Jul 25, 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.
 

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

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