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Corn Harvest Behind Analyst Estimates

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Good Morning! From Allendale, Inc. with the early morning commentary for October 17, 2017.

Grain markets trade the latest in crop progress numbers from the USDA. South American weather remains a focus as planting there continues.

Crop progress report out yesterday afternoon reported corn harvest at 28% complete as of Sunday. This compares with last week's 22%, and the 31% analyst estimate. Soybean harvest was reported 49% complete, inline with estimates. Winter wheat plantings were 60% complete, just below the 62% estimate.

September NOPA crush was 136.419 million bushels which was under the 138.017 trade estimate. This number, the first of the new marketing year, is 4.7% over last year. USDA forecasts a 2% increase in crush this year to a new record of 1.940 billion bushels. The 2016/17s crush totaled 1.899 billion.

NAFTA negotiators are running out of time and look set to extend the remaining rounds in a bid to modernize and meet end-year deadline as tensions rise. The tight negotiating schedule is also presenting a challenge as they try to the goal of having an agreement by year end.

Export Inspections for the week ending 10/12/2017 reported wheat exports of 322,860 tonnes, corn 322,672, and soybeans 1,770,324 tonnes. The corn exports were well below expectations, while the soybeans were above.

Corn exports are currently running 7% behind last year at this time while USDA is projecting a goal of 1.850 billion bushel for 2017/18 or 6% over the recent five year average. Officially, we are running behind where we should be but neither Allendale, nor USDA, are really too concerned at this time.

Russia's Agriculture Ministry has raised its estimate of 2017 wheat production up from 81.4 million tonnes to 83. USDA last week raised their estimate up from 81 to now 82 mt.

China's Ministry of Agriculture reports China's grain production this year would be over 600 million tonnes. That would be down from the 2016 production of 616.2.

Economic calendar events out this morning include Export/Import Prices at 7:30 CDT, Industrial Production and Capacit Utilization at 8:15, and NAHB Housing Market Index at 9:00.

Cattle on Feed will be released on Friday as early expectations suggest a higher percentage in all categories.

Cash cattle trade broke a sharp down trend last week by trading over the 110 area. Early expectations are for a steady firm trade as a few of the packers who were down for maintenance get back on line.

Product could be steady firm as the lighter than expected production last week keep supplies tight.

December cattle held last weeks low while putting in an inside day on the charts. Key support is 115.90 and resistance is 119.17.

Lean hog futures found technical buying as the October contract went off the board. December contact has resistance at 64.25 and 65.35 while indicators are showing overbought. Support comes in at 61.40.

Hog packer margins continue to be positive and processor are willing to push hog through the system. The timing of the rally is causing surprise among traders as we approach the seasonal turkey featuring.

Dressed beef values were higher with choice up .59 and select up .52. The CME Feeder Index is 155.66. Pork cutout value is up .81.

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About the author

Paul Georgy serves as president/CEO of Allendale, Inc., a worldwide agricultural advisory and research firm that provides agricultural commodity price research and risk management alternatives for producers, major food companies, international corporations, foreign governments, and major news vendors.

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