March 27, 2015

Small Grains Hold Key To Plantings Expectations

March 26th, 2015

Good Morning! Paul Georgy with the early morning commentary for March 26, 2015 at 5:15 am.

Update – Morning Coffee Commentary:

Grain markets are firmer and nearby corn futures have rallied 30 cents in the last 7 trading session. Crude oil surged higher overnight as Saudi Arabia and its Arab allies have begun military operation against Iranian allied forces. The dollar has fallen to trend line support on the charts.

Traders will be watching the export sales report later this morning. Reuter’s surveyed estimates are for wheat 200,000 to 400,000 tonnes, corn 400,000 to 600,000 tonnes, soybeans 100,000 to 300,000 tonnes, soymeal 50 to 150,000 tonnes and soyoil 0 to 20,000 tonnes.

Shift in cotton and small grain acres could have a greater than normal impact on corn and soybean planted acreage. Average trade estimate for cotton is 9.829 million acres verses 11.037 last year. Sorghum planted acres could be as much as 1.0 million acres more than last year. Barley and oats acreage could increase about 125,000 acres each while rice acreage is expected to decline by 95 million acres.

Agroconsult raises Brazil’s soybean production by 1.1 million tonnes to 95.8 million tonnes. They also raised their outlook for corn production to 79.4 million tons from 79.0 million tonnes last month.

Russian Ag Ministry has cut the grain loss to winterkill to 16.8 percent down from 21 percent. They believe Russia’s 2015 grain harvest is on track to be 100 million tonnes.

US crush margins continue to erode as meal values continue to be on the defensive.

South American bean basis is soft as harvest nears 60% complete in Brazil but is just starting to pick up steam in Argentina where early yields continue to be very good. Argentine farmers may hoard beans until the Presidential elections this fall. Several of the candidates have pledged to revamp the export tax system in Argentina which provides the incentive for farmers to hold on to grain.

April grain options at the CME stop trading tomorrow at the close.

Crude oil stocks build by 8.140 billion barrels last week which makes the 11th record week in a row. Ethanol production rose during the latest week and was an 8% year over year increase.

The wholesale prices between beef and pork are at record levels. How much longer can beef sustain its strength with the abundance of competitive meats? Beef values are sharply higher with choice up 3.68 and select up 2.36. The CME Feeder Index is 216.90.

The USDA will release the Quarterly Hogs and Pigs Report on tomorrow at 2:00 pm. The December pig crop would have said the numbers would be up 4%, instead the last four weeks have been 9%. Weights have dropped about four pounds since the first of the year, which are roughly half the extra pigs that we have seen. Pork cutout values are down .99.

Markets as of 5:15 AM CDT          

  • May Corn   +2        
  • May Beans +2 1/4    
  • May Wheat   +4 3/4
  • May Soymeal -.20
  • Jun Dlr     -.67
  • Jun S&P   -14.50
  • May Crude   +2.04
  • Apr Gold   +13.30

    Allendale Advisory Contributor:

    Pgeorgy

    Paul Georgy

    Paul is one of the founders of Allendale. He is very active in the futures industry and currently serves on the Board of Directors of the National Futures Association.

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