September 22, 2017

Wake Up Call

Bargain Hunters Support CME Grain Futures

Good Morning! From Allendale, Inc. with the early morning commentary for September 21, 2017.

Grain markets are finding support as bargain hunters look for value. Recent export sales suggest lower prices cure lower prices as world buyers book purchases. The large outside day reversal in the US Dollar could entice buying and reason to book needs now (before exchange rates become less favorable).

Harvest Reports from Farmers: We will be happy to share them on this report. Mail to or call 800-262-7538.

Marshall County, IA: 150 acres of corn harvested 230 bpa vs. 239 last year. Mid-August rains helped considerably, thought 200 bpa was going to be the top.

Woodford County, IL: 40 acres of early corn yield 235 bu/acre vs 248 dry last year.

Chariton County, MO: 1,000 acres of corn harvested yield 183 to 185 bpa which is at least 20 bushels less than last year. Harvest moisture is 18%, dropping by the day

East of Decatur, IL: just started harvesting corn on Monday and found 230 bpa, 18% moisture, pleasantly surprised considered how much water and replant issues we had. Beans still 7-10 days out.

Cotton Wood County, MN: Producer's silage appraisals were 187 bpa, 204 bpa and 210 bpa.

Weekly Export Sales report will be released at 7:30 this morning. Trade estimates are: corn 700,000 to 1,000,000 tonnes, soybeans 1,200,000 to 1,500,000 tonnes and wheat 300,000 to 500,000 tonnes.

Ethanol production in the two weeks of the new marketing year are trending lower than the previous week. The weekly production is strong at 1.047 million barrels per day during the first week and 1.033 barrels per day in the most recent week. These numbers are 4.3% and 5.3% over last year respectively, when USDA is looking for a year over year increase of 0.7%.

Soybean sales announcement on Wednesday was great to see. As of September 7, the latest weekly data available, total bookings only came to 624 million bushels. That is clearly under the 774 five-year average by this point in the marketing year as last year we had 828million bushel sold. Wednesday's 40 million bushels of soybean sales were great, but more are needed to justify USDA's 2017/18 goal.

CME October grain options expire on Friday. USDA Quarterly Stocks report will be released a week from Friday on September 29.

Ukraine grain harvest for 2017 is expected to be 61 to 63 mmt versus 66 mmt last year. Ukraine's Ag Minister cut their corn crop by 1.0 mmt to 27 mmt. USDA has Ukraine's production at 27.5 mmt.

Barge traffic on the Illinois and Ohio Rivers is experiencing slow movement due to low water levels.

Cattle on Feed report will be released on Friday at 2:00 pm CDT. Trade is estimating Cattle on Feed as of Sept 1 to be 102.7%, Placed during August at 97.1% and Marketings during August at 105.8%. Monthly Cold Storage report is scheduled for release on Friday.

Fed Cattle Exchange offered 1450 head of cattle this week. There were 636 head sold, 192 head at 106.50 and 444 head at 106.75.

Packers and feedlots have a bit of a standoff going this week. Feedlots want more money, especially after the FCE auction. Packers want to hold on to their $150.00 per head profit margins. It seems likely we will see higher fed cattle prices this week. The question is how much higher will they be by Friday?

Cash hog prices continue to fall when many were thinking the opposite due to the 2 new packing plants coming online. The problem is the volume of meat being offered to the consumer. Retailers are running features but supply is the real headwind to price rallies.

October lean hog futures contract is under pressure compared to the deferred contracts as cash index slides. Chart support crosses at 58.25 with resistance at 61.20.

December lean hog futures have a more constructive appearance as chart watchers point out the possible double bottom. A confirmation would be a close above 60.74.

Dressed beef values were lower with choice down .07 and select down .31. The CME Feeder Index is 150.46. Pork cutout value is unchanged.

Technical Chart of the Day

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