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Grains Wait For News to Widen Trading Range

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Good Morning! From Allendale, Inc. with the early morning commentary for October 18 2017.

Grain markets are struggling with low volume, open weather for US harvest and South American planting conditions likely to improve. The large ending stocks have traders looking elsewhere for excitement. Traders focus on US stock indices posting new all-time highs and US Dollar value increasing against foreign currencies.

Weather in South America: World Weather, Inc. believes, however, that given the La Nina like environment, the timing for the wind direction change and the approaching Intertropical Convergence Zone fits well with past years and that will likely lead to the increasing rainfall that has been long awaited.

Funds were light volume players on Tuesday. They were estimated to have been net sellers of 1,500 corn contracts, 4,000 soybeans and 2,000 wheat contracts.

Cash corn and soybeans bids were raised by .11 at a central Illinois processor. Most other cornbelt locations were steady.

NAFTA representatives from US, Canada and Mexico accused each other of sabotaging efforts to renegotiate the North American Free Trade Agreement, even as they agreed to extend talks into the first quarter of 2018.

Chinese soybean farmers may earn less this year than last year if prices of the oilseed keep falling, said an agriculture ministry official on Tuesday, and that may threaten the nation's efforts to promote soy production instead of corn. (Reuters)

U.S. Wheat Associates, a trade group that promotes U.S. exports, is closing its office in Egypt after about 40 years, reflecting the loss of market share for U.S wheat in the country.

November grain option expiration is October 27th, a week from Friday. First notice day for November soybeans is Tuesday Oct 31, 2017.

Cattle on Feed will be released on Friday as early expectations suggest a higher percentage in all categories. Allendale's estimates are On Feed 106.2%, Placed 116.0%, and Marketed 102.1%. There was 1 additional marketing day in September compared to last year.

Allendale projects cold storage of 593 million lb. total pork stocks for the end of September. The five-year average is 609 million lbs. Beef stocks, at 502 million lbs. on September 30 are over the five-year average of 453.

Fed Cattle Exchange has 919 head being offer this morning on the electronic auction. Packers have been quiet so far this week, likely waiting for some indication from today's auction.

Beef product values are being supported by the reduced slaughter. Trade was looking for a 635 to 640,000 head production this week but current pace may make it difficult to achieve.

Pork packers are operating in the black and very anxious to produce as much pork as possible which is the underlying driver of cash hog pricing. However we all know within a few weeks retailers will be focusing on Thanksgiving Specials.

December lean hog futures had a large trading range on Tuesday and closed near session lows, suggesting the possibility of a near term top. Support crosses at 61.30 with resistance at 64.50.

Dressed beef values were lower with choice down 1.15 and select down .72. The CME Feeder Index is 155.06. Pork cutout value is down .44.

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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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