Soybean Acreage Surprises Trade

Jul 01, 2014

 Good Morning! Paul Georgy with early morning comments for July 1, 2014 at 4:30 am CDT.

Grain futures are mostly lower as markets adjust to USDA data.

Now that the June 30th reports are out of the way, traders are calculating how USDA will use this information in next week Friday’s Monthly Supply and Demand Report.

US crops benefited from moisture last week as corn G/E improved by 1% to 75%.

Winter wheat harvest is lagging behind with only 43% complete compared to 48% average.

Soybeans were equal to a previous week with 72% G/E which is a record high condition for this week.

The Quarterly stocks for soybeans on June 1 of 405 million bushel gives USDA some wiggle room to keep this year’s ending stocks at 125 million bushel.

The USDA surprised trade with a record 84.8 million acres planted to soybeans which is 3.3 million acres more than the March estimate. This is an increase of 8.3 million acres from last year. Using trend yield it is likely to have an ending stocks over 400 million bushel for 2014/15.

Corn acres were little changed from March and preliminary projections suggest ending stocks at 1.750 million bushel. Crop conditions and weather conditions will be watched closely until crop is made.

USDA Farm Service Agency North Dakota State Executive Director Aaron Krauter has announced that prevented planting reporting deadlines have been extended this year to coincide with the final acreage reporting date of July 15 due to planting issues caused by North Dakota’s cold, wet spring. "Farmers need to visit their local FSA office before July 15 to report all their crop acreage, including that which has been prevented from planting," Krauter said.

Argentine farmers say they will stockpile soybeans in the second half of the year if the government is unable to cut a deal with debt investors to stave off a new sovereign default.

CME grain markets close early on Thursday July 3 and will not reopen until Monday morning July 7 at 8:30.

Economic reports: Today construction spending at 9:00, tomorrow Factory orders at 9:00 and Thursday, Unemployment at 7:30.

Cattle traders are concerned about the drop in showlist numbers of approximately 39,000 head this week. Packers will be closed on Friday and have reduced hours because of tight fed supplies. Retail fill-in buying should be complete which could pressure product values. Futures are relieving some of the overbought condition while trend is still up. The 20 day moving average crosses at 145.80. Beef values were firm to start the week as choice was up 1.30 and select was up 1.16. The CME Feeder index is 215.25.

Lean hog futures are still reacting to the bullish Hogs and Pigs report. The discount of deferred contracts (Dec on out) should provide support as breeding herd and farrowing estimates were well below trade expectations. Hog slaughter levels are expected to be very light the next several weeks as PEDv numbers should have greatest impact. Pork cutout values are up .54.

Markets as of 4:30 AM CDT          

  • Jul Corn   -3       
  • Jul Beans   +1
  • Jul Wheat   -2
  • Aug Cattle  +.57    
  • Jul Hogs    -.37
  • Sep Dlr     +.04
  • Sep S&P     -3.75
  • Aug Crude   +.39
  • Aug Gold   +5.30

 

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

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