Stock Rebound Brings Bargain Hunters to Grains
Aug 27, 2015
Good Morning! Paul Georgy with the early morning commentary for August 27, 2015 at 5:15 am.
Grain markets are higher on short covering and bargain hunting ahead of Weekly Export Sales. Traders have a risk-on attitude this morning as outside markets are higher after Chinese stocks close 5.3% higher.
Only 2 days to get your yield estimates in the 26th Annual Allendale Yield Survey. We continue to say "No one knows your fields better than YOU!" Last year Allendale’s August survey estimated corn yields at 171.9 bpa which was only 0.2 off USDA’s 171.7 September report. The survey was also incredibly strong in soybeans as well with a 46.4 bpa estimate, off only 0.2 compared with USDA’s September 46.6. Participate by calling 800-262-7538 or online at www.allendale-inc.com/yield-survey
Weather forecasts show no concern over potential early frost. The western cornbelt is expect to receive more rain which should be beneficial to crops. No real trouble spots in US major crop growing areas right now.
Corn harvest is rolling along in the south and yields are below last year (as expected) but above the 10 year average.
Ethanol production slipped in the latest week to 952,000 barrels per day versus 965,000. This is actually a complete normal event for the end of August. Production will likely slip into September until new crop supplies hit the Midwest. More important than the week to week change is that production was 4% over last year and continues to run above the pace needed to hit USDA’s whole-year goals.
Ethanol production margins are estimated at 3 cents positive however the blending margins are 10 cent negative.
Export sales will be released at 7:30 this morning. Trade estimates for old crop corn is 50,000 to 250,000 tonnes, soybeans 0 to 150,000 tonnes, soymeal 0 to 75,000 tonnes and soyoil 0 to 20,000 tonnes. New crop sales estimates are: corn 450,000 to 650,000 tonnes, soybeans 600,000 to 900,000 tonnes, soymeal 50,000 to 200,000 tonnes, soyoil 0 to 10,000 tones and wheat 225,000 to 400,000 tonnes.
U.S. farm incomes will decline 36% this year to the lowest level in nine years, the USDA projects, reflecting a continued slump in crop prices and recent weakness in the dairy and hog markets. Net farm income will drop to $58.3 billion from $91.1 billion in 2014, marking the largest percentage decline since 1983, including when figures are adjusted for inflation.
Brazil's largest agricultural cooperative Coamo expects to increase its area planted with soybeans by 3 percent in the upcoming season from a year earlier, Coamo's president Jose Aroldo Gallassini told Reuters in an interview.
The Brazilian port of Paranagua is expecting to move 71 percent more soybeans and corn between August and October of 2015 versus same period in 2014.
China's PMI report out over the weekend will be important to their stock market Sunday night.
First notice day for delivery on the September grain contracts is Monday, August 31.
Tuesday night’s August Ag Leaders Webinar is available to everyone free. If you missed it, we had a great discussion on yield changes on upcoming USDA supply/demand reports, click here.
Yellen/Draghi will not be at the Jackson Hole meetings but markets will still be gauging policy-maker concern about China and volatility. U.S. Q2 GDP released at 7:30 is expected to be revised substantially higher and U.S. pending home sales are expected to remain near 8-year high.
Smithfield Foods Inc. said its U.S. pork exports to China jumped 45 percent in the first six months of 2015 and would continue to grow for the rest of this year.
August Feeder Cattle expire today, August Live Cattle futures go off the board on Monday.
Cattle trade is concerned about the news of more heavy weight cattle at auction barns in the cornbelt. There also is more 4’s and 5’s showing up in the marketing mix which suggests cattle feeders have backed up some cattle and it will take time to clean up.
Livestock futures have been under pressure as economic concerns weigh on traders bias. Cattle futures are oversold and testing long-term support. Lean hog futures remain in a trading range.
Dressed beef values were lower with choice down .45 and select down .18. The CME Feeder Index is 212.34. Pork cutout values are up 1.14.
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