August 19, 2018

Wake Up Call

Good News Or Bad News, Trade Looking For New News

Good Morning! From Allendale, Inc. with the early morning commentary for August 16, 2018.

Grain markets are drifting as trade searches for some positive news or simply a reason to buy. Weather conditions, harvest around the corner, and farmers having to move the 2017 crop off the farm are adding pressure. Strength in US Dollar continues to provide additional headwinds to export opportunities.

Allendale’s Annual Yield Survey will begin on August 20 and run through August 31. We will be releasing the survey results on September 5. Please go to www.allendale-inc.com during that time to share the results of your farm or call us at 800-262-7538.

Overnight, soybeans did find needed support on a Reuters story that, "A Chinese delegation led by vice commerce minister Wang Shouwen will travel to the United States for trade talks in late August, China's Ministry of Commerce said on Thursday."

USDA Weekly Export Sales report will be released at 7:30 am CDT with trade expecting big corn sales. Trade estimates are: Corn old crop 300,000 to 600,000 tonnes, new crop 300,000 to 1,000,000 tonnes, wheat 200,000 to 500,000 tonnes, soybeans old crop 100,000 to 400,000 tonnes, new crop 300,000 to 700,000 tonnes.

ProFarmer will begin their crop tour on Monday. The media coverage should give a first hand look at crop conditions throughout the cornbelt.

Argentine farmers are expected to plant a record-high 5.8 million hectares with corn in the 2018-19 crop year, up from the 5.4 million hectares planted in 2017/18. Favorable prices and weather conditions are the reasons the Buenos Aires Grains Exchange has raised planting projections.

NOPA crush data showed a bigger-than-expected 167.733 million bushels of soybeans during July which was their second largest monthly total ever.

Weekly ethanol production fell from the previous week which was not surprising considering the previous week’s 1.100 million barrel per day pace was the second highest of all time. This week’s 1.072 million barrels per day was 1.2% over last year. The year to date pace is still 2.9% over last year.

EIA weekly petroleum data reported a 6.81 million barrels rise in crude oil inventory while trade was expecting a 1.2 million barrels decline. Distillate supplies increased sharply while gasoline inventories declined.

Fed Cattle Exchange offered 488 head and all were no sales. Packers bought a few cattle in the north early this week. The south is at a standstill. Market ready cattle supplies should be increasing and packers are concerned about product values. Seasonally we could be seeing the peak in beef cutout values as holiday pricing door closes.

October live cattle futures are trading at a discount to cash, however, the pricing comparison usually changes at this time of year. Technical support crosses at 107.75.

Cash hogs have fallen sharply over the past several weeks. Packer margins and retail margins have improved dramatically simply because of supply of hogs going to market. The positive retail margins should encourage pork getting the counter space and help movement through early September.

October lean hog futures are consolidating in a narrow range with the optimism building that new contract lows have not been seen in 4 trading sessions. Downtrend resistance crosses at the 54.00 level.

Dressed beef values were mixed with choice up .31 and select down .66. The CME Feeder Index is 150.34. Pork cutout value is down 1.25.

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