September 29, 2016

Rains and Report Estimates Dominate Trade Talk

September 28th, 2016

Good Morning! Paul Georgy with the early morning commentary for September 28, 2016

Grain markets are slightly lower as traders continue to position ahead of Friday's USDA reports. Outside markets are mostly quiet ahead of Federal Reserve speeches slated for later today.

More Market Commentary:

Morning Coffee Commentary 9-28-16

If you missed last nights Ag Leaders Webinar, you missed a great outlook on cash rents with University of Illinois Professor Gary Schnitkey. Get the recording here. We asked Professor Schnitkey for his take on where rents are headed and how futures markets could be impacted. We also had Rich Nelson on hand for estimates and expectations for Friday's USDA Grain Stocks report.

Rain discussions continue to circulate as some fear the Eastern Corn Belt will get too much moisture and slow harvest. In Australia, key wheat growing regions continue to see very heavy rains. In South America, on the other hand, forecast rainfall seems to be timely and welcome as planting continues.

Reuters estimates for Friday's two USDA reports has corn stocks at 1.754 billion bushels, over the 1.716 USDA had last guessed on September 12. Old crop soybean stocks are seen at 201 million bushels, just over the 195 million USDA was estimating earlier this month. September 1 wheat stocks are estimated at 2.397 billion. Last year on Sep 1 the number was 2.097.

USDA's Small Grains Summary is estimated to show total wheat production at 2.323 billion bushels, winter wheat 1.660, other spring 570 million, and 93 million for durum.

China's Commerce Ministry confirmed an anti-subsidy tax of 10% to 10.7% on imports of US DDGs earlier today. The tax was expected after last week's announcement of an anti-dumping tax on DDGs.

Russia's grain harvest is estimated to be 88% complete according to the Agriculture Ministry. They suggest 109 million tonnes of grain has been brought in from 41.6 million hectares. Last year at this time they had only harvested 36.9 mh.

South Africa's Crop Estimates Committee raised their estimate of the harvested corn crop up from 7.3 million tonnes to now 7.5. This was their ninth and final estimate of the year. The trade expected no change at 7.3. Last year's crop ran 9.95.

Managed Money funds were estimated buyers of 5,000 corn contracts, 7,000 soybeans, 3,700 wheat, and 3,500 soymeal. They were estimated sellers of 500 soyoil.

Outside market events to watch today include Durable Orders at 7:30 AM CT, and Crude Inventories at 9:30 AM. Several members of the Federal Reserve, including Janet Yellen, are also expected to speak today. Traders will be interested in their general thoughts on the economy to gauge the probability of the next interest rate hike.

USDA's Hogs and Pigs is likely to show herd expansion according to average analyst estimates. All hogs as of September 1st is estimated to be 101.2% (of last year), Kept for breeding 100.5%, and Kept for market 101.3%. The report will be released at 2:00 PM CT on Friday.

Limit down trade was seen in the October through February Live Cattle contracts yesterday. As a result, all live cattle contracts will have expanded limits today.

Cattle traders are concerned that unsold cattle from last week will flood this week's offering and push prices lower as Monday's showlist had a 31,000 head increase.

Dressed beef values were mixed with choice up 1.18 and select down .07. The CME Feeder Index is 136.81. Pork cutout value is down 1.04.

Markets At-A-Glance – 5:30 AM

  • Dec Corn    -1 3/4
  • Nov Beans   -5 1/4
  • Dec Wheat   - 3/4
  • Dec Soymeal +.10
  • Dec Soy oil -.51
  • Dec Dlr     +.12
  • Dec S&P     -2.80
  • Nov Crude   +.25
  • Oct Gold    -1.60

Technical Chart of the Day

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    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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