Jul 29, 2014
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Current Marketing Thoughts

RSS By: Kevin Van Trump, AgWeb.com

Kevin Van Trump has over 20 years of experience in the grain and livestock industry.

Soybean Prices Struggle as Crop Grows....

Jul 29, 2014
We continue to see the bean market backpedal despite many still questioning the record USDA projected yields.  The overnight markets showed some follow through from Monday's rally, but quickly sold off as the trade discounted any weather premium that its tried to build into this market. The old-crop balance sheet tightness provided additional short term bullish sentiment in the market yesterday, but was it too little too late?  Will the US have early beans that will be harvested in the southern growing states?  From what we are hearing, the beans will be harvested early but where will they end up?   The beans appear to be all about weather right now, being to wet early, not enough moisture now, planted late, susceptible to an early frost or freeze and short term cooler temps, with no moisture, on the bullish side.  On the flip side, the bears continue to remind us that, with 85 million acres projected to be planted, if this is not a record crop it will be one of the biggest ever. Most have estimated yields to be between 44 bushels per acre, on the low side, to 48 bushels per acre on the high side.  Say we end up with harvested acres around 84.5 million acres, with these mentioned yields, your looking at a production in the neighborhood of 3.718 million bushels to 4.056 million bushels.  Anyway you slice it, we are talking a big bean crop, with a large carry, that will push these prices lower, unless demand spikes dramatically.   With the new crop beans trading near $11, do we you take more risk off the board, to insure a profitable sale?  I still see the old crop beans providing some support to prices, potentially trying to fill the gap in the chart in the $11.30 range, which would see the new crop trading in the $10.50 to $11.50 range through the month of August. CLICK HERE for my daily report..   

Nearby Bean Balance Sheet, Keeps Bulls in the Game....

Jul 28, 2014

Soybean bulls keep trying to revive the glory days by stoking the potential flames associated with the old-crop balance sheet.  Anyway you want to slice it this story is still not 100% dead, but there is only 30-45 days left before the story is "officially" over.   In other words, as bearish as the new-crop balance sheet may appear longer-term, there are still some traders in the marketplace very uncertain about nearby availability of supply.  In other words, it wouldn't surprise me anytime between now and the end of August to see a $0.30 to $0.50 cent rally, maybe even a $0.50 cent to $1.00 rally if we can catch some type of bullish weather story from down South to go along with the old-crop supply shortage headlines.  All we need is talk of a delayed harvest or flooding conditions down South and the front-end of the soybean market takes back off to higher ground.  Remember, the trade is desperately counting on the early new-crop bushels to immediately solve the current supply shortage concerns.  Understand, I am by no means bullish the soy market longer-term (just too many US and South American acres in the ground), but I do believe we might get an opportunity to make some additional new-crop sales between $11.00 and $11.30 vs. NOV14 if we catch the final tail winds that the old-crop bulls are trying to stir up. Pay close attention and keep one finger on the trigger.  I'm afraid our opportunities to reduce more long-term risk may be fleeting at best between now and harvest.  To say the August weather is going to be extremely important to the soybean market would be an obvious and gross understatement...sorry to keep pointing out the obvious!Keep your eye on the USDA's latest crop condition ratings, most suspect soybeans to stay at our near the 73% "Good-to-Excellent" rating reported last week, the highest in the past 20-years.                                 CLICK HERE for my daily report...      

Geopolitical News Lifts Wheat Prices....

Jul 25, 2014

Wheat bulls are trying got stoke the flames in regard to ongoing conflicts in the Black Sea region. There were some rumors out this morning that Ukraine could lose 500,000 or more tons of grain due to war in country's eastern areas.  The US late on Thursday accused Russia of firing artillery across the border into eastern Ukraine, and of planning to send new missile launchers and heavy weapons to separatist groups.  From what I can see early this morning the market isn't overly excited about the headlines. In fact the story of "Little Red Ridding Hood" comes to mind... I think the bulls have "cried wolf" one to many times.  In the end we simply see Black Sea wheat prices moving lower and their exports making it tougher on US suppliers ability to compete.  Closer to home the bears are quick to point out the Wheat Quality Council's spring wheat tour of North Dakota, showed a final yield estimate of 48.6 bushels per acre, the highest in 22 years of the event.  We are also hearing reports that South Dakota is looking at extremely strong yields and very high quality spring wheat as well.  From my perspective, the only real hope from the bullish side of the fence is that the Spring crop is late-developing, where as a cool and wet weather could create some problems later on, especially if the market starts to eventually question complications that could arise from an early frost...unfortunately that's still a ways off.                            CLICK HERE for my daily report...

Unexpected Soybean Demand Supports Prices....

Jul 24, 2014

Soybean bulls desperately trying to stoke any old-crop flames that still exist by talking about strong Chinese demand (lack of cancelations) and the thought that US crushers will NOT have as early of access to new-crop supplies as some had once anticipated. In simple terms, the bears were thinking the Chinese would eventually make some old-crop cancellations. That would have freed up some additional surplus for domestic meal demand. The bears were also thinking US crushers had enough inventory and soybean supplies on hand to hold out until new-crop supplies arrived.  The problem is a good portion of the crop in the South is now running a bit behind, as indicated by the USDAs weekly "blooming" numbers that showed MS, TN, KY and LA all a bit behind their respective 5-year average. Wetter conditions to the South might also eventually delay the harvest of early-soybeans. There is also some fear in the marketplace that the farmers aren't going to be as eager to sell directly out of the field this year with prices having fallen to such low levels. As I have noted the past couple of weeks many ag banks across the country are starting report an increase in producers looking to extend lines of credit in order to hold and store more bushels for longer periods of time. In other words the trade is wondering if the crushers to the north are going to end up having a tougher time than originally imagined sourcing enough new-crop soybeans in time to supply end-users with meal???  I should also point out the fact the trade is closely watching the I-States (Iowa, Illinois and Indiana) as they account for about 30% of our harvested soybean acres. Not only is moisture important during the next 45-days, but so will be cooler than normal temps across the largest producing soybean states. Remember when I said a few days back the trade wasn't concerned or worried about "demand"...well now all of a sudden they are starting to scratch their head a bit?  The "death march" lower has, at least temporarily, been placed on hold, I'm assuming until more is known about demand and the true availability of new-crop beans. Producers who need to reduce more risk should look very closely at an opportunity above $11.00 per bushel.         CLICK HERE for my daily report....

Will MIR-162 Miraculously Find Approval?

Jul 23, 2014

Corn harvest rolling in Texas and several independent Crop Tours taking place across the US belt reporting some of the best looking corn seen in years (many fields reporting +200 bushel yields). In return prices fall to levels not seen since July of 2010. The problem is I'm afraid we may soon be testing the Sept 2009 lows at around $3.00 per bushel, especially if the bull's can't soon find a way to stop the current bleeding at or above the $3.50 level. If there is any bullish hope out there right now it's coming from more talk amongst producers in parts of the Western corn belt, and producers in parts of Iowa who are saying the corn and soybean crops might not be nearly as good as "advertised."  Several areas in the top-producing state and some areas out West are reporting less than ideal rainfall as of late and possibly limited moisture in the days ahead.  The bears are quick to diffuse this potential bullish bomb by talking about the extremely cool temps.  In other words, the cooler than normal temps are trumping the talk of limited rainfall right now.  We are certainly going to keep a close eye on the situation and will continue to stay in close contact with producers all across the Midwest, in regard to any sign of moisture deficits. The other bit of "potential" bullish news is the fact US prices are trending lower and Chinese prices are trending higher.  There is some speculation starting to arise that as import margins into China approach EXTREMELY profitable levels, MIR-162 might soon miraculously find approval...obviously if this were announced the corn market would at least post some type of knee-jerk reaction higher.  CLICK HERE for my daily report...        

Comparing Current Conditions To Years Past: The USDA recently released their rendition of "crop-condition" art. As you can see the 2014 corn crop conditions are running well ahead of the conditions seen during the record setting 2009 crop year, but slightly below the conditions from the record setting 2004 crop year. Bottom-line, this years corn crop conditions are some of the highest we have seen in the past 20-years. Yes, we are still a long ways from the finish line, but we are certainly past the halfway point and running at a potential record setting pace. Sorry for pointing out the obvious, I just wanted to give you another way to view the data.      

Taking A Look At Growing Degree Days: There has been some talk amongst producers that with the cool temps the growing degree days are are running well behind.  The graphic below was released yesterday by the USDA and NOAA.  From what I can tell, states like NE, KS, KY, TN, IL, IN, OH, and most of IA, MO, WI and MI are looking good. Yes, MN, AR and most the Dakota's are running a bit behind. Net-net nothing real bullish to speak about.CLICK HERE for my daily report.


 

 

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