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Argentina Dryness Reason For Concern

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Good Morning! From Allendale, Inc. with the early morning commentary for November 27, 2017.

Grain markets are lower as US weather is open for farmers to finish harvest. US stocks traders will be looking for data from Black Friday and Cyber Monday consumer purchasing to keep the rally going.

Friday's sell-off in grains left Dec corn down 3/4 for the week, with Jan soybeans up 2 and Dec wheat down 11 1/2. This week traders will be adjusting positions as the first notice day for December contracts is Friday November 30th.

Option Expiration leaves us scratching our heads as there were 55 Dec corn 345 calls and 50 Dec corn 350 calls exercised despite a close in CZ of 342. Hard to figure it out.

Argentina's weather is being watched closely as it remains one of concern for developing dryness. Limited rainfall again next week will allow drying to resume and if some areas have not received significant rain in this first week of the outlook crop stress is likely to be a greater concern in the second week, says World Weather Inc.

Brazilian crop should have very good conditions for crop development during the next two weeks.

AgRural out of Brazil says soybean farmers in Brazil have planted 84 percent of the estimated area of the 2017/18 crop, advancing 11 percent on last week's level, helped by the return of rain. At this time last year, farmers had planted 83 percent of the estimated soybean area while the five-year average is 79 percent.

Argentina's Crop Progress as of Thursday, suggests that corn planting is 50% complete compared to 48% done one year ago and soybean planting was 41% done compared to 39% last year.

Funds were estimated to have been net sellers of 4,000 corn contracts 3,500 soybeans and 4,500 wheat, 3,000 soymeal and 4,000 soyoil contracts on Friday. The CFTC Commitment of Traders Report will be released this afternoon.

Baker-Hughes says U.S. energy companies this week added 9 oil rigs, which has the monthly rig count rising for the first time since July as crude prices traded near their highest levels since the summer of 2015.

China's hog prices are expected to fall further next year, curbing demand for imports at the world's top pork consumer. Exports from the U.S. business to China have dropped 12 percent in the first three quarters. (Reuters)

December live cattle futures were down only .27 after a very choppy week. Expect to see more volatility in the week ahead as cash trade will be key to the end results. Packers will be looking to book more cattle for needs to run full capacity.

Product values and overall demand will provide the ignition to keep this bull trend moving. Post-holiday and first of month featuring could keep beef demand strong.

December lean hogs closed 2.60 higher for the week on Friday. Technical support crosses at 61.00 and resistance comes in at the 65.00 level.

Dressed beef values were mixed with choice up 1.98 and select down .79. The CME Feeder Index is 155.58. Pork cutout value is up .34.

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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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