September 18, 2014

How Much More Negative News?

September 17th, 2014

Good Morning! Paul Georgy with the early morning commentary for September 17, 2014 at 5:30 am.

Grain futures are quietly mixed as soybeans get support from soyoil.

Traders Focus: FOMC Meeting results, Export sales on Thursday, early harvest results, Russian sanctions and chart support and resistance.

South American Weather, Grain Stocks, and Small Grains Summary are topics that will be discussed on Tuesday, September 23rd at 8:00 PM CDT at the September Allendale Ag leaders Webinar, Sign up Now!

Investors will be watching the outcome on Wednesday’ FOMC meeting for clues on the timing of the first U.S. rate hike in more than eight years. They do not expect rates to rise until 2015, but recently strong U.S. economic data has led Fed officials to acknowledge they may need to act sooner.

ABARES lowered Australian wheat export estimate for 2014/15 by 3 percent to 18.102 million tonnes, having pegged sales at 18.66 million tonnes in June.

Processors in Argentina are struggling to buy soybeans going into the time of year where meal exports pickup. With inflation running rampant, farmers are hoarding soybeans.

Scotland will vote tomorrow for independence. The outcome could have major impact on their economy.

Update – Morning Video Commentary:

The California Public Employees’ Retirement System said it would shed its entire $4 billion investment in hedge funds over the next year in an effort to simplify its assets and reduce costs. This retreat could prompt other cities and states to consider similar moves.

House leaders are indicating that the House is likely to vote today on a continuing spending resolution to keep the U.S. government funded until December 11, 2014, after the November election.

Watch the monthly chart of the US Dollar Index, a close above long-term resistance at 84.50 could open the door for a sharp rally. Dollar strength usually is negative for commodities.

More early harvest yield reports are coming in much better than expected; Southern IN 220 bu/ac and East-central IN 266 bu/ac dry which were well above APH. Soybean yields are equally surprising in Southern IN and IL.

Australia raised its forecast for 2014/15 beef exports by 1 percent as continued dry conditions force farmers to slaughter animals at a soaring pace, and said the United States was set to emerge as the biggest customer.

Cattle on Feed report Friday: total Cattle on Feed as of September 1 is expected to be 2.6% under last year. August Placements are expected to be 5.2% lower than last year. This would be the lowest August placement since the history of the current data series (1996). The Marketing total could be 1.1% lower than August 2013.

Packers are not bidding yet for cattle as their margins have dropped into the red. Beef values are under pressure with choice down 1.38 and select down .32. The CME Feeder Index is 230.05.

Allendale projects a 535 million lb. total pork stock level for the end of August. The five year average is 499 million lbs. for the end of August. Lean hog futures are in a trading range. Pork cutout values are up 1.90.

Markets as of 5:30 AM CDT                                                                    

  • Dec Corn   -1 1/2    
  • Nov Beans   +3 1/4
  • Dec Wheat   -1 1/4
  • Oct Cattle  +1.20
  • Oct Hogs    +.72
  • Dec Dlr     -.02
  • Dec S&P     +.50
  • Oct Crude   +.06
  • Oct Gold   +1.70

Chart of the Day

daily chart

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    Allendale Advisory Contributor:


    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.