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Weather and Supplies Still Applying Pressure

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Good Morning! From Allendale, Inc. with the early morning commentary for November 15, 2017.

Grain markets are sliding as traders look for a catalyst or reason to step in and be a buyer. World supplies, US supplies and fund selling continues to weigh on grain trade. Look for strategies to benefit from a short covering rally.

Corn futures are pressured to new contract lows by technical and end of harvest selling. Open interest has been growing in corn futures which suggests a bottom has not been seen yet. The real issue is the trade needs to find some friendly news to change direction. Check with your Allendale Representative to find the re-ownership strategy that will work for you.

Soybeans struggle to bounce after a 40 cents correction in 4 sessions. Next support crosses at 9.63 in the January contract. Season tendency has soybeans rallying 15 out of 15 years starting in mid-November. Allendale has a option strategy which may benefit you. Call today!

World Weather Inc. says The bottom line for the official weather outlook in most production regions is unchanged. Little has changed through early next week in much of South America's production region.

Funds were estimated to have been net sellers of 13,000 corn and 6,000 soybean contracts on Tuesday. They were net buyers of 3,500 wheat contracts. Trade is talking about funds now holding record shorts in corn. Tuesday's close is the date the funds report positions to CFTC.

Brazil's 2017/18 soybean crop should reach 109.43 million tonnes, according to an average from projections sent by analysts in a Reuters poll. Their previous poll in October saw a projections' average at 109.39 million tonnes.

Today's Oct CPI report is expected to ease to +2.0% y/y from Sep's +2.2%.

Weekly EIA report has traders looking for a -2.0 million barrel decline in U.S. crude oil inventories, a -1.0 million barrel decline in gasoline inventories and a -2.5 million barrel in distillate inventories.

Fed Cattle Exchange auction this morning at 10:00 has only 969 head being offered. Product weakness combined with reduced packer margins has trade expecting cash cattle to be lower this week.

Last trade session for November feeder cattle is tomorrow, November 16.

November Cattle-On-Feed report will be released on Friday the 17th. Trade averages are: On-Feed 105.7%, Placed 107.7% and Marketed 105.4%.

December live cattle futures has an important support level at 118.75 and resistance at 124.00.

Cash hogs are lower as packers adjust production ahead of a holiday week. This week could be the largest production week of the fall. Retailers are doing some fill in buying ahead of holiday which is providing some support to pork product values.

Lean hog futures came under heavy selling pressure on Tuesday. Technical and fund selling was reason for the sharp break. Commitment of Traders report should large fund buying as of last week Tuesday.

February lean hog futures now has support at 67.02 (50-day Moving average) with resistance near 70.00.

Dressed beef values were lower with choice down 2.14 and select down .34. The CME Feeder Index is 159.63. Pork cutout value is up .42.

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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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