October 24, 2016

Wake Up Call

Demand Strength Continues with Export Sales

Good Morning! Paul Georgy with the early morning commentary for October 21, 2016

Grain markets are higher as traders weigh their next move after strong export sales compete with large harvest expectations. Outside markets have crude higher, gold and equities lower.

South American production potential is still in question. Find out what to expect from South America this year and beyond as we welcome Dr. Michael Cordonnier to the Allendale Ag Leaders Webinar Series. Register here to get Dr. Cordonnier's thoughts on how South American corn and soybean production will impact US markets.

Weekly export sales reported corn sales of 1,022,962 metric tonnes (all from the current harvest), a bit above the 700,000 - 950,000 trade expectation. USDA forecasts record exports this year at 2.225 billion bushels. That would be 40% over the five year average. Year to date sales are 46% over the five year average.

More Market Commentary:

Morning Coffee Commentary 10-21-16

Soybean sales came to 2,008,760 metric tonnes (almost all from the current crop), well over the 1,0000,000 - 1,300,000 trade expectation. USDA's goal for soybean exports this year is for a record 2.025 billion bushels. That would be 25% over the five year average.

Wheat export sales totaled 513,753 tonnes (all 2016/17 crop). This was within the 350,00 - 600,000 trade expectation. USDA's goal for exports this year is 975 million bushels. That would be right on the five year average. Year to date sales, since that June 1 start of the marketing year, are 3% over the five year average.

Informa estimates that 2017 US acreage will feature a 5.7% increase in soybean acres, and a 3.7% decline in corn acres. They estimate soybean acreage at 88.487 million, and corn at 90.971.

Franca Junior, a Brazilian analyst, estimates farmers have forward sold 24% of currently planted soybean crop. That is under the 40% sales pace from last year at this time.

Brazilian vegetable oil processing association, Abiove, estimates the spring 2017 soybean harvest will total 101.3 million tonnes. They see total exports of 57 mt. USDA is currently at 102 and 58.4 mt respectively.

Managed money funds were estimated sellers across the board in yesterday's trade. Funds sold 10,000 corn contracts, 6,000 soybeans, 2,000 wheat, 2,500 soymeal, and 4,000 soyoil contracts.

The European Central Bank did not change their short term interest rates yesterday. ECB President Draghi suggested that they feel low interest rates are supporting the economy and that they would take further action in the future if the economy warranted it.

Retail pork prices fell slightly from August to September, $3.798 to $3.789. We remain a bit off the $4.215 peak that was posted in September of 2014.

Limit up trade in cattle yesterday was based on bottom picking speculation as well as the fact that packers moved bids up to steady at $98 after seeing Wednesday's $98/$99 trading via the Feeder Cattle Exchange. Today's trade will have expanded limits for Live Cattle contracts.

Cattle on Feed will be released today at 2:00 PM CT. Reuter’s traders survey average estimates are On Feed 101.3%, Placed 103.6% and Marketed 106.2% of a year ago. Cold Storage, also out at 2:00 is estimated to show pork stocks at 626.019 million pounds and beef stocks at 498.876. Both reports will be covered in our afternoon commentaries.

Dressed beef values were lower with choice down 2.86 and select down 2.54. The CME Feeder Index is 120.58. Pork cutout value is down .82.

Markets At-A-Glance – 5:00 AM

  • Dec Corn    + 1
  • Nov Beans   + 2 3/4
  • Dec Wheat   + 1/2
  • Dec Soymeal + 1.20
  • Dec Soy oil -.08
  • Dec Dlr     +.19
  • Dec S&P     -7.20
  • Nov Crude   +.23
  • Dec Gold    -2.40

Technical Chart of the Day

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