March 29, 2015

Wake Up Call

Chart Patterns Create Additional Concerns

Update – Morning Coffee Commentary:

Good Morning! Paul Georgy with the early morning commentary for March 27, 2015 at 5:15 am.

Grain markets are quiet as traders dig in before reports. Crude oil prices slip as concerns about productions ease. In early trade the dollar is firming against other currencies.

The average trader’s estimate for March 1 soybean stocks is 1.346 billion bushels and the average trades guess for March 1 corn stocks are 7.609 billion bushels.

Prospective plantings average trade estimate for U.S. plantings (in million acres): corn 88.731, soybeans 85.919, all-wheat 55.796, winter wheat 40.727, spring other wheat 13.334, durum 1.759.

Technical traders are concerned about the outside day reversal in corn contracts. Spreaders contributed to volume in the grain complex on Thursday. Position traders are adjusting positions ahead of the USDA report. Call your Allendale representative to discuss positioning going into Tuesday.

Harvest is getting underway in Argentina and early yield reports are causing private forecasters to raise production to 58 to 60 mmt. USDA  estimated a 56 mmt crop in Argentina on the last report.

Headline risk on the Brazilian truckers and the inevitable Argentine worker strikes going for their annual inflation adjustment raises could provide support to the grain complex. Reports Argentina will have a national day of protest against the government on Tuesday, March 31st.

Russia will probably not extend a tax on wheat exports, imposed until June 30, if optimism over lower inflation and a large crop persists among officials, SovEcon consultancy said.

EU grants another 789 tmt of wheat export licenses which is now 8% above a year ago.

Federal Reserve Bank of Atlanta President Dennis Lockhart said he’s now watching the dollar more closely to determine what impact its strength will have on the economy as the central bank gets closer to raising interest rates.

The US House of Representatives approved a budget containing $1 billion worth of farm bill spending cuts over 10 years for agriculture programs and a massive reorganization for the Supplemental Nutrition Assistance Program that shifts control from the USDA to individual states.

Cash cattle trade is at a standstill. Beef cutout values are mixed with choice up .16 and select down .18. The CME Feeder Index is 217.63. Futures markets are finding support near the gap and the 100 day moving average. Spread traders are buying hogs selling cattle as wholesale product values favor pork.

China’s pork imports declined significantly in Feb 2015 from a month earlier. According to customs data, China imported 35,212 tonnes of pork in Feb 2015 that decreased 43.38% month on month but rose 2.19% from a year earlier. Pork cutout values are up .43.

Estimates for the USDA Hogs and Pigs report which will be released at 2:00 pm:

                         Ranges   Average    Mln head

All hogs March 1    105.0-108.5     106.8      65.676

Kept for breeding   102.4-104.6     103.6       6.062

Kept for market     105.0-109.0     107.2      59.650

Pig crop

December-February   104.7-111.2     109.0

Markets as of 5:15 AM CDT          

  • May Corn   – 1/4     
  • May Beans -1 1/2    
  • May Wheat   +2
  • May Soymeal -.40
  • Jun Dlr     +.33
  • Jun S&P   -4.50
  • May Crude   -.93
  • Apr Gold   -7.60

Technical Chart of the Day

daily chart

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