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2017 Harvest Presents Storage Logistic Issues

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Good Morning! From Allendale, Inc. with the early morning commentary for October 19, 2017.

Grain markets are caught at a level where farmers are not selling and end users are not buying. Big money is not interested in grain trading lately especially when the US stock market is posting record highs. Grain traders know the facts of the supply/demand situation but unable to find the catalyst that will push us out of the range.

La Nina is looking more and more likely in the coming months. How is this impacting the agriculture markets? What should we expect going forward? We'll discuss this and so much more with CME Group's Erik Norland, October 24th at 8:00 PM CDT.Register here to join us or to have the recording sent to you.

Farmers are reporting their struggles with emptying old crop corn out of bins which is slowing down harvest progress. Many producers are working around the clock, delivering corn to feedlots and elevators.

Weekly Export sales report will be out at 7:30 this morning. Trade estimates are: Wheat 250,000 to 400,000 tonnes, corn 800,000 to 1,100,000 tonnes, soybeans 1,300,000 to 1,700,000 tonnes, soymeal 100,000 to 250,000 tonnes and soyoil 5,000 to 22,000 tonnes.

Ethanol had a strong rebound last week with production at 1.019 million barrels per day or 2.1% over last year. Previous week's production was 967,000 barrels per day. Year to date pace is 2.7% over last year, which is over the 0.7% year over year gain the USDA projects for corn for ethanol.

China sells 92,388 tonnes of 2013 corn out state reserves.

Funds were light players again on Wednesday. They were estimated to have been net sellers of 5,000 corn contracts, 3,000 wheat and flat in soybeans.

US Dow Jones stock index closes above 23,000 for the first time. This is the fourth time the Dow has closed above a 1,000-level milestone this year.

Iowa Governor Kim Reynolds had a conversation with President Trump in which he reassured her of his commitment to the program. "It was a really good, productive conversation," she said in an interview.

U.S. Senate Republicans appeared to have enough votes on Wednesday to pass a budget measure that is crucial to President Donald Trump's hopes of enacting tax reform legislation before the end of the year. - (Reuters)

OPEC is leaning towards extending a deal with Russia and other non-members to cut oil supply for a further nine months, four OPEC sources told Reuters News, although stronger-than-expected demand growth may allow the group to delay a decision until early next year.

Brazilian meatpacker JBS shut down seven slaughterhouses in Mato Grosso do Sul after a court-ordered asset freeze affected its operations.

Cattle-On-Feed report is Friday at 2:00 pm. Reuters survey of analysts show average estimates for On Feed October 1, 2017 is 104.6%, Placements during September 108.0% and Marketing in September 102.6%.

Fed Cattle Exchange offered 919 head yesterday of which only 230 head sold at 109. Cash is starting to develop with packers raising bids.

December live cattle continues to be very volatile with Tuesday's range breaking the 20-day moving average and finding support at the 100-day moving average. Support today is 114.52 with resistance 117.72.

Cash hog price strength has traders scratching their heads. Hog supplies are manageable and packer's margins remain in the black which leads to packers keeping the chains running at full speed.

December lean hog futures are consolidating; 62.00 is support and 64.50 resistance.

Dressed beef values were lower with choice down .40 and select down .76. The CME Feeder Index is 155.26. Pork cutout value is down .93.

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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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