February 19, 2018

Wake Up Call

Weather Forecast Important Post Holiday

Good Morning! From Allendale, Inc. with the early morning commentary for February 16, 2018.  

Grain markets trade carefully ahead of the three-day weekend. Markets will close at their normal time today, but will not reopen until Monday evening in observance of President's Day. Keep an eye on weather map updates ahead of Monday night's reopen. A change in forecast could move markets.

NOPA released monthly crush numbers yesterday and reported 163.111 million bushels crushed in January, under the 165.511 trade expectation. This is 1.6% over last year. Our year to date pace is 2.2% over. We are still behind USDA’s goal of a 2.7% increase.

Weekly Drought Monitor showed no improvement for the Southern Plains drought, but almost no expansion in the geographic areas. It did add to the severity of dryness in Southern half of Illinois and in Missouri, just West of St. Louis.

Weekly export sales for the week of February 2 –  February 8. had corn export sales of 2,072,003 metric tonnes (1,974,467 for 2017/18), well above the trade expectation of 1,000,000 – 1,600,000 tonnes. It was also a record weekly sale for this particular week.

Soybean sales totaled 837,482 metric tonnes (640,362 for 2017/18), at the high end of trade expectations of 450,000 – 850,000 tonnes. We will need to start seeing bigger weekly sales to hit USDA's most recent export estimate. Wheat export sales of 421,923 were also reported, within the 200,000 – 450,000 trade expectation.

USDA expects corn and soybean exports out of the US increasing over the next 10 years, but the share of global sales will decrease according to long-term projections out yesterday. Competition from South America is expected to have a great impact on exports with the US share of world exports falling below 30% by 2027.

USDA’s 94th Annual Agricultural Outlook Form will be held on February 22 and 23, 2018. This when the industry will get the first peak of what USDA is expecting for the 2018 crop.

Strategie Grains cut its estimate of EU soft wheat exports by 300,000 tonnes to 21.4 million tonnes this year. They cite the lack of competitiveness on the world stage of French and Polish wheat. Last year, the EU exported 24.1 million tonnes.

Managed money funds were estimated buyers of 5,500 corn contracts, 9,000 soybeans, and 4,500 wheat in yesterday's trade.

Commodities-related revenue at the 12 biggest investment banks fell by 42 percent last year to its lowest since at least 2006, a report by financial industry analytics firm Coalition said on Friday. Revenue from commodity trading, selling derivatives to investors and other activities in the sector fell to $2.5 billion in 2017 from $4.3 billion the previous year, it said in a report. "Low volatility and subdued client activity, coupled with trading underperformance witnessed in 1H17, led to the overall decline," it said. (Reuters)

Weekly beef export sales were reported at 10,374 metric tonnes, or 22% under last year for this particular week. Year to date sales are now down from a 22% surplus over last year to 19%.

Weekly pork sales showed some life at 21,258 metric tonnes for the week. That was 14% over last year. If it continues, this is a positive sign after the previous five weeks ran about 1% over last year.

Dressed beef values were higher with choice up 1.23 and select up 1.63. The CME Feeder Index is 147.70. Pork cutout value is down .53.

Technical Chart of the Day

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