Good Morning! From Allendale, Inc. with the early morning commentary for July 27, 2017
Grain markets firm a bit on short covering after this week’s selloff. Trade will continue to watch weather forecasts, technicals and outside influences toward commodities.
Allendale’s Ag Leaders Conference Series Day 3 Begins at 2:00 pm today!
July25th, 26th and 27th, 2017
Weather Outlook - July 25th 2:00 PM CST, Drew Lerner of World Weather, Inc. will share his forecast for the remainder of this growing season and into harvest.
Grains & Oilseeds - July 26th 2:00 PM CST,Is it time to change your hedge strategy, or should you stick to your plan?Recordings are available.
Livestock - July 27th 2:00 PM CST,Our livestock outlooks will address the big fundamental questions that the livestock markets are currently facing.
Day 3 of the Allendale Ag Leaders Conference is reserved for Livestock and Meats. Cattle/beef and lean hog/pork outlooks will be noted in this session. Along with comments on chicken, Rich Nelson will cover a lot of key topics for the industry to consider. Expansion is the word in all livestock species but demand growth has been impressive! Will the market be able to deal with this supply and still offer profit into 2018? Full recommendations for hedging and speculative trading will be covered by Greg McBride.
Rich Nelson, Allendale’s Chief Strategist, shared his projections for the 2017 corn crop, putting the current yield at 163.3 bushel per acre, ending stocks at 1.927 and stocks/use at 13.6%. USDA in July was using 170.7 bushels per acre, 2.325 ending stocks and 16.2% stock to use. Call your Allendale representative to get the details on price projections.
Ethanol production last week averaged 1.012 million barrels per day which was 1.4% over last year. Current yearly production is 4.5% above last year and right on target with USDA of 4.3% year over year increase.
Weather forecast does not increase the heat in the 11 to 15-day period with dry areas expected to get some rain in the next few days.
Funds were active net buyers on Wednesday. They bought 9,000 corn contracts, 7,500 soybeans and 3,000 wheat.
Soybean export premiums were about 3-6 cents per bushel higher for shipments out of the U.S. Gulf Coast on Wednesday, caused by rising operational costs for barges navigating the Mississippi River. Corn premiums were lower with wheat flat.
U.S. wheat quality council tour projects day two spring wheat yield at 35.8 bushels/acre, down from 46.9 in 2016 and the five-year average of 46.6.
U.S. Dollar index falls to levels not seen since June of 2016. The Fed’s dovish comments about starting to shrink its massive holdings of bonds "relatively soon", which was taken by many to mean an announcement in September. However, the weaker Dollar could give a bit of lift to commodities.
Fed Cattle Exchange auction on Wednesday sold 36% of cattle offered with an average of 117.67 compared to last week of 118.27. Post auction the direct feedlot trade in Nebraska has been reported at 117.00.
Beef values appear to be trying to find a bottom. Historically, the seasonal pattern is for live cattle to notch a low in late July as retailers prepare for the finale of the cookout period. Institutional buying for school programs should begin their purchasing very soon.
Live cattle futures are currently battling resistance which is the gap left after Monday’s opening. Support for nearby cattle contract is last week’s lows. We would expect a breakout of this range by the end of this week.
Lean hog traders are wrestling with several conflicting fundamentals which are the big discount of futures to cash index, the known increasing supply of market hog numbers and positive technical picture.
October lean hog futures have technical support near the 66.00 level and the 200-day moving average. Resistance crosses at 68.50 and then 69.50.
Dressed beef values were lower with choice down .55 and select down 1.06. The CME Feeder Index is 151.57. Pork cutout value is down 1.82.
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