December 15, 2017

Commerce Department Makes Determination on Biodiesel

Good Morning! From Allendale, Inc. with the early morning commentary for August 23, 2017.

Grain markets are trying to put together a rally as bargain hunters and bottom pickers provide the support. Farm Journal Crop tour will release their production from the survey on Thursday afternoon. Technical indicators are registering oversold.

Need your help. Fill out Allendale's 28th Annual Yield Survey,

August 16-30, 2017 with results being released on September 1, 2017. You know your fields better than anyone. Help with another successful survey. Call 800-262-7538 or go to http://www.allendale-inc.com/2017-yield-survey/

December wheat as of last nights close is down 13 ½ cents lower for the week. We are in the 7th consecutive week of lower prices. Fundamental picture is bearish but how bearish? Allendale’s Chief Strategist, Rich Nelson's analysis suggests fair market value for Dec Wheat is around 4.71. Current prices are well below that level. Technical indicators are showing oversold which could provide a quick bounce at any time.

Corn futures are testing the August lows of 2016 at 3.58 ½. Corn futures are being pressured due to the weak wheat values and thoughts of improving corn production potential as rains cover much of Midwest.

Funds were net sellers of 7,000 corn contracts and 5,000 wheat on Tuesday. They are estimated to have bought 1,500 soybeans and 2,500 soyoil contracts.

National Biodiesel Board (NBB) Fair Trade Coalition won a preliminary countervailing duty determination from the Commerce Department regarding subsidized biodiesel imports from Argentina and Indonesia. The Commerce Department found that Argentina and Indonesia provide subsidies to their biodiesel producers in violation of international trade rules.

Argentina's biodiesel association, Carbio, said a U.S. decision to impose duties ranging from 50.29 percent to 64.17 percent on imports of biofuel from Argentina would result in the immediate suspension of exports to the United States. Carbio President Luis Zubizarreta denied biodiesel exports were subsidized in a statement, calling a preliminary finding by the U.S. Commerce Department "unjustified" and "protectionist." (Reuters)

Celeres, a Brazilian consultancy firm, estimates the spring 2018 soybean harvest at 109.1 million tonnes, under the 2017 estimate of 133.8. They see corn production for 2018 at 95.8, down from 100.7 in 2017. USDA is currently at 107 and 95 for their respective 2018 crop estimates. Allendale is using estimates of 107.9 and 93.4 respectively for Brazil 2018 estimates.

German farm cooperatives firm, DBV, projects this year's winter wheat production at 23.4 million tonnes which would be 3% under last year. Germany is the second largest wheat producer in the EU. USDA's estimate of 2017 EU production is 2.6% larger than last year at 149.56 million tonnes.

Allendale’s August Ag Leaders Webinar is set for August 29th at 8:00 pm CDT. This month we will be discussing Yield Estimates and Macroeconomics with R.J. O’Brien’s Chris Modaff. Register Here

Eco calendar has 3 major events starting with today’s August flash PMI, then the Jackson Hole Conference where Yellen speaks on Friday morning and Draghi at 3:00 pm in the afternoon and corporate earnings reports.

Cattle on Feed report will be released on Friday at 2:00 pm. Trade average estimates are: On Feed 104.9%, Placed 106.2% and Marketed 104.5% of a year ago.

Fed Cattle Exchange will be offering 1,067 head at the auction today. Country auctions are several dollars lower than last week.

Packer margins remain in the black which is incentive to keep production at capacity. Basis premiums are keeping feedlots aggressive sellers with futures leading the market lower.

Live cattle futures rallied on Tuesday based on short covering and bargain hunting closing above the 200 day moving average. The strength in product values combined with technical oversold conditions has provided the reason for buying. Technical support now crosses at 104.75 and resistance at 109.70 in the October contract.

Live hogs continue to roll into packing plants as producers take advantage of profitable margins. However, the large amount of protein offered to the consumer is weighing on all meats.

October lean hogs closed below key support at 64.12. Chart watchers are suggesting a double top and unless the October contract can close above recent support in the next few days, prices could drift several dollars lower.

Dressed beef values were lower with choice down .06 and select down .73. The CME Feeder Index is 143.43. Pork cutout value is down 1.42.

Technical Chart of the Day

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