December 12, 2017

Harvest Weather Window Opens For A Few Days

Good Morning! From Allendale, Inc. with the early morning commentary for November 7, 2017.

Grain markets are lulling traders to sleep while open volatility shrinks. USDA report on Thursday has producers hoping for a friendly report but concerned about a bigger crop in corn. With low volatility driving premium prices, talk to your Allendale broker about ways to control risk going into the report.

World Weather Inc. says, “Some occasional precipitation will occur in the Northern Plains, Corn Belt, Delta, and Southeast within the next seven days. Some snow will occur in the Northern Plains Wednesday with more light snow showers and showers containing a wintry mixture likely Friday into early Saturday. The most widespread precipitation in the Corn Belt will occur Saturday into Sunday with mostly rain that moves across the region and some snow near the Great Lakes.”

USDA November crop production report will be released on Thursday at 11:00 am CT. Trade is expected corn production to increase to 14.333 billion bushels due to a .6 bpa increase from USDA last month’s estimate of 171.8.

Soybean yields are expected to drop to 49.3 from USDA 49.5 last month. Total soybean production will still be above 4.400 billion bushels. Ending stocks are expected to be adjusted slightly based on yield adjustments.

Wheat is expected by trade to see minimal changes from last month.

China sells 3,765 tonnes of imported 2013 wheat at auction of 124,216 tonnes offered from the state reserves.

US harvest is estimated by USDA to be 90% complete for soybeans which is very near normal of 91% for this time of year. Corn harvest continues to run behind the average of 83% with only 70% completed as of last Sunday. Winter Wheat conditions improve by 2% to 55% Good/Excellent.

Funds were estimated to have been net buyers of 6,000 wheat and 3,500 soybean contracts on Monday while selling 5,000 corn contracts.

Safras says that Brazil farmers have sold 19.1% of their soybean crop for 2017/18 compared to 25% last year and 29% average.

AgRural, a consultancy group out of Brazil, suggests farmers there are 43% planted compared to 53% last year and 44% for the 5-year average.

Saudi Arabian’s corruption crackdown has been a catalyst for the rally in crude oil prices and in turn has been supportive to soybean oil and ethanol values.

Beef exports in September were 13% above a year ago at 242.954 million lbs. This compares to the two previous months of increases of +11% and +16% over last year levels. Imports of beef into the US during September ran 230.592 million lbs. or 5% over last year.

Cash cattle markets are expected to be steady to higher this week with offers starting at 128.00. Packers margins are shrinking quickly as product gains at a much slower pace than fed cattle prices.

Live cattle futures have been volatile in recent sessions. The cash market demand for choice fed cattle, the overbought technical pictures, strong stock market and positive economic data are few of the influences driving cattle trader’s emotions.

February contract has support at 128.00 and at the gap at 126.67. Resistance is contract highs at 131.95.

Cash hog markets have drifted lower for the past 6 out of 7 days. The cash index should work lower.

December lean hog futures have come under pressure due to cash hog weakness and index funds rolling long positions out of December to a deferred contract. The Goldman Roll starts today and will run for 5 business days.

Dressed beef values were higher with choice up 1.83 and select up 1.69. The CME Feeder Index is 159.46. Pork cutout value is up .17.

Technical Chart of the Day

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