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June 2009 Archive for 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!

What happened to the rain?

Jun 25, 2009
Chip Flory

 

Chore time for me isn't what it used to be when I was growing up on our eastern Iowa farm, but taking care of two horses in the morning before I head in for work gives me a little time to think about the day ahead. Each morning, stop at this spot to get a feeling for the "tone of the day" - and some attitude about agriculture and the markets.

I was thinking…

... about the rain that didn't fall!

I'm not saying the entire Corn Belt missed yesterday's rains... but as we watched another line of storms make its way across Iowa yesterday, the front line of the front broke up and we got only a few raindrops on the windshield. That was (thankfully) it. I know... it seems strange to be "turning away" rain at this time of the year... and you've got to be careful what you ask for when you're asking for conditions to dry out (a bit). But there's hay to make... and weeds to spray... and yellow spots in corn fields that need a break from saturated soils before they'll green-up and "grow right."

And I'm not saying the Iowa corn crop is suffering. There are spots where the crop looks a bit rough, but at least it's developing at a quick pace and is well ahead of development in the eastern Corn Belt. I asked the question earlier this week, "When does the heat become too much of a good thing?" A cattle feeder was quick to respond that it was already too much if you had a load of fancy black steers headed to market -- which is completely understandable. But even as weather-warning maps lit up with heat advisory warnings yesterday across Iowa, temps didn't get as hot as predicted... and it was a really good day for the crops.

That wasn't the case in Illinois and Indiana. It got hot... low to mid-90s with high humidity made it feel like 100-plus. With the amount of water available to the corn and soybean crops in the eastern Belt, I'm not too worried about stress to the crops... but if it's going to stay this hot for a while, regular and timely rains will be needed to keep the shallow-rooted crop from stressing out. Like I said... not a big worry yet, just something to keep an eye on.

And it looks like there's a break from the heat coming in July. Yesterday's National Weather Service 6- to 10-day forecast and 8- to 14-day forecast features normal to below-normal temps across the Corn Belt. And while the shorter of the two long-term outlooks also features normal to below-normal rains, the longer of the two outlooks calls for above-normal rains across most of the Corn Belt.

Still haven't checked out the new profarmer.com?

Why not! Seriously... there's a couple of pages market watchers must take a look at -- the Streaming Quotes (go to the bottom of the page and click on "GRAINS") and the Interactive Charts. Check out the pages, and be sure to look at all the tabs at the top of the interactive chart. There are really cool studies you can run... it's one of the best charting packages I've seen for a very affordable price (FREE to PF Members)!

It's a sad day.

Jun 24, 2009
Chip Flory

 

Chore time for me isn't what it used to be when I was growing up on our eastern Iowa farm, but taking care of two horses in the morning before I head in for work gives me a little time to think about the day ahead. Each morning, stop at this spot to get a feeling for the "tone of the day" - and some attitude about agriculture and the markets.

I was thinking…

... about something that has nothing to do with farming or the markets.

A lot of you know I'm a big believer in the importance of organized athletics... whether it be AAU, high-school, town teams, whatever. It builds characters, makes kids strong... so on. One of the best at it was the head football coach at Aplington-Parkersburg, Iowa, high school. This morning, a young man walked into the weight room at AP where coach Ed Thomas was supervising activities and shot the coach multiple times. Coach Thomas died from the injuries. Local reports indicate there were roughly 50 kids in the weight room this morning from several different AP athletic teams... members of the football, girls and boys basketball, and girls volleyball teams were all reportedly in the weight room when the shooting happened.

A lot of you might remember stories from May 2008 about Parkersburg. It's the Iowa town that was devastated by a May 25, 2008, tornado that leveled hundreds of homes in the small town. The school was badly damaged in the storm, as well. While coach Thomas was unbelievably important in the lives of many young men at the school over 30-something-years of coaching football at the school, he was equally important in the recovery of Parkersburg from last year's storm. Thomas was very active and very supportive of recovery efforts that continue today.

And coach Thomas was unbelievably successful at what he did. He's got four former players in the NFL and was the NFL high school coach of the year (I believe in 2005). Several other of his former players played in college at all different levels.

My kids' school is in the same athletic conference as A-P... and this morning's happenings have left the entire area in shock. It just makes no sense... coach Thomas was a rare man. When I saw him coach, you could tell he demanded the respect of his players, but was quick to show respect for his players, too. It's a sad day. Our prayers go out to the Thomas family, to the families of the kids who were forced to witness such a horrible thing, and to everyone in the community.

When does heat become "too much of a good thing?"

Jun 23, 2009
Chip Flory

 

Chore time for me isn't what it used to be when I was growing up on our eastern Iowa farm, but taking care of two horses in the morning before I head in for work gives me a little time to think about the day ahead. Each morning, stop at this spot to get a feeling for the "tone of the day" - and some attitude about agriculture and the markets.

I was thinking…

... about the riders on the 13th Annual Great Iowa Tractor Ride. The event is sponsored run by WHO Radio (1040-AM) and is supposed to be a nice, relaxing get-together with other people who enjoy restoring tractors and taking the "old iron" for a drive every now and then. I saw one of the "squads" of tractors driving yesterday and it really is a cool thing -- some dads had a kid with them, some grandmas had a grandchild, some husbands had their wives. It's a family event these iron-lovers look forward to every year. Well... maybe not every year -- or at least every day. Today their entire route is in the middle of a heat advisory area. Yesterday, the heat index was 100-degree-plus... and it might get hotter today. Last night at the College World Series in Omaha, Nebraska, the heat index was 107 degrees at 9:30 p.m.!

Last week, growers across the Corn Belt were asking for a "little heat and sunshine." Whoa... this is one of those "be careful what you ask for" things. We've got lots of heat and lots of sunshine going right now. Traders are calling weather conditions "exactly what the crops need." That's part of the reason for recent pressure on corn and soybean prices.

Another reason is a factor that dates back to March 31 and the Prospective Plantings Report. Most market-watchers said, at the time, total planted acres (to all crops) was too small... that those "lost" acres would eventually come back into play. With the June Acreage Report coming early next week, traders are generally expecting corn acres to be down about 1 million from planting intentions; bean acres to be up 1 million. But, the "whisper" number that's starting to have an impact is steady on corn and "up big" on bean acres because those "lost" acres will work back into planted acreage.

Have you checked out the new www.profarmer.com?

There's a couple of things you should check out... both are under the "Markets" tab at the top of the page. From there, you can get "streaming quotes." These are still delayed quotes, but streaming quotes show you a every price tick and give an idea of momentum in the market. Also under the "Markets" tab, you'll find interactive charts. If you like using intraday, daily, weekly and monthly chart analysis in your risk management, you've got to check out these charts. You can also add a long list of studies, draw trendlines, add comments... it really is one of the best FREE charting packages available.

I say FREE, and that's true until July 1. At that point, www.profarmer.com will be locked up for Pro Farmer Members only. To be a Member and to get access to everything we do and offer on the site, you'll have to be a subscriber to Pro Farmer services. The new and enhanced www.profarmer.com is included in your Pro Farmer Membership at any level (Classic, Preferred and VIP). On the site, you'll get early-morning comments from PF News Editor Roger Bernard in News From Around the World; from PF Sr. Markets Editor Julianne Johnston in From the Bullpen; and from PF Sr. Market Analyst Brian Grete in Marketing Toolbox. You'll also have access to daily comments from PF Washington consultant Jim Wiesemeyer in Inside Washington Today. And we're presenting news in a slightly different format -- in addition to a "harder sort" on the news we decide to put on the site, we are also including a quick comment at the end of news stories to give you what we think about the news item.

So -- will this turn into "too much of a good thing?"

If you believe the 6- to 10-day and 8- to 14-day outlooks from the National Weather Service, it might. The long-range forecasts call for above-normal temperatures across the Corn Belt for the next two weeks. It will be interesting to see how shallow-rooted crops in the eastern Belt handle the heat. If I had to put a timeline on when heat turns from being perceived as a positive for crop development to a "threat" to yield potential, I'd guess it will be coming back to work after the three-day Fourth of July weekend.

What's most important to watch in corn?

Jun 01, 2009
Chip Flory

 

Chore time for me isn't what it used to be when I was growing up on our eastern Iowa farm, but taking care of two horses in the morning before I head in for work gives me a little time to think about the day ahead. Each morning, stop at this spot to get a feeling for the "tone of the day" - and some attitude about agriculture and the markets.

I was thinking…

... about where the grain rally stands in its "life cycle."

This isn't a warning... or a prediction. It's more of a reminder. The 2008 grain rally ended the last day of June. In the first week of June 2008 (actually, that week's trade started May 30), front-month corn futures fell a half cent. But, in the first full week of trade in June 2008, front-month corn gained 51 1/2 cents. In the second full week of June, front-month futures rallied 81 cents. (Of course, the Midwest was experiencing record flooding during that rally.) By the third full week of June, the flood waters were starting to subside and front-month corn futures slipped 10 1/2 cents.

The rally peaked in the week started June 27 -- with front-month futures posting an upside reversal on the weekly chart while gaining 46 1/2 cents on the week to the all-time high weekly close of $7.67 3/4. By the end of the second week of August, front-month corn futures had plunged to $4.98 1/2.

By the time that rally was over, the move was a full 11 months old! That, my fellow chart-watchers, was a "mature" rally.

The current rally started from a low posted in front-month corn futures the first week of December 2008. So, the rally is already a full 6-months old. By "old standards," that should be viewed as a "mature" rally. But when the year-ago rally hit six months old, it was just starting to attract more "investment" money -- the kind of money it takes to push moves higher (or lower) than expected. Some of that money is coming into the market now, and front-month corn futures have now posted 10 consecutive closes above the 200-day moving average. That's the kind of pricing action it takes to continue to attract "trend-following money." Trend-following money is investment money... and you know what that can do to a market.

So... which is more important to watch? The calendar and planting progress? The money flow into the market? The charts? The "maturity" of the rally?

U.S. corn planting progress hit 93% as of May 31. That's just 1 point behind last year's planting progress and this is the week in 2008 that saw a price explosion (Again... the floods had something to do with that.) Rather that planting progress, I'd give the one-year anniversary of the all-time high in the last week of the month more "weight."

More money is flowing into the market... because of the charts and the long-term trend. When prices cross either side of the a long-term moving average (like the 200-day MA), it normally takes time to reverse that trend -- it's like trying to turn a battleship rather than a speed boat. That slow turn in long-term MAs should keep money flowing to the long side of the grains for quite some time. And since front-month corn futures are just moving away from the 200-day moving average, it could be argued the market is just middle-aged... and still a month (or more) from maturity.

For now, we're comfortable following the momentum of the market... and letting the rally run until it gives us a clear signal the surge is coming to an end.

And I'm sure you're probably wondering why I'm talking about corn instead of the high-flying $12-beans, right? Well... we'll rundown the situation on beans later this week.

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