October 9, 2015

Wake Up Call

Grain Market Waits For New News

Good Morning! Paul Georgy with the early morning commentary for October 8, 2015 at 5:15 am.

Grain markets are lower as they setback and fill ahead of tomorrow’s major report. Outside markets are carrying a risk-off attitude this morning as most markets are lower.

Traders hope that USDA will answer some of the questions concerning yield. On recent reports trade believed that corn and soybean yields were too high. Now producers are surprised with field averages even when including drowned out areas.

Will USDA drop acres in corn and soybeans due to wet spring and late plantings? Harvested acre adjustments on tomorrow’s report could be the number that will have the most influence on total production. However we have to remember “headline traders” will be buying or selling based on any USDA number not on trade average estimates.

More Market Commentary:

Midday Commodity Weather 10 08 2015

The weekly export sales will be released this morning at 7:30. Trade estimates are: corn 550,000 to 750,000 tonnes, soybeans 700,000 to 1,000,000 tonnes, soymeal 100,000 to 300,000 tonnes, soyoil 5,000 to 30,000 tonnes and wheat 175,000 to 375,000 tonnes.

Profit margins for ethanol producers is still good enough to continue production above a year ago. Year to date pace for ethanol production is 5% over last year. Even with a higher corn for ethanol conversion rate we are beating USDA’s goal for the year of a 0.9% increase. Ethanol stocks are not burdensome as they are in line with year ago levels.

Australia’s Bureau of Meteorology said in a recent news release that there is less than a 20% chance that the southeast quarter of the country will receive median rainfall. The strengthening El Nino is increasing the chance for drier conditions for October through December.

The 200 day moving average in December wheat crosses just above Wednesday’s high. The 5.33 level will be important as traders digest the report data on Friday.

Monsanto said it is slashing 2500 jobs and restructuring operations to cut cost in a slumping commodity market which it expects to last well into 2016.

US crude oil stocks continue to build as total supplies increase by 2.3 million barrels to an EIA record of 1.3 billion barrels.

The Malaysian Palm Oil Board will release its September palm oil data next Monday. Local output and stockpile levels are expected to reach record highs.

October live cattle futures have rallied 5.92 per cwt from Friday’s close. Cash markets have been quiet with bids and ask all over the board. The premium futures is carrying of last week’s cash is enticing more deliveries. There were 7 new deliveries last night bringing total to 35 loads. There were 28 loads retendered.

Some are attributing the rally in cattle futures to the potential pickup in beef featuring. Retail chains around the country are running ads featuring beef. The excitement comes for cattle traders because in the middle of National Pork Month, pork usually gets the ink in the ads.

Dec Lean Hog futures are still $7.00 below the cash index which is providing underlying support.

Dressed beef values were lower with choice down .59 and select down 1.17. The CME Feeder Index is 182.27. Pork cutout values are down .10.

Markets as of 5:15 AM CDT

  • Dec Corn   -1 1/2
  • Nov Beans -4 1/4
  • Dec Wheat   +1 3/4
  • Dec Soymeal -.60
  • Dec Soy oil -.29
  • Dec Dlr     -.30
  • Dec S&P   -6.75
  • Nov Crude   +.11
  • Dec Gold   -4.60

Technical Chart of the Day

daily chart

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