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Grain Markets Ready to Strike at USDA Data

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Good Morning! From Allendale, Inc. with the early morning commentary for January 12, 2018.

Grain Markets are coiled and waiting to strike at this morning's major release of USDA data at 11:00 AM CST. History, as well as this week's build in open interest suggest that volatility can be expected.

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Average estimates for 2017 production have corn production at 14.579 billion bushels on a harvested area of 83.103 million acres, and a yield of 175.4. Soybean production is estimated at 4.427 billion bushels on 89.501 million acres , and a yield of 49.5.

Quarterly Grain Stocks are estimated at 1.849 billion bushels for wheat, 12.431 for corn, and 3.181 for soybeans according to a Reuters poll. Corn would set a new Dec 1 record number should the estimate be realized.

US Ending Stocks for the Supply and Demand report are estimated at .959 billion bushels for wheat, 2.431 billion bushels for corn, and .472 billion bushels for soybeans.

Total winter wheat seedings are estimated at 31.307 million acres. Of that total, analysts predict 22.327 million acres of hard red wheat, 5.555 MA of soft red wheat, and 3.435 MA of white wheat.

Conab raised its Brazilian soybean production estimate from 109.2 million tonnes in December up to 110.4. Conab slightly increased its corn production estimate from 92.2 mt to now 92.3. Their production estimate includes a fall planting guess of 34.9 million hectares, 3.2% over last year.

AgRural, meanwhile, increased its soybean production estimate for Brazil from 112.9 million tonnes to 114.0. AgRural has been on the higher end of the analyst group to start and they remain so. This number is made from a 34.8 million hectare planting estimate.

Weekly export sales for the week of Friday December 29 - Thursday January 4 reported corn sales of 437,745 metric tonnes (all 2017/18). That was within the 350,000 - 750,000 trade expectation. Soybean sales ran 616,381 metric tonnes (607,381 2017/18). That was within the 500,000 - 950,000 trade expectation. YTD soybean export sales total 1.523 billion bushels. That is 68% of USDA's 2.225 billion shipment expectation. Wheat export sales of 71,463 were noted (all 2017/18), well under the 250,000 - 450,000 trade expectation.

La Nina is 85 to 95% likely to last through winter in the Northern Hemisphere, but is expected to dissipate by Spring according to the latest models from the Climate Prediction Center.

CME will lower soybean margins from $1,450 per contract to $1,300 effective with today's close.

Managed Money funds were estimated sellers of 1,000 corn, and 5,000 soybeans in yesterday's trade. They were buyers of 2,000 wheat.

Outside markets will have their eye on a few important economic reports today. CPI, Core CPI, and Retail Sales are all due this morning at 7:30 AM CST.

The final day of our 30th annual outlook series will feature an in depth look at the livestock markets. A few of the issues we'll explore include what role Chinese demand will play in an expanding US production market, how the US tax cuts could increase meat demand, and what role managed money funds could play in day to day pricing. We'll also have time for your questions, live. Find out more, and Register Here.

Pork sales of 9,138 tonnes were noted for the first four days of the year, including New Years Day. That is just under the 9,429 tonnes posted last year for the first five days of the year.

Beef sales ran 6,858 metric tonnes in the first report of the year. That was much over the 2,482 posted last year in a week with five days including New Years.

Dressed beef values were lower with choice down .99 and select down .28. The CME Feeder Index is 148.81. Pork cutout value is down .41.

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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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