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Quick Reaction to News Keeps Volatility High

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

Grain markets are firmer as bargain hunters provide support. Dec corn futures after 3 sessions are down 20 cents while Nov soybeans were down 46 cents. Can we get a short covering rally? Will sellers take a break for a day? Is the potential negative report factored into prices already? USDA report is today at 11:00 AM CDT.

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Average estimates for todays USDA Supply and Demand report have analysts looking for an increase in corn production from the June estimate. Increased acreage and by raising yield to 174.9 puts total corn production at 14.269 billion bushels. Soybean production is estimated at 4.314 billion bushels due to increased acreage and yield estimate of 48.6. All wheat production is estimated at 1.858 billion bushels.

Weekly export sales report will be released today at 7:30 am. Trade estimates are: wheat 200,000 to 500,000 mt, corn old crop 400,000 to 800,000 mt and new crop 250,000 550,000 mt, soybeans old crop 200,000 to 500,000 mt and new crop 250,000 to 550,000 mt.

Last trading day for the July grain contracts is tomorrow, Friday, July 13th.

Funds were estimated net sellers of 21,500 corn contracts, 13,500 soybeans, 10,000 wheat, 3,000 soymeal and 5,000 soyoil on Wednesday.

Cash corn basis bids were 2 to 9 cents higher in some locations as farmers resist making sales at current prices.

Ethanol production fell from 1.067 million barrels per day to 1.033 in the latest week. This was still over last year, in this case 2.6%. The year to date pace is still 2.6% over last year, right on USDAs whole-year goal.

Acting EPA chief, in his first major appearance since taking the helm this week, tried to reassure his staff that the agency will get back to normal. Wheeler also emphasized that he will support the EPA staff.

Cash cattle trade is at a standoff as packers bids are several dollars lower than last week while feedlots are expecting steady to higher values. Product demand is surprisingly good for this time of year. However, the tariff wars are causing havoc with the traders psyche and the path of least resistance is lower.

August live cattle futures settled slightly above the 50-day moving average. Technical support crosses at 102.30 with resistance at 105.60.

Lean hog futures are being hit with the perfect storm. Hog supplies are increasing, demand is waning due to tariffs, technical picture looks weak but oversold and funds continue to press the short side. August lean hog futures after 3 days of trading are down 6.62.

Dressed beef values were mixed with choice up .12 and select down 1.25. The CME Feeder Index is 145.08. Pork cutout value is down .50.

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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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