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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.

Futures Provide Caution Signal

Jul 12, 2012

Good Morning! Paul Georgy with early morning comments for July 12, 2012 at 5:15 am. Corn and soybean futures are mostly higher. We are still in a weather market as the Midwest is dry. The weather models put a better chance of rain for early next week. However, temps will warm up again but not a hot as last week. Futures markets are providing signals of caution. Yesterday’s huge range in corn, soybeans and wheat were technically an outside day reversal after posting new contract highs. Volume was extremely heavy with corn trading over 324,000 and soybeans 219,000 contracts. The government went all-in on the corn yield estimate by giving us nearly a 20 bushel per acre reduction from last month. This surprised traders as they were expecting a more statistical adjustment and expecting the big adjustment in August. History tells us yields are likely to go down again by year end. The demand adjustment made by USDA is the possible catalyst for the profit taking sell-off. Using the reduced production there still is 1.223 billion bushel ending stocks. The 100 million bushel drop in corn for ethanol raises concerns that further demand reduction could come out of ethanol. The announcement by Secretary Vilsack that CRP land will be opened for haying or pasture should be helpful to livestock producers in drought-stricken counties. Key chart support is the gap from 6.75 to 6.86 left on the December corn chart on July 5th. A close below this support level will likely increase selling bias. Live cattle futures struggle as boxed beef prices continue to slide. Choice was down .54 and select was down .68. Pork cutout was down only .02. Feedlots continue to fill up with cattle that are running out of grass. The next Allendale Ag Leaders Webinar is July 24th.
Markets as of 5:15 AM
Dec Corn    +13 3/4
Nov Beans   +1 1/2
Sep Wheat   +7 1/4
Aug Cattle -.47
Aug Hogs    +.30
Sep S&P     -7.50
Sep Dlr     +.03
Aug Crude   -.82
Aug Gold    -10.80
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Allendale Advanced Charts
Yesterday’s trade in the Dec Corn has created a bearish pattern for the short term. The fact that we made new highs and closed lower on the day has left a key reversal at the top of the chart. From a symmetrical point of view, we gave back four days of gains in one day which is never action you want to see at a top. Now the level of major importance is the $6.85 level. If we do get below $6.85, we should fill the gap to $6.75 which would be termed exhaustion gap and leave today’s $7.48 high the pivot high that all hedges and bearish plays should be risked against.

Get technical analysis for corn, beans, wheat, cattle, hogs, crude and dollar markets.
Nelson Notes from the desk of Rich Nelson
New crop stocks were lowered from 1.881 billion to 1.183 billion bushels. Expect the August report to have another production drop when USDA recognizes their harvested acres estimate is too high.
Contact Allendale: 800-262-7538
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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