August 16, 2017

Wake Up Call

Will Funds and Technical Traders Press Markets Further?

Good Morning! From Allendale, Inc. with the early morning commentary for August 16, 2017.

Grain markets are taking a breathier after breaking technical support levels on Tuesday. The US Dollar’s rally combined with more favorable row crop conditions is providing headwinds for grains. Farmers need to move old crop corn is also weighing on prices as September option expiration and first notice day approaches.

Warmer temps in the forecast following the showers currently across the cornbelt are underscoring the negative price action.

NOPA Crush data showed 144.718 million bushels were processed last month which was over the 143.004-million-bushel expectation. USDA’s whole-year goal was just reduced last week from 1.900 to 1.890 billion bushels, 0.2% over last year. With only August remaining, it appears processors will meet this new reduced estimate.

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/

Farm Journal Crop Tour starts on Monday and runs through Thursday. The results should be released on Friday.

Funds were light sellers on Tuesday in comparison to recent sharp down days in price. Estimates have funds selling 13,000 corn contracts, 10,000 soybeans and 7,500 wheat contracts.

Chart support in November soybeans is now the Jun 23 low of 9.07 with resistance initially at Tuesday’s high of 9.39 ¼. Technical indicators are showing oversold.

Dec corn support at 3.70 was broken yesterday which now becomes resistance. A close above the 3.70 level (as soon as possible) is important for the bulls. Initial support is 3.65 (Sept. 2016 lows) then 3.58 the lows made on August 30, 2016.

Trump administration is taking steps which could lead to formally investigating China’s trade practices.  China’s Ministry of Commerce responds by saying they will defend their interests if US harms trade ties.

Argentina's corn area will expand by 5 to 10% to a record of more than 5 million hectares in the 2017/18 season, which starts planting in September, due to favorable planting conditions and attractive margins.

The FOMC will release today the minutes from its last meeting held on Jul 25-26. The Eurozone will release its 2nd Qtr. GDP today with expectations for unrevised 6-year highs.

Fed Cattle Exchange weekly auction has 1184 head being offered. On Tuesday packers started bidding at 110 in the live. There has been some IA cattle selling for 110 with several weeks before delivery.

Cattle futures rallied sharply late in the session on Tuesday which could support firmer cash bids today in the feedlot trade.

October live cattle futures put in a large trading range with an outside day reversal on the charts. Important support is yesterday’s low of 105.75 in the October cattle contract and resistance comes in at 111.25.

Hog slaughter levels continue to run above a year ago but are falling short of what USDA Hogs and Pigs report suggests. Pork for export demand is running above year ago level supporting cash hog values.

October lean hog futures is now the lead contract and due to the large discount has caught the eye of bargain hunters. Resistance is 72.25 and support 67.25.

Dressed beef values were mixed with choice up .03 and select down .57. The CME Feeder Index is 145.32. Pork cutout value is down .26.

Technical Chart of the Day

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