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Chip's Chore Time

RSS By: Chip Flory, Pro Farmer

Chore time for me isn't what it used to be when I was growing up on our eastern Iowa farm. In fact... I don't even have horse chores to do any more!

Pro Farmer's Monday Morning Wake Up Call

Aug 15, 2011

Chip Flory

Every Monday morning, Pro Farmer editors record the "Monday Morning Wake Up Call." It's a recorded message available by clicking here.
 

But... if you'd rather read the report instead of listening, each Monday morning I'll update the copy from the call here to help set your agenda of key issues that will be impacting the grain and livestock markets in the week ahead.

Monday Morning Wake Up Call

Good morning ... this is your August 15th edition of the Pro Farmer Monday Morning Wake Up Call.

Grain futures ended the overnight session higher, but below session highs as traders continue to sort out last week’s Crop Production Report, Supply & Demand update and individual reports coming in from around the Corn Belt.

The combination of USDA’s objective yield survey work and the results of the survey of farmers for corn yield potential as of August 1 resulted in a national average corn yield of 153 bu. per acre. While that’s just 0.2 bu. per acre better than last year’s final corn yield estimate, it is 12 bu. below USDA’s August 2010 corn yield estimate. Because ear populations are not likely much different than they were last year (but that’s just a guess since USDA omitted any comment about stalk or ear counts) and USDA used a five-year average ear weight in making the estimate, we’ve got to assume the farmer survey indicated much lower yield potential than year-ago. With that in mind, we see the potential for lower corn yield estimates from USDA in upcoming monthly updates as lighter-than-normal corn ear weights are factored into the equation.

We’ll be busy at Pro Farmer this week making final preps for the 2011 Midwest Crop Tour. Pro Farmer Sr. Analyst Brian Grete will lead the largest group of scouts ever on the eastern leg of the Tour and I will be heading up a large group of scouts on the western leg of the Tour, including a delegation of Chinese grain buyers, researchers and ag educators that are traveling with the U.S. Grains Council in the U.S. right now.

Grain traders will continue to track the weather closely, but it does look to be relatively non-threatening for the Corn Belt for the week ahead. There are, however, areas of the western Corn Belt that are too dry to promote kernel fill -- which is likely putting a dent in some of the western Belt’s yield potential. The 6- to 10-day outlook from the National Weather Service calls for mostly below-normal temps with normal rain in the east and below-normal rain in the west. Southern production areas are expected to remain hot and dry in the week ahead.

Weather will be a focus this week, but traders will also be forced to follow movement in the extremely volatile U.S. equity markets. Stock trade is viewed as a barometer of consumer confidence... and up and down trade in the Dow will impact grain trade again this week.

That’s your Pro Farmer Monday Morning Wake Up Call.

August 8 Monday Morning Wake Up Call

Aug 08, 2011

Chip Flory

Every Monday morning, Pro Farmer editors record the "Monday Morning Wake Up Call." It's a recorded message available by clicking here.
 

But... if you'd rather read the report instead of listening, each Monday morning I'll update the copy from the call here to help set your agenda of key issues that will be impacting the grain and livestock markets in the week ahead.

Monday Morning Wake Up Call

Good morning ... this is your August 8th edition of the Pro Farmer Monday Morning Wake Up Call.

It’s battle time in the grain markets.

On one hand, the ag markets will be forced – along with all the other U.S. markets – to factor in the downgrading of U.S. debt by the credit rating agency Standard & Poor’s. As U.S. Treasury Secretary Timothy Giethner pointed out, S&P does not have the best track record when it comes to credit rating, but S&P has more often than not erred on the other side and has been too generous with its ratings. There is no doubt the S&P U.S. credit downgrade weighed on grain prices overnight and prices will likely be under pressure again today.

Also on the bearish side of the grain markets today is a non-threatening forecast for the Midwest. After a string of days, that turned into weeks, that were too hot and too dry, a string of cooler and wetter days will at least stop yield deterioration for now. Conditions look favorable in the Midwest at least through mid-month.

But... on the bullish side of the market, grain traders are trying to figure out exactly what they should do with talk of terrible yield potential in some Illinois cornfields. Traders know damage has been done to corn yields, but now the question they are trying to answer is just how much yield has been lost.

The battle between poor economic conditions (coupled with exceptionally low consumer confidence) and talk of damaged corn yield potential will create another week of very choppy price action in grain futures.

It’s a busy week in Washington. This afternoon, the Weekly Crop Progress and Condition Reports will be released and traders are looking for generally steady crop conditions. Tuesday, the Federal Open Market Committee meeting will take center stage with financial markets looking for any change in attitude at the Federal Reserve after the credit downgrade. And Thursday, USDA will release its first survey-based corn and soybean crop estimates as well as update the Supply & Demand outlooks for the old- and new-crop marketing years.

Gold is trading about $50 – yes, $50! – higher this morning, but the dollar has recovered from early sharp losses to trade sharply higher. Crude oil futures are trading sharply lower in early trade. Overnight, corn was mostly 13 to 14 cents lower with soybeans 16 to 20 cents lower and wheat mostly 18 to 20 cents lower. Those are your opening grain calls.

That’s your Pro Farmer Monday Morning Wake Up Call.

Aug. 1 Wake Up Call

Aug 01, 2011

Chip Flory

Every Monday morning, Pro Farmer editors record the "Monday Morning Wake Up Call." It's a recorded message available by clicking here.
 

But... if you'd rather read the report instead of listening, each Monday morning I'll update the copy from the call here to help set your agenda of key issues that will be impacting the grain and livestock markets in the week ahead.

Monday Morning Wake Up Call

Good morning ... this is your August 1st edition of the Pro Farmer Monday Morning Wake Up Call.

As expected, the Senate finally reached agreement on a deal to raise the debt ceiling and will pass the package today. That will send the package to the House where it will be passed as soon as tonight. The deal will raise the U.S. debt ceiling by $400 billion now, with another $500 billion increase later this year. Spending cuts total $917 billion. The agreement also creates a “super committee” that is responsible for identifying another $1.2 to $1.5 trillion in spending cuts. If this committee can’t reach a deal, an across-the-board cut of $1.2 trillion will kick in (with half coming from defense and half coming from domestic programs). The plan also has no new taxes and there will be a vote on a constitutional amendment to balance the budget.

Last week was one of the worst weeks of the year for the stock market, but equity futures are indicating a sharply higher open this morning. That will help spread a generally positive tone across all the markets as traders start to establish “risk-on” positions. Grain futures participated in the relief rally overnight with corn mostly 7 to 9 cents higher; soybeans mostly 14 to 15 cents higher and wheat mostly 12 to 15 cents higher. Those are also your opening calls for the grain markets.

Traders are looking for a slight downtick in corn and soybean condition ratings in USDA’s weekly update this afternoon. Most of the deterioration is expected in Southern and Eastern Corn Belt locations while Western and Northern locations should feature at least steady conditions.

The National Weather Service 6- to 10-day forecast for August 6 thru 10 is fairly non-threatening for the Corn Belt. The greatest concern is the risk of continued hot temps over the Southern portions of the Corn Belt. Ahead of that period, a mini heat wave is expected over the next 48 hours with cooler temps moving into the Corn Belt by mid-week. Private weather forecasters are also warning the next 10 days features several opportunities for thundershowers and a generally wet period over the Northern Plains and Midwest.

That’s your Pro Farmer Monday Morning Wake Up Call.

July 25 Pro Farmer Monday Morning Wake Up Call

Jul 25, 2011

Chip Flory

Every Monday morning, Pro Farmer editors record the "Monday Morning Wake Up Call." It's a recorded message available by clicking here.
 

But... if you'd rather read the report instead of listening, each Monday morning I'll update the copy from the call here to help set your agenda of key issues that will be impacting the grain and livestock markets in the week ahead.

Monday Morning Wake Up Call

Good morning ... this is your July 25th edition of the Pro Farmer Monday Morning Wake Up Call.

House GOP leadership talks with President Obama reached a clear impasse late Friday, although all sides are still talking with each other. But the latest strategy has leaders in the House and Senate working on their own debt limit/budget cut proposals. The House plans to vote on its fast-changing plan on Wednesday. If that proposal includes balanced budget language, Senate Democrats will not vote for it and the focus would turn to Democratic Majority Leader Harry Reid's (D-Nev.) plan, which currently does not have any cuts in entitlement programs, a move guaranteed to bring strong GOP opposition. President Obama is now mostly on the sidelines, but insists he would veto any short-term plan and he instead prefers a debt limit extension that goes into 2013.

Grain futures were under pressure overnight with better-than-expected rains moving across key areas of the Corn Belt over the weekend. O’Hare airport in Chicago actually saw the wettest 24-hour period on record with nearly 7 inches of rain. Rains in Illinois, however, were very inconsistent – too much in the north and not nearly enough in the middle of the state. The Corn Belt forecast for this week includes some hot temps, but it also includes another shot of rain to help offset some of the heat stress. It should be a “good week” for the corn crop.

This afternoon’s Crop Condition Report is expected to show steady to slightly lower corn and soybean ratings. Most importantly, we’ll focus on how much of the corn crop is silking as of July 24, compared to the 35% silking pace on July 17. That change will give us an idea of how much of the U.S. corn crop pollinated during last week’s hot temperatures.

Friday’s Cattle on Feed Report will be slightly negative for live cattle futures today. More cattle on feed than expected means a slightly bigger supply of beef, but it should also be a positive for corn prices as it suggests bigger-than-expected corn-for-feed demand. The twice-yearly Cattle Inventory Report showed continued slow contraction of the beef herd with no indication of herd rebuilding at this time. Long-term, that should be supportive for cattle prices.

That’s your Pro Farmer Monday Morning Wake Up Call.

July 18 Monday Morning Wake Up Call

Jul 18, 2011

Chip Flory

Every Monday morning, Pro Farmer editors record the "Monday Morning Wake Up Call." It's a recorded message available by clicking here.
 

But... if you'd rather read the report instead of listening, each Monday morning I'll update the copy from the call here to help set your agenda of key issues that will be impacting the grain and livestock markets in the week ahead.

Monday Morning Wake Up Call

Good morning ... this is your July 18th edition of the Pro Farmer Monday Morning Wake Up Call.

Weather will be the driving factor in the grain markets again this week. The early week weather update suggests the heat wave across the country won't be quite as severe or last quite as long as indicated in last Friday's forecast. That slight change in the outlook is the reason corn futures were under hefty pressure overnight, putting spillover pressure on soybeans and wheat. Based on overnight action at the slight change in the forecast, traders are looking for corn to open 13 to 15 cents lower; soybeans seven to 10 cents lower; and wheat 10 to 15 cents lower.

It will be a busy week in Washington. Critical discussions about raising the debt limit while reducing the budget shortfall will continue to dominate headlines. The House will do some "Grandstanding" this week by likely passing a proposal that would boost the debt ceiling, but only if congress also passes a constitutional amendment requiring a balanced budget. It seems like a great idea to many... but the Senate won't pass that bill. In the Senate, the focus will continue to be on reaching a deal to raise the debt ceiling. This morning, Treasury Secretary Tim Geithner said progress is being made and that he believes federal default has been taken off the table. That's helping support the U.S. dollar ahead of the grain market open, which could add to what is expected to be heavy pressure on the grain open.

Critical crop updates will come this afternoon in USDA's Weekly Crop Progress and Crop Condition Reports. Expect a mixed bag in the condition update. The corn crop in many areas is showing very little stress despite high temperatures. But, there are areas where soils are too dry and temps are too hot as the corn crop attempts to pollinate. Many areas will "survive" the week ahead with minimal yield impacts, but some areas will see corn yields slashed.

USDA will also release the July Cattle on Feed Report this Friday. After a sharp drop in cash cattle prices last week as the boxed beef market appeared to put in a short-term top, traders will start this week with a negative bias toward prices. Cash hogs are called steady, but bids should firm to keep supplies moving to town despite hot temps.

That’s your Pro Farmer Monday Morning Wake Up Call.

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