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The Allendale Wake-Up Call

RSS By: Paul Georgy,

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

Crop Yields Continue To Decline

Jul 31, 2012

Good Morning! Paul Georgy with early morning comments for July 31, 2012 at 5:15 am. Grain futures are higher as traders adjust positions on the last trading day of the month. There is still a lot of disagreement on the weather forecast for the next few weeks. World Weather Inc. is expecting some moisture to fall in most of the crop growing area at one time or another over the next 2 weeks. It is likely the amounts will not be general in nature but should slow crop stress and be supportive to late season crops. The USDA gave us crop conditions yesterday afternoon and reduced the G/E in corn by 2% to 24% and increased the P/VP by 3% to 48%. Soybeans saw similar changes G/E was lower by 2% to 29 and P/VP was raised by 2% to 37%. In 1988 during this same week Corn G/E was 20% and the P/VP was 47%. In 1988 soybeans had 24% G/E during this week. The bottom line to all these numbers is that the crop is still deteriorating and yields are declining. The unknown answer is, what yield is the market trading at current price levels? Investors will be watching the economic data this week. Congress is expected to vote on the extension of the 2008 Farm Bill on Wednesday. The 2013 contracts in livestock continue to be supported as traders worry about liquidation and tight food supplies next year. The livestock trade association sent a petition to the EPA asking for a waiver to RFS for ethanol mandate. There still remains talk that several US governors will plead the EPA for mandate concession. Seems to us price will change consumption of corn for ethanol and livestock. Boxed beef showed some strength on Monday as choice was up .68 and select was up .75. Pork cutout values were down .36.
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Markets as of 5:15 AM
Dec Corn    +5 3/4
Nov Beans   +13 3/4
Sep Wheat   +2
Aug Cattle +.10
Aug Hogs    +.12
Sep S&P     +3.25
Sep Dlr     -.10
Sep Crude   +.32
Aug Gold    +4.90
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Allendale Advanced Charts
Yesterday Nov Soybeans gapped higher from their close on Friday. The Gap is from $16.17 ½ to $16.12 now the question is do we fill this gap or leave it in our wake as we resume our bullish trend. Until we close below the pivot low of $15.36 the trend is expected to continue higher. One interesting note is that the last two times the market touched the 20day moving average which was the $15.36 low on 7/25 and $15.50 ¾ on 7/27 the market found buyer with conviction as we saw dramatic rally’s from the 20 day. I would also look for a close below the 20day to signal a change in trend.
Get technical analysis for corn, beans, wheat, cattle, hogs, crude and dollar markets.
Nelson Notes from the desk of Rich Nelson
There are varying ideas about the size of Iowa’s corn crop. The state which was supposed to help carry the drought areas is now coming in less than expected when crop tours get in the fields.
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There is a significant risk of loss when trading futures and options contracts. This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities herein named, and each investor should consider the appropriateness of trading on this information, based on their objectives. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed as to accuracy. Past performance is not indicative of future results.

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