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.

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Dollar Rally Impacts Ag Commodities

Mar 07, 2013

Good Morning! Paul Georgy with early morning comments for March 7, 2013 at 5:05 am. Grains are firmer after yesterday’s sharp sell-off. The USDA and CONAB (like USDA of Brazil) will be release reports during the next 2 trading sessions. CONAB's last production estimate for Brazil was 76 mmt of corn and 83 mmt of soybeans. The lineup of ships is rising in Brazilian ports. US ethanol production was down from last week and is now 11% below last year. The USDA was closed yesterday due to the snow storm in the Washington DC area. It is expected they will still be releasing the sales data this morning. Weekly export sales estimates are: #corn 450 to 650 tmt, #soybeans 900 to 1.200 tmt, soymeal 200 to 300 tmt, soyoil 5 to 15 tmt and #wheat 350 to 550 tmt. One reason for the recent slide in grain prices is money continues to leave commodities. The stock market continues to grind higher and investment money loves to chase after a rally. Part of the commodity problem is also related to the strength in the US dollar. It now is at levels not seen since August 2012. The Japanese Yen has fallen 8.5% vs. the US dollar so far this year. Japan’s government is printing Yen in order to encourage exports. They are our #1 beef buying customer and have seen US beef get expensive and Australian beef get cheaper! Rich Nelson, our Chief Analyst, took a look at the weekly export report, which only shows muscle cuts, and found a 41% drop in Japanese purchases vs. last year at this time. Boxed beef was higher again with choice up 2.21 and select up 3.28. This strength is coming from tight supplies of beef not an improvement in demand. Cash cattle traded at 128 yesterday. Pork cutout values continue to slide as it was down .47 on Wednesday. Steve Georgy will be writing the Wake-up Call for the next 6 days as I will be on vacation. Please fill out the Allendale Planted Acreage Survey before Friday’s close. We will be releasing the results by email on March 15.

Markets as of 5:05 AM