Apr 19, 2014
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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.
 

Long Weekend Could Impact Monday’s Direction

Apr 17, 2014

Good Morning! Paul Georgy with early morning comments for April 17, 2014 at 4:50 am.  

Grain futures are higher ahead of export data numbers. End-users are aggressively accumulating inventory before farmers head to the fields.

Weekly export data will be released at 7:30 this morning. Traders are focused on the soybean sales as there are already more beans sold than USDA has in the balance sheet. Traders are talking about 12 cargoes of Brazilian soybeans canceled by China and being redirected to the US. Also there is talk that 2 cargoes of soybean meal have been sold to US. No confirmations yet.

                          Trade estimates          Trade estimates
                            for 2013/14                   for 2014/15
Wheat               50,000-250,000          225,000-375,000
Corn               550,000-850,000                 0-150,000
Soybeans      -100,000-+100,000         175,000-350,000
Soymeal         100,000-200,000           50,000-100,000
Soyoil                        0-50,000                        0-10,000

Weather forecasts suggest farmers will have a chance to get in the fields next week. Several of our customers are going to start planting today and many others will be in full swing by the weekend. Traders will be watching the long-range weather forecast as they get positioned for Monday. In recent weeks Monday’s have been a buy day for funds. This Monday much of the world will be on holiday.

Without a major change in Ukraine or in the weather forecast bears might have the upper hand to start the week.

Soybean basis remains strong in the Eastern Cornbelt as processors struggle with rail shipments from the western Cornbelt. They also hope to get enough inventories before farmers go the fields.

US grain futures markets will close at regular time today and not open until Sunday night. Livestock will close at 1:55 CDT today and reopen at 9:05 on Monday morning.

Typically the trade pays little attention to USDA’s regular mid-month Livestock, Dairy, and Poultry report. This report provides a text commentary followed by tables of USDA’s big picture projections in the livestock world. This year hog analysts are trying to find any guidance to get a handle on hog supplies. USDA again suggested 2014 pork production will only run 2% lower than last year. Adjusted from a live price to a lean with premium they are projecting cash hogs from $107 to $112 in Q2, $100 – $108 in Q3, and $92 to $100 in Q4. Futures are suggesting prices will be much higher. Pork cutout values are down .57.

Given the higher tone to wholesale beef prices this week there is an undercurrent of optimism for this week’s cash cattle trade. Some are suggesting steady to firm. Beef cutout values are higher with choice up .89 and select up 1.33. The CME Feeder Index is 179.63.

Markets as of 4:50 AM

  • May Corn    +1 3/4
  • May Beans   +10 1/2
  • May Wheat   +5 1/4
  • Jun Cattle  +.00
  • Jun Hogs    -.25
  • Jun Dlr     -.22
  • Jun S&P     -3.75
  • May Crude   +.07
  • Jun Gold    +4.10

 Chart of the Day

daily chart

If you have any questions on any of our material, give us a call at 800-262-7538 or email us at service@allendale-inc.com

Beans Leading The Charge

Apr 16, 2014

Good Morning! Paul Georgy with early morning comments for April 16, 2014 at 4:30 am.  

Grain futures are mixed as demand for old crop soybeans provides the support.

The NOPA crush number was a surprise for traders as the average estimate was 146.1 million bushels and the high estimate 150 million bushels. The actual March usage was 153.84 million bushels. This is 12% above a year ago with an average for the year up 2%. The USDA balance sheet estimate is for soybean crush to be down 0.2%. Needless to say the May Supply and Demand table will be much anticipated.

The impact on winter wheat crop from the recent frost in the southern plains is yet to be determined.  

Unrest in Ukraine has wheat traders on edge as Ukraine has deployed troops to the area where Russian dissidents are controlling government buildings. However the Eastern region of Ukraine is more of a corn producing area and spring planting should be getting started.

There is more talk that China canceled a couple of cargoes of soybeans from Brazil. Those cargoes are thought to be offered to East Coast buyers in the US.

Brazilian farmers took advantage of yesterday’s rally in soybeans and were aggressive sellers. US farmers were light sellers at the $15.00 level.

Markets are closed on Friday for Good Friday observance. Monday is "Patriots Day" in Boston where this year is more significant due to the bombing a year ago. Easter Monday is an observed holiday in many countries around the world. Will Managed Money be a large participant in the markets to start the week?

Funds bought a net 8,000 contracts of wheat and 9,000 contracts of soybeans. They were estimated as being even on corn.

Weather forecasts are setting up for clear and drying conditions next week which will allow for some planters to go to the field.

Beef cutout values showed improvement on Tuesday as choice was up .34 and select was up 1.09. The CME Feeder index is 179.75.  Cash cattle are expected to be lower this week. Traders are hoping to see an improvement in product next week as retailers start building inventory for cookout season.

Lean Hog futures are not for the weak of heart or the shallow pockets. We expect to see more volatility ahead of the long weekend. The battle line is drawn between less hogs due to PEDv and high priced pork at the retail counter. Pork cutout values are down 2.68.

Markets as of 4:30 AM

  • May Corn    – 3/4
  • May Beans   +16
  • May Wheat   – 1/2
  • Jun Cattle  +.20
  • Jun Hogs    -1.07
  • Jun Dlr     -.10
  • Jun S&P     +8.75
  • May Crude   +.88
  • Jun Gold    -1.40

 Chart of the Day

daily chart

If you have any questions on any of our material, give us a call at 800-262-7538 or email us at service@allendale-inc.com

Slow Planting Start For Corn

Apr 15, 2014

Good Morning! Paul Georgy with early morning comments for April 15, 2014 at 4:30 am.  

Grain futures are mixed with soybeans higher, wheat steady and corn lower.

Planting progress for corn is 3% completed nationally. Weather forecasts suggests slow progress this week but the last week in April should allow for much better planting conditions for western 2/3 of Midwest.

Winter wheat good to excellent conditions were down 1% to 34%.

A French analyst has cut their estimate of 2014 wheat crop in the Black Sea Region by nearly 4 million tonnes which is 9% less than last year. They cut corn production by 3.9 million tonnes which would be down 14.2% from last year. They see the rising turmoil in the region and dry weather as the reason for the reduced production outlook. Other analysts are citing lack of available financing, fewer fertilizers and poor quality seeds mean spring crops in Ukraine and Russia will be more vulnerable than ever due to changeable weather this year.

The National Oilseed Processors Association will release its monthly crush report today at 11:00 am. Trade estimates ahead of the report ranged from 140.1 million to 153.0 million bushels. The median was 146.5 million. The average would suggest a crush of 7% higher than last year and a very strong pace. In order to hit USDA’s target crush needs to run 3.2% below last year for the balance of the year.

Weekly export shipments were well below trade expectation for soybeans however there were 267,939 tonnes loaded out last week.

A major bank came out with their forecast for a negative return on commodity investments for the next 12 months, predicting a fall in precious metals, agriculture and energy. The decline will be led by a 15 percent drop in precious metals, 10 percent drop in agriculture, 2.5 percent drop in energy and a 4 percent decline in industrial metals.

China is expected to intensify its efforts to promote crop insurance, with a goal to cover 60 percent of the country’s cultivated land by 2020.

Market ready hog supplies are causing some packers to be dark during the Easter weekend. High prices have impacted weekly pork exports as it has fallen to the worst level this year. Hog slaughter is expected to continue to decline as the largest impact from PEDv should hit during summer months. Pork cutout values were down .35.

Beef cutout values were mixed with choice up .40 and select down .41. With a short trading week it is expected that retailers will have enough inventory and will want to clean out the coolers going into Easter. Beef demand should improve next week as cookout season is near. The CME Feeder Index is 180.39.

Markets as of 4:30 AM

  • May Corn    -3
  • May Beans   +6 1/2
  • May Wheat   + 1/4
  • Jun Cattle  -.05
  • Jun Hogs    +.32
  • Jun Dlr     +.11
  • Jun S&P     -2.00
  • May Crude   -.81
  • Jun Gold    -16.00

 Chart of the Day

daily chart

If you have any questions on any of our material, give us a call at 800-262-7538 or email us at service@allendale-inc.com

Grain futures are mixed with soybeans higher, wheat steady and corn lower.

Key Factors Affecting Trade This Week

Apr 14, 2014

Good Morning! Paul Georgy with early morning comments for April 14, 2014 at 4:30 am.  

Grain futures are higher on an increase in tension between Ukraine and Russia, US weather and money flow.

The USDA will give us the first weekly planting progress report this afternoon. Trade is expecting 2% to 5% of corn planted nationally. The 5 year average for April 14 is 7% planted.

Weather will be the focus this week as cool temps and lack of planting progress are on traders’ minds. You are able to get the full insight from Allendale’s in-house meteorologist Ryan Martin by clicking Allendale Weather.

NOPA will release crush data on Tuesday. Average analyst estimates are 146.1 million bushels for the March and 1.917 billion pounds for soyoil stocks.

The soybean market is very concerned about the Chinese default on several loads of soybeans. A Chinese research firm is suggesting as much as 2 million tonnes may have been defaulted on due to the importers inability of getting a line of credit.

Money flow has been a huge driver to the Agricultural markets in recent months. Managed Money Funds were net sellers on Friday’s CFTC commitment of traders report as they reduced long positions in corn, soybeans and wheat.

The geo-political unrest in Ukraine is escalating as pro-Russian activist take over government buildings and Ukraine vows force to regain control. Russia has warned against any use of force by Ukraine.

Outside markets are stronger this morning as traders have a risk on attitude.

Cash cattle traded at 147 in TX and KS late on Friday which was 1.00 lower than the previous week. The drop in product is giving packers a negative margin. Beef cutout values were under pressure again on Friday with choice down 2.88 and select down 2.12. CME feeder Index is 178.30. Product is not likely to see post Easter Holiday featuring until next week.

Pork cutout values are up .29. Hogs supplies are tight which is causing the weekly slaughter declines. A meat price rally is showing up at the retail counter and it remains to be seen how consumers will react. April contract expires today and June is discount to the cash index. Look for the livestock futures to start the week a bit lower.

Markets as of 4:30 AM

  • May Corn    +5 1/4
  • May Beans   +5 1/2
  • May Wheat   +17 1/2
  • Jun Cattle  Steady
  • Jun Hogs    Steady
  • Jun Dlr     +.29
  • Jun S&P     -4.75
  • May Crude   +.04
  • Jun Gold    +5.80

 

Chart of the Day

daily chart

If you have any questions on any of our material, give us a call at 800-262-7538 or email us at service@allendale-inc.com

Weather, Weekend and China

Apr 11, 2014

Good Morning! Paul Georgy with early morning comments for April 11, 2014 at 4:45 am.  

Grain futures are mixed as the weather forecast is the focus for corn traders heading into the weekend. China’s default on bean purchases weigh on futures.

Allendale continues to grow by adding an in-house meteorologist Ryan Martin. You are able to get his insight on US weather by clicking Allendale Weather.

USDA Weekly Export sales in soybeans at 79,000 were considered friendly however the news of China backing away from several cargoes of soybeans due to a line of credit has pressured prices. The trade now will be watching the newswire very closely at 8:00 am when the USDA announces new sales or cancellations to see if there are any official cancellations.

Egypt is tendering for 55,000 to 60,000 tonnes of soft wheat after 2 cargoes were being held up in Russian ports.

The Climate Prediction Center, an agency of the National Weather Service, pegged the likelihood at more than 50 percent that an El Nino will develop by this summer.

The Brazilian crop agency, Conab, expects a record soy crop of 86.1 mmt, up from 85.4 mmt seen last month. USDA said 87.5 mmt onWednesday. Conab’s corn forecast was little changed at 75.46 mmt, up from last estimate of 75.18 mmt, USDA said 72 mmt.

The first Conab wheat forecast for 2014/15 is 6.7 mmt compared with 5.5 mmt 2013/14 crop.

IA soybean basis (futures minus cash) is nearly 75 cents per bushel less than last year at this time.

Russian President Putin has warned the EU that if Ukraine delays in paying for gas it could become a critical situation. Russia may be forced to stop movement of gas across Ukraine. EU gets about one third of its gas from Russia.

Japan and the United States are seeking a two-way trade deal before Obama travels to Japan for an April 24-25 state visit. It is believed Japan is offering a tariff reduction on US beef from 38.5% down to 10%. Beef cutout values were lower with choice down .46 and select down .93. Featuring of beef and buying for Memorial Day usually is supportive to beef product values the week after Easter. Cash trade is developing at steady to $1.00 lower this week. The CME Feeder Index is 178.31.

Grocery retail ads this week has beef prices edging lower. Pork prices this week work higher as bacon moves above $4.00 per pound. Chicken ads were steady with last week. Pork cutout values were down 2.48 on Thursday. Yesterday’s volatility in lean hog futures was on low volume.

Markets as of 4:45 AM

  • May Corn    +2
  • May Beans   -5 1/4
  • May Wheat   – 1/4
  • Jun Cattle  +.25
  • Jun Hogs    -.70
  • Jun Dlr     +.04
  • Jun S&P     +.25
  • May Crude   -.23
  • Jun Gold    -1.30

Chart of the Day

daily chart

If you have any questions on any of our material, give us a call at 800-262-7538 or email us at service@allendale-inc.com

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