The Allendale Wake-Up Call

Budget Wait Continues as Trade Talks Near

Good Morning from Allendale, Inc. with the early morning commentary for January 25, 2019.

Grain markets are cautious as the leading headlines continue to remain mixed. Dryness concerns in Brazil are adding support, but the lack of a trade deal, as well as a lack of government data are keeping traders from moving too hard one way or the other.

"Brazil’s bottom line has not changed with much of the nation enduring a drying trend that is expected to reduce production from the northeast and far southwest. Relief is not likely to occur through the first week in February – at least not in a significant manner. Temporary relief is possible in parts of the southwest and center west this weekend," according to Drew Lerner of World Weather, Inc., who will headline our outlook conference next week, Tuesday. There's still time to get registered. Give us a call at 800-262-7538 and ask for Zach for best pricing.

Farm Futures estimates 2019 corn acres at 90.3 million acres a 1.3% increase from last year. Soybean acres are estimated at 84.6 million acres, down from last year, and wheat acres are estimated at 46.6 million, also a drop from last year.

The International Grains Council raised its estimate for 2018/19 world wheat production by 8 million tonnes to 737 million. They also raised their estimate of world corn production by 3 million tonnes to 1.076 billion. In corn, decreases in Brazilian production were offset by increases in Ukraine and the EU.

Weekly ethanol production fell from 1.051 million barrels per day to 1.031 in the latest week. That is 2.9% under last year. The year to date pace falls to 0.7% under last year. This remains under USDA’s corn for ethanol goal of -0.1% for the year.

Ukraine's ag ministry reports grain exports of 26.5 million tonnes in the 2018/19 season, an increase from 22.9 million tonnes at this same point last year. They stated total exports could rise to 47.2 million tonnes for the marketing year compared to 39.4 last year.

Brazil's Paraná state, the country's second largest soybean producer, cut on Thursday its forecast for the 2018/19 soy crop to 16.8 million tonnes from 19.1 million tonnes projected in December, after losses due to a dry spell last month. (Reuters)

Trade Deal talks continue to leave traders on edge as the latest from Commerce Secretary Wilber Ross is that the US and China are miles and miles away from a deal. He did add that he thought a deal could get done, however.

The US Senate failed to pass either of its proposed budget plans leaving the shutdown of the US government very much alive and well with no end in sight.

Funds were thought to be sellers of 9,000 corn contracts, 3,000 wheat, and 1,500 soy oil in yesterday's trade. They were buyers of 2,000 soybeans and 3,500 soyoil.

Cattle on Feed was originally scheduled to be released today, but like everything else is delayed due to the government shutdown. Newswires still collected estimates and found the trade expects December cattle placements at 1.2% over last year. Cattle on Feed is expected at 2.2%

Cattle Inventory is scheduled to be released next Thursday at 2:00 PM CST, pending the reopen of the US government. We expect the report to confirm the end of four straight years of expansion in the cattle herd at 94.013 million head, 99.6% of last year.

Off and on moderate snows are still set for Iowa, Minnesota, and the Northern half of Illinois/Indiana in the coming days. On top of that, temperatures will be bitterly cold ahead. Weather may be a condition to inhibit active hog marketings.

Dressed Beef Values were higher with choice up 0.54 and select up 0.10. The CME feeder index is 142.24. Pork cut-out values were down 1.43.