Sep 16, 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.

Will Next Acreage Report be Positive for Grains?

Sep 15, 2014

Corn market continues to tumble as the USDA confirms a tsunami of corn is headed our direction. The USDA's Aug to Sept yield jump of +4.3 bushels may have came as a surprise to many of the bulls, but most ALL of the bears are calling for additional yield increases coming in the Oct and Nov reports. As I sit here this morning, it feels as if we are now trading a yield somewhere between 173 and 175. The problem for the bull is the fact growth in "demand" simply can't keep pace with the continuing growth of the crop. For this reason my targeted low of $2.85 still remains in play, and I suspect we start seeing the sub-$3.00 handles at some point within the next 90-days. From a money-flow perspective, it appears the "managed money" crowd is surprisingly still net long about 80,000 contracts.  I would hate to see what happens to the price of corn if these guys ever decide to get wildly bearish and shift to a large net short position???If your looking for a couple of longer-term bullish headlines to grasp onto, I warn you now they are far and few between. In fact several analyst are now thinking prices will remain sub-$4.00 for an extended period of time (perhaps 2-3 years). I'm not in this camp, but certainly understand their argument and reasons for concern. Lets just keep in mind then Chinese are in a major transitionary phase. My hunch is one morning we wake up to headlines reading they were major buyers of US corn.  I'm also thinking  there is going to be a more drastic reduction in global corn acres than most in the trade are currently anticipating. Not only will South American producers be cutting back corn acres in the coming weeks, but my guess is so will the producers in Ukraine as well as here in the US.   CLICK HERE for my daily report...   

What About Tomorrow's FSA Acreage Data? There continues to be a bit of a "buzz" from the bulls about current USDA acreage for both corn and soybeans being too high.  Be careful here...as this can often be a costly and painful learning experience.  Remember, the FSA had some recent budget cuts and in turn may still be trying to adjust to the overburdening work load with fewer staff.  I'm just afraid at first glance the FSA numbers may appear to show significantly fewer planted acres, but realistically there are simply so many "unknowns" and moving parts associated with data it's extremely tough to predict the accuracy or influence it will have on the USDA numbers.  I don't want to burst anyones bubble, but on the flip side of this argument the bears are saying they actually have satellite imagery data that confirms the current USDA estimates and perhaps even shows the current USDA estimates to be a bit light???    We should know for sure what the USDA is thinking in the upcoming Oct 10th report... Point being, even though the trade my flinch a bit, don't get yourself overly excited about tomorrows FSA numbers!  CLICK HERE for my daily report...

Marketing Rules 101....

Sep 12, 2014

 

Marketing Rules 101 -Marketing a crop is NOT a "team sport," it's entirely up to you to pull the trigger and reduce your own risk. The herd mentality tends to NOT pay big dividends! Continually talking about a USDA conspiracy does NOT pay big dividends! Remember, you build a marketing plan for the "bad years"...not the "good years." Anybody can market $7.00 and $8.00 corn. Please do not simply stick your head in the ground and think the problem is going to take care of itself. You have to "execute." That can mean a lot of different things for each farm operation but not doing anything, in these market climates, can be extreme.  We are reducing risk not only for the 2014 crop but also looking out into the 2015 crop year.  Believe it or not there are still marketing strategies that you can use to protect thing going forward.                  CLICK HERE for my daily report....

All Eyes on the USDA....

Sep 11, 2014

All eyes are on the USDA! The big numbers to watch are obviously the US corn and soybean yield and total production numbers. A lot of the so called "smart money" is thinking the USDA will be somewhat conservative with their corn yield, adjusting only slightly higher.  The larger gains will more than likely come in the OCT/NOV reports, once the NASS has a chance to better gauge ear weights and actual harvest data.  Moral of the story, don't get all excited if the USDA elects to leave the yields at sub-170 for a bit longer.  Unfortunately, this will leave the trade in a very precarious situation and allow the bears to keep their foot squarely on the throat of the market.  In other words, regardless of what the USDA has to say this afternoon, the bears have already pre-sold the trade on the fact the next two USDA reports will more than likely show even higher yields.  Same type of story for soybeans. The trade appears uncertain about today's move by the USDA, but seems confident the yield is ultimately moving much higher, perhaps 2-3 bushels higher.  There's not really expected to be any change to acreage in this report (more than likely coming in the Oct or Nov report), that's why most traders are eagerly waiting to see next weeks updated FSA acreage number.  The bulls are wanting to believe the USDA overstated corn acres by 1-2 million and total planted soybean acres perhaps by a similar amount. I would be extremely cautious buying into this bullish rhetoric, or thinking this data could prompt some type of major longer-term turn around...regardless of what the FSA data shows.  Also keep in mind today's numbers should show a jump in 2014/15 ending stocks for corn, wheat and soybeans. Bottom-line, it clearly appears that everyone is leaning over the same side of the boat, with very few traders looking for bullish data from the USDA.  I hate going along with the crowd, but I'm just not seeing many alternatives right now. Producers should continue to keep hedges in place!  CLICK HERE for my daily report....

A "Technical Perspective" on Beans Prices

Sep 10, 2014

Soybeans trade below $10.00 for the first time in over 4-years as traders continue to digest thoughts of record US acreage accompanied by record US yields. The USDA is currently estimating the yield at 45.4 bushels per acre, well above the previous record yield of 44.0 bushels per acre. The problem is most sources inside the trade are thinking this number could work itself much higher, possibly ending up somewhere between 46.5 and 48.0 bushels per acre by the year end report. With harvested acres somewhere between 84.0 and 85.0 million, it doesn't take a rocket scientist to project we may soon be swimming in soybeans.  Not only is there strong talk of soybean ending stocks pushing north of 500 million bushels, but now there is some rumblings that we could exceed 600 million.  If that scenario ends up playing itself out, don't be surprised if you see soybeans eventually end up somewhere between $8.00 and $9.00 per bushel.  Keep in mind Brazil is now gearing up to plant another record crop as well.  I've been preach that we must prepare for an extended bearish storm. Similar to corn, use any unexpected weather related rallies to help reduce additional risk.   CLICK HERE for my daily report....

From a "Technical" Perspective... If you consider in 2008 soybeans fell from a high of $16.36 to a low of $7.76, you could conclude that a similar 0.52568% retracement from the high set in 2012 at $17.89 would create a projected low of $8.49. The first level of nearby support should be around $9.84 followed by more solid support in the $9.40 range.

Can the Corn Market Gain Some Longer Term Momentum?

Sep 09, 2014

Corn continues to slide as harvest reports become more inundated with "better-than-expected" yields. The USDA is out with their latest yield estimates on Thursday and the trade is bracing for higher numbers. In fact most ALL of the producers I have spoken with lately are pulling much better than expected yields out of the field. Yes, moisture levels are a bit higher than some would like to see and the cooler than normal temps aren't helping the situation, but regardless the yield monitors are showing huge numbers.  Keep in mind the longer the corn sits in the field under cool conditions it gives the kernels more time to "fill," ultimately meaning higher test-weights.  The bulls are hoping to skate by Thursday's USDA report without sustaining much damaging, then hoping to see the FSA (next Monday Sept 15th) show fewer planted corn acres. Just keep in mind the USDA more than likely wouldn't use this data or make any adjustments until their October report. Obviously the bulls are also cheering for the cold front to dip further South creating more deeper concerns about an early-freeze. Unfortunately I just don't see this gaining much credence or creating any tip elf sustained longer-term rally.  There is some talk that South America may drastically reduce their corn acres this next season, which could help us gain some longer-term momentum.  I'm just afraid that's too far out on the time horizon to create much bullish enthusiasm.  Form a "technical" perspective the charts remain extremely ugly, with the bears now eyeballing the lows made last Thurs at $3.43^6 in the DEC14 contract. I hate to sound like a broken record, but from they will have their sites sets on the $4.20 range.  Producers should continue to keep all hedges in place.  CLICK HERE for my daily report....  

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