CBOT Grain Futures Calls:

-December corn called steady to 2 lower.

-November soybeans called 3 to 6 lower.

-December CBOT wheat called 1 to 4 lower.

US dollar is down 10 at 78.70. October crude is up $.45 at $68.50. Dow futures are down 3 points.

Economic Information:

-Commerce Department releases its report on factory orders for July this morning.

-Labor Department releases its report on second quarter productivity this morning.

-American Petroleum Institute reported on Tuesday afternoon a larger than expected drawdown in US crude oil stocks. The API reported a 3.2 million barrel decline from the previous week. Traders were expecting a 600,000 barrel decrease. Gasoline stocks declined by 2.8 million barrels compared with expectations for a 900,000 barrel decrease. Distillate stocks increased by 920,000 barrels compared with the 600,000 increase expected. Refiners voluntarily report numbers to the API.

-The Department of Energy’s EIA (Energy Information Administration) will release the complete picture of energy stock levels this morning. Refiners are mandated to report numbers to the EIA.

Go to our homepage, www.allendale-inc.com, to view our latest market update videos, recorded twice a day (before and after the grain market session).

Weather:

-No frost threats for the next two weeks. Temps will warm back to normal by the end of the week. Conditions will be dry until late this holiday weekend. Longer term forecasts suggest a possible freeze late in the month. This is too far out for the market to trade it though.

Grain Market Influences:

Deliveries posted are as follows…209 contracts for corn (positions through 07/13), 4,359 contracts for wheat (positions through 09/01), 2,925 contracts for soyoil (positions through 09/01), and 5 contracts for oats (positions through 08/31).

Corn summary… Corn prices normally have a strong correlation to crude and an inverse relationship to the dollar. This did not work in June and July but the trend seems to be returning. Most traders expected a “Turnaround Tuesday” rally today but the outside market pressure and lack of threatening frost forecast allowed sellers to take out last weeks lows at 320. This hit stops and set the market up to test the 311 contract low.

One US firm estimates corn yield at 162.7 versus USDA’s August number of 160.0. Allendale will be releasing its closely watched farmer survey estimate on Friday.

The Chinese government has offered subsidies to processors of 5.77 million tonnes of corn in four provinces. This move is intended to help offset processing losses.
Soybean summary… Commercials are in charge of this game and there are 305 contracts in deliverable position. That might not seem like a lot but when you bid September up to $12.00 beans due to a shortage…..well let’s just say I would hate to be long September beans. We should see September trade at +30 November before this is over-with. The only card that can trump the commercials hand is a frost card. And that is not in the forecast.

One US firm estimates soybean yield at 42.6 versus USDA’s August number of 42.4. Allendale will be releasing its closely watched farmer survey estimate on Friday.

The Chinese government has offered subsidies to crushers of 2 million tonnes of soybeans in the Heilongjiang province. This is still likely not enough to make domestic soybean prices cheaper than imports.

China’s weekly offering of 500,000 tonnes of government soybeans brought 10,600 tonnes of sales. Last week’s purchase totaled 9,600 tonnes.

Wheat summary… For about a month we have said “value” of wheat is in the 475 area. Futures are now within 10 cents of this. Obviously, if corn takes out 311, then the value of wheat will decline with it. However, until the frost issue is no longer in play, corn should hold above 300 and we do not think our outlook for wheat will change materially. If we finish the corn out in good shape and yields are high, then there will intense price competition for the feed market (already a demand sector very ready to pay less).

Japan purchased 11,385 tonnes of feed wheat in its regular tender. No supplying country has been released.

Egypt is seeking 30,000 to 60,000 tonnes of wheat. Eight separate countries are listed as potential suppliers.

Contact Allendale to schedule a speaker for your Fall/Winter meetings!

Livestock Comments:

-Wholesale beef closes down $.79 for choice and down $.40 for select.

-Pork carcass cutout closes down $3.11.

-Cash hogs are called steady.

Livestock Futures:

October Lean Hogs are called 20 to 40 lower.

----Chart support 46.500 and resistance 51.20

October Live Cattle futures called steady to 10 higher.

----Chart support 86.20 and resistance 89.75.

October Feeder Cattle futures are called steady to 10 higher.

----Chart support 96.65 and resistance 101.50.

Livestock Market Influences:

Lean hogs summary… This afternoon’s wholesale meat report was a big shocker. Hams, the cut that skyrocketed last week, fell $10.60. That dragged the overall pork cutout down by $3.11. We’ve been a little skeptical of this ham-only rally this past week. It is likely today’s good futures gains will be reversed on this news.
Live cattle summary… October futures closed at their lowest level of this downtrend. Wholesale beef has shown some weakness recently on concern over post Labor Day demand. It is a valid concern as right now the trade is evaluating how well beef can stand on its own without a holiday to prop it up. Having recognized that concern we are still holding a supportive viewpoint here.

Live cattle summary… October futures closed at their lowest level of this downtrend. Wholesale beef has shown some weakness recently on concern over post Labor Day demand. It is a valid concern as right now the trade is evaluating how well beef can stand on its own without a holiday to prop it up. Having recognized that concern we are still holding a supportive viewpoint here.