Sep 16, 2014
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August 2014 Archive for 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.

What We See for Corn and Beans This Week...

Aug 30, 2014

Corn will continue to suffer from its curse of "no new news" outside the fact that the world is about to be swimming in corn. The one thing I keep reminding myself is the fact we have never produced a yield over 160 bushel per acre when we have planted over 90 million acres. But then again, when was the last time we have seen weather like this for such a large portion of the Belt? Technically the $3.58 level is still providing nearby support but many in the trade are worried about longer-term price depreciation deeper into the US harvest. Producers should continue to take advantage of the rallies when they present themselves. Reduce your risk to only those bushels you are comfortable storing and or carrying for the proverbial "long haul." I continue to worry that the bears at-bat could extend further than some producer's credit-line.  CLICK HERE for my daily report...

Soybean bulls will be pointing to strong demand and limited old-crop supplies but how long will this scenario be able to hold up price? First notice day for theSEPT14 contract was yesterday (Friday 8/29) meaning the old-crop story may officially be out of ammunition. I suspect between now and the upcoming Sept 11th USDA report the trade will begin to take on a more "wait-and-see" type approach. In return I'm thinking the new-crop NOV14 contract trades in a narrower range somewhere between $10.00 and $10.60 per bushel. Longer-term I'm still extremely concerned about excessive supplies.  Not only might new-crop ending stocks jump beyond 500 million, but it looks like many US farmers are talking about planting even more soybean acres in 2015. Near-term I continue to look for the $10.05 area to provide some type of "technical" support...longer-term however, I still can't rule out the $8.50 to $9.50 range. Wish I had more positive news, unfortunately there's just very little out there to stop the bleeding. Keep ALL hedges in place!  CLICK HERE for my daily report...

Where Will New Crop Corn Find Support?

Aug 28, 2014

Corn harvest is starting to work its way north as we are now getting reports in the office form producers in parts of Missouri and Illinois. There is some obvious variability from field to field, especially in regard to moisture levels (anywhere from 10% to 30% moisture). But yield however seems to be consistently "better" than anticipated.     Several sources in the trade are now sighting the 2004 record crop year as a possible comparison.  If you recall this was the year the USDA raised their final yield by just over 11 bushels per acre in the reports following their August estimate. This is also the year the low in corn wasn't posted until early-December.  Keep in mind during the record crop year of 2009 we posted our lows in early-September.  From a producers standpoint, many of the folks I've been talking to are wanting to see corn and soybean prices bottom out between now and October.  They really don't seem to care how low they push it, because for many this will allow them to collect a bit more Federal crop insurance. I'm afraid the timing of the lows will depend a lot on the approach taken by the USDA.  If they decide to once again be conservative in raising their yield estimate in the upcoming Sept 11th report, then we may continue slowly bleeding to death.  On the flip side if they took a more drastic approach and pushed the yield up closer to 175 bpa the knee-jerk reaction might be another -$0.50 cent break to the downside, then the pain is essentially over.  I hate to say it, but this might just be one of the few times  many producers will be hoping to see the USDA "over-estimate" yield.  From a "technical" perspective the trade continues to consolidate and the recent low of $3.58 vs. the DEC14 contract still remains nearby support.  CLICK HERE for my daily report.... 

China..Old Crop Beans add to Market Volatility

Aug 26, 2014

Soybean traders are trying to digest what has become an extremely violent and dangerous front-end of the market.  Yesterday's -$0.60 cent plus plunge from the high to the low certainly opened a few eyes. The new-crop NOV14 contract also fell under pressure and posted a NEW low on the charts at $10.26, which now becomes nearby support. Longer-term, I still believe the market is "technically" looking to test the $10.06 or $10.05 area vs. the NOV14 contract before finding more stable footing.  The harvest in the Delta region appears to be coming along nicely and generating better than expected yields.  I also continue to hear producers further north trying to harvest earlier than normal in an effort to capture some additional premium. There are also more and more reports circulation that beans are turning yellow in some key locations, meaning harvest is just a few short weeks away. All of this simply equates to the old-crop supply story finally starting to unwind itself. The only real bullish news to speak of, which isn't bullish when you consider the entire picture, is the slight reduction by the USDA in their weekly crop condition estimate.  What we have to recognize is the current US soybean crop still stands at a very healthy 70% rated "Good-to-Excellent." As you can see from the chart below, a crop we haven't seen rated this good in a very long time. Also don't forget that condition number is being reported on larger than ever record acreage.            CLICK HERE for my daily report... 

Bank of China Could Cut Credit:  There is some talk and chatter the Bank of China is in the process of cutting the credit rating on a couple of large Chinese importers. Keep your eye on this the next few days.    

Soybean Rated Good-to-Excellent" by State: LA 84% up +2% on the week; MS 79%; IL 78% "unchanged" on the week; MO 76% down -2%; ND & TN 75% up +1%; IA 73% unchanged; OH 73% up +1%; NE 71% up +1%; SD 71%; WI & IN 69% up +2%; MN 66% up +2%; MI 63% down -1%; AR 62% down -1%; KY -58% down -1%; KS 48% down -5% 

Could We See a Short Term Bounce in Corn?

Aug 25, 2014

Corn may get a bit of a short-term bounce on what some believe is a fairly conservative Pro Farmer total crop estimate. Many analyst in the trade have been talking about a yield at or around 172 bpa and a total crop closer to 14.5 billion bushels. These are both well above what Pro Farmer threw out on the table.  There is also more talk by the bulls that a "normal first frost date" could takeout a small percentage of the crop up north. Yes, that's an arguable case, but tell me when was the last time a "freeze" event sparked a major longer-term rally in corn? I'm not saying it isn't possible...I'm just thinking it isn't probable!  Therefore, if you take a major bullish "weather event" out of the equation, I'm afraid there is still additional downside price-risk.  From a "technical" perspective many traders continue to talk about fairly heavy resistance in new-crop corn (DEC14) between $3.80 and $3.90.  From a producers perspective this  might be good area to target for reducing some additional new-crop risk???    Something else to consider is the fact harvest is rolling down south, and form what I continue to hear the overall yields have been very strong.  In other words continue to take advantage of the rallies when they present themselves. Reduce your risk to only those bushels you are comfortable storing and or carrying for the proverbial "long haul." I continue to worry that the bears at-bat could extend further than some producer's credit-line.  Defend, defend, defend remains the battle cry!                  CLICK HERE for my daily report...  

Can Meal Demand & Frost Scare Support Bean Prices?

Aug 22, 2014

Soybeans bounce off the bottom, but more than likely will continue their "downhill slide."  Yes, soymeal remains in heavy demand, and until new-crop bushels are both harvested and delivered, the front month (SEP14) contract is going to remain extremely volatile. The weather forecasters are now thinking the latest tropical storm will miss the Gulf which should ultimately allow the harvest down south (through the Delta) to gain more traction. From where I sit, it's only a matter of time until there is NO old-crop soybean story for the bulls to grasp on to.  This will eventually leave more and more in the trade with nothing to focus on but new-crop production.  As of right now most seem to be on the same page, thinking that we have not only planted record acreage but could soon harvest a record yield. I still keep hearing many of my top soybean sources penciling in a 46 to 48 bushel yield estimate.  I can't stress enough, if this happens to be the case and plays itself out, new-crop soybeans have the potential to trade down to the $8.50 area. Obviously, good finishing weather will be needed to push yields past 46 bushels per acre, but what if the weather cooperates? Are we really sure we fully understand the potential of these new traits and genetics?  I'm telling you now, the past three to four years almost every producer I have spoken with (hundreds and hundreds) underestimated their soybean yields.  As far as that goes, it appears the USDA did the same thing with this past crop.  All I'm saying is with this many beans having been planted and the weather as a whole being extremely cooperative, the surprise could be a blowout type number to the up-side.  Yes, there is still the chance for some type of early freeze or other unforeseen weather event, and I'm sure someone will want to argue the case. Just remember, as each day passes our odds of getting that "one card" becomes less and less. CLICK HERE for my daily report...

Crop Tour Points to Higher Yields?

Aug 21, 2014

Results Pro Farmer Midwest Crop Tour:  Day #3 of the Tour came to an end with scouts giving us a look at Western Iowa and the final Illinois numbers. Both corn yields and soybean pod counts for Illinois and Western Iowa were better than last year and much better than their 3-year average. Today, crop scouts will dive into the remainder Iowa and Minnesota.  Then this evening participants from both the Eastern and Western leg of the tour will come together in Rochester, Minnesota to give us their final overall estimates. Remember, as I mentioned before the tour started, Day #4 (today) could bring a bit of disappointment, especially as the crop scouts work their way further north.  I try no to get caught up in the short-term day-to-day movements of the market, but as the tweets and social media roll across the screen, theres a chance we could see a bit of a short-covering rally.                           CLICK HERE for my daily report...    

Western Iowa (Wednesday) - 3 districts surveyed yesterday the rest of the state today. Corn: District 1 - 177.48 vs 175.6 bpa last year vs. 3-year avg. of 170.72;  District 4 - 180.06 vs. 170 bpa last year vs. 3-year avg. of 162.06;  District 7 - 180.90 vs. 160.12 bpa last year vs. 3-year avg. of 146.77.  Soybean pod counts by district: District 1 - 1091.34 vs. 802.98 last year vs. 3-year avg. of 962.06; District 4 1124.96 vs. 849.79 last year vs. 3-year avg. of 1045.65;  District 7 - 1166.21 vs. 1101.49 last year vs. 3-year avg. of 1091.22. 

Illinois (Wednesday) corn yield reported at 196.96 bpa vs. the 170.48 bpa estimate last year  vs. the 3-year average of 149.36 bpa. Soybeans showed a pod count in a 3’-by-3’ square of 1,299.17 vs. the 3-year average of 1,085.35 and last years estimate of just 1,115.97.

Nebraska (Tuesday) corn yield reported at 163.77 bpa vs. 154.93 bpa last year  vs. 3-year average of 146.81 bpa. Soybeans showed a pod count in a 3’-by-3’ square of 1,103.36 vs 1,138.94 last year vs. the 3-year average of 1,106.62.

Indiana (Tuesday) corn yield reported at 185.03 bpa vs. 167.36 bpa last year vs. 3-year average of 141.24 bpa. Soybeans showed a pod count in a 3’-by-3’ square of 1,220.79 vs. 1,185.14 last year vs. the 3-year average of 1,118.65. 

Ohio (Monday) corn yield estimated at 182.11 bpa vs. 171.64 bpa last year vs. the 3-year average of 146.43 bpa.  Soybean count at 1,342.24 pods in 3’-by-3’ square vs. 1,283.61 last year vs. the 3-year average of 1190.18 pods.

South Dakota (Monday) corn yield reported at 152.71 bpa vs. 161.75 bpa last year vs. 3-year average of 125.70. Soybeans count at 1057.8 in a 3’-by-3’ square vs. 1,016.68 last year vs. the 3-year average is at 902.76.  CLICK HERE for my daily report...

 

Is the Corn Market Ready for a Breakout?

Aug 20, 2014

Corn market remains on hold as traders wait for a better look and more confirmation in regard to the US crop.  Keep in mind, new-crop DEC14 corn has essentially traded sideways for the past month between $3.60 and $3.80 per bushel. From a "technical" perspective you have to imagine a close below the $3.58 bring about more bearish interest and prompts some of the longer-term bulls to throw in the towel.  While a close back above the $3.81 level will bring some new bullish interest and additional short covering. As congested as the market has been as of late, I'm starting to think a breakout in either direction may be enough to push the market for an extended period of time. In other words a close below $3.58 could prompt the market to quickly tumble another $0.50 cents.  From a risk-management perspective this is what we are trying to avoid. On the "demand" side of the equation things still remain strong, in fact corn is now the cheapest it's been in relation to ethanol since 2007. Bottom-line, demand is not the issue right now, the trade is clearly focused on supply, specifically total US production. I'm afraid if the trade can somehow confirm a US corn yield north of 172 (like many analyst are projecting) prices may eventually test the $3.00 level. As producers we have to make certain we are prepared for such a move.                       CLICK  HERE for my daily report....             

China Seeing More Rain: We have all seen the recent headlines regarding one the worst droughts in years for parts of the Northern China Plain's.  The latest forecasts are now calling for 2.0 to 2.5 inches of rain by next week for key areas of Jilin and Liaoning.  Bottom-line, I'm still not seeing a major reason to worry about Chinese production.  They might end their run of 11 straight years with NEW record corn production, but I'm thinking it will still be extremely large. Keep in mind, cash corn in their country is still trading north of $9.50 per bushel.

Latest Thoughts on Pro Farmer Midwest Crop Tour!

Aug 19, 2014

UPDATED Thoughts on 2014 Pro Farmer Midwest Crop Tour: Crop scouts took to the field today. The Eastern leg got started in Ohio, moving towards Indiana, while the Western leg of the tour started in South Dakota and worked its way into Nebraska. As expected, the first day brought along many variables... some fields were much drier than many had thought they would be, especially out east. In addition some fields were nitrogen deprived due to heavy amounts of June moisture. I heard out west some scouts found their way into fields that had seen some fairly significant storm damage, hail, high winds, etc... There is also a bit more talk than normal about various disease issues in the fields. I'm assuming this is due to the moisture levels and cooler than normal temps. As expected though, most early reports brought attention to a few dry pockets, a crop that appears to be behind pace and a soybean crop that needs good finishing weather out into Sept.  Bottom-line, OH yields were better than last year for both corn and soybeans, while SD yields were almost -6% lower for corn, but about +4% higher in soybeans.  Details from the first day of data are below. I suspecttomorrow and Wed scouts will find some massive yielding fields...hold on to your hat! CLICK HERE for my daily report...   

 

  • Ohio corn yield estimated at 182.11 bpa vs. 171.64 bpa last year vs. the 3-year average of 146.43 bpa.  Soybean count at 1,342.24 pods in 3x3 square vs. 1,283.61 last year vs. the 3-year average of 1190.18 pods.   
  • South Dakota corn yield reported at 152.71 bpa vs. 161.75 bpa last year vs. 3-year average of 125.70. Soybeans count at 1057.8 in a 3’x3’ square vs. 1,016.68 last year vs. the 3-year average is at 902.76. 

Bean Prices Higher on Weather Uncertainty...

Aug 18, 2014

Soybean production obviously remains a major "wild-card" for many inside the trade, especially since we are only at mid-August. We all know the weather could still play a major part in final production numbers. My question is  how much longer will the trade buy into this rhetoric? You have to believe as each day and week passes, with unbelievable temps and adequate rainfall, the US crop is getting bigger NOT smaller.  The trade also has to soon start paying more attention and becoming more concerned about longer-term price risk associated with increasing acreage both in South America and here at home next year.  We are already digesting news and data that indicate Brazil is going to plant an additional 5-6% in soybeans. Meaning yet another new record planted soybean crop in Brazil.  Keep in mind they start planting in just a few short weeks.               CLICK HERE for my daily report....

Our Perspective on Next Weeks Crop Tour...

Aug 15, 2014

A Deeper Look Inside The 2014 Pro Farmer Midwest Crop Tour: Our good friends over at Pro Farmer are going to be kicking off their highly anticipated and heavily monitored "2014 Midwest Crop Tour" this next week. Our buddy Chip Flory will be heading up the Western leg of the tour and Brian Grete will be leading the Eastern leg of the tour. Since social media has become such a driving force in the market, I felt it was important to play this out a bit. Below are my thoughts and a few inside details:

 
My Thoughts Regarding "The Western Leg of the Tour"
 
Sunday participants gather in Sioux Falls, SD to begin the tour. 
Day #1 - Monday the tour heads from Sioux Falls, SD southwest to Grand Island, NE. I'm thinking the tour won't start far enough east to see much of the major flooding and won't go far enough west to see much of the hail damage on Day #1. This might leave the bulls a bit disappointed as the Tour tweets about record yields in various locations. The nightly meeting will be held at Grand Island, NE Riverside Golf Club, 2820 Riverside Dr. Grand Island, NE 6880
Day #2 - Tuesday the tour heads from Grand Island, NE southeast to Nebraska City, NE. I'm thinking this might end up being the most promising leg of the Western tour, not far enough north to see the hail and storm damage, and not far enough west to see the non-irrigated dry land problems. Hence, there could be some mammoth irrigated yield numbers being tweeted and talked about. The nightly meeting will be held at Arbor Day Farm/Lied Conf. Ctr 2700 Sylvan Rd Nebraska, City, NE 68410
Day #3 - Wednesday the tour heads from Nebraska City, NE northeast to Spencer, IA - This part of the tour could go either way just depending on the various samplings. You could start to see some flood, high wind and hail damage in NE and once you get up towards Spencer, IA there might be some disappointment as well. There are some areas up in northwestern IA that have taken a bit off the top-end because of conditions being a little dry. My point is, some folks might be looking for huge record yields during this leg of the tour, but I bet when you add it all up its not overly impressive. Could be some disappointment. The nightly meeting will be held at Clay County Events Ctr, 800 West 18th St. Spencer, IA 51301
Final Day #4 - Thursday the tour heads from Spencer, IA northeast to Rochester, MN - I'm thinking the crop is going to look fairly good but well behind schedule. There are some talks many parts of MN might not see corn black layer until early to mid-Oct. The problem with that is they generally tend to see a freeze by mid to late-Sept. Might cap the top-end. The nightly meeting will be held at Rochester Event Center, 7333 Airport View Dr. SW Rochester, MN 55902                               CLICK HERE for my daily report..... 
Putting it ALL Together... From where I sit, Day #2 (Tuesday) and perhaps early in Day #3 (Wednesday) look as if they could provide the trade with the most dangerous bearish headlines. The beginning of Day #1 and the majority of the Final Day #4 (as the tour moves from IA into MN) may end up being a bit of a disappoint. This final leg this years might show some extreme variability amongst fields, but overall one that is MUCH later developing (some areas 30-days behind). Remember the Western Leg will be in NW Iowa during the second half of Day # 3 and the first part of Day #4. This is where producers got a ton of rain in June then the spigot shutoff until just recently. This means the fields where producers put ALL the nitrogen on before the corn came up are going to be much worse than the fields where producers waited to apply half the nitrogen after the corn came up. Similar type story for Day #4 on the Eastern Leg of the Tour. My hunch is they see more extreme variability as some areas in NE Iowa have been much drier than normal. My fear is that tour participants, after rolling out of the bin busting areas during Day #2 and parts of Day #3, may feel a bit of a let down or disappointment into the final home stretch. If these assumptions are correct, you might see the market pressured as we digest the big social media data Day #2 and into Day #3, then bounce a bit after the final numbers are released and some of the shorts decide to cover. In fact, if we get some major downside pressure I might even start peeling off a few of our longer-term hedges that we have been parked in for downside protection. Bottom-line, I'm still thinking a national yield right around 170 makes the most sense. The guys who are talking 175 plus still seem a bit too high for me. My contention is to get the US average yield at or north of 175, you will need to see the #1 corn producing state of Iowa averaging closer to 200 bushels per acre. Right now the USDA has them pegged about right at around 185-187 bushels per acre, which I believe is close. There are some areas that could struggle moving forward without a steady stream of additional moisture. In fact I see no way the areas in NE Iowa will harvest the record yields they recorded last year. Hence I'm not thinking Iowa really blows it out of the water. The state of Illinois is obviously very good right now (especially in Central Illinois), but since the state runs more north to south there is a much larger variable in soil types and conditions. My fear is some of the southern areas are not having the same bin busting record crops like the guys in the central part of the state. There are also a few other pocket areas that the Tour won't be getting into that are less than ideal. Moral of the story, yes the USDA may still need to push yields higher, but I'm not so sure we get much over 170 once the dust settles and the smoke clears. In fact I'm starting to think we are going to need really good finishing weather to pull of the 170-172 type yield that so many are currently trading. Any wrinkles in the sheets and I'm thinking the yield is less. Does this mean we have reached a bottom in price? I doubt it, but it does mean we might be close to hearing or seeing the highest yield estimates of the season already revealed. *If you plan on attending the nightly meetings, just remember the reception generally starts around5:30pm; Dinner at around 6:30pm; and the Tour presentations will start around7:15pm (hoping to end around 9:00pm).  CLICK HERE for my daily report....
 

The Corn Market Takes a Breather, Then Goes?

Aug 14, 2014

When have seen the corn market be comfortable taking a bit of a breather today.  The pasue could be in anticipation of the upcoming crop tours that are usually pretty good at helping out in giving these prices some direction.  Many in the trade want to see and hear about the early estimates of 170 bushels per acre are accurate?  With the recent weather have we seen the top knocked off the yields?  Or, on the other hand have we seen the cooler temps and wetter forecast added to the big crop, as in record crop years 2004 and 2009, to push yields north of 175 bushels per acre?   Bottom-line, the market definitely recognizes the fact we are going to harvest a NEW record crop, the question is how big is BIG?  Demand certainly remains strong, but there is still a glut of old-crop corn being stored on-farm that eventually has to hit the marketplace.  This has me worried that any demand based rally moving forward will be capped to some degree by heavy farmer selling.  In other words, I have to imagine any time we try and rally back closer to (or above) $4.00, old-crop bushels will start aggressively moving out of the bins.  Remember, with there being NO bullish supply side story, the bulls engine will have only half of its pistons firing (the demand side of the engine).  If there were NO available old-crop corn bushels left on the farm, then half the pistons firing might be enough to pull us out of this bearish ditch, unfortunately that's not the case.   Hence until we can get some of the supply side pistons firing this bullish engine is going to struggle to provide the necessary horsepower and torque needed.  I suspect the bulls will try and crank it over again next week during the Pro Farmer Crop Tour, but I'm afraid they are going to find out there is still no combustion. To summarize, I still see NO, ZERO, NADA supply side story. In fact I think the crop is getting bigger not smaller. As of right now, I'm still in the camp that the national yield is moving north of 170 bushels per acre.  Even though demand is good I'm afraid with no supply-side help and a wave of old-crop bushels that could soon hit the marketplace I don't see a ton of nearby upside potential...Keep hedges in place!                  CLICK HERE for my daily report.....  

How Will "Psychology" of Trade Play Out?

Aug 13, 2014

We saw the USDA raise yields by 2.1 bushels per acre to 167.4, from their initial crop estimate of 165.3 bushels per acre.  Overall production was raised +172 million bushels while demand was raised by +100 million bushels.  We have heard over the past few weeks that the trade was thinking that the exports were a bit overstated, as the glut of Ukraine and Black Sea region corn that may be hitting the marketplace, with EU demand waivering.  Since earlier this year, the feed usage number has been debated and there has been no real explanation as to how we have a +50 million bushel jump.  Here in point is the "psychology" of the trade that will begin to play out.  The trade currently seems a bit skeptical in regard to the USDA's latest jump in "demand," thinking it's overly optimistic. On the flip side, the trade seems worried the USDA has a lot further to go in regard to raising the US corn yield.  The minimal rise that the USDA gave us yesterday for the corn yield, is somewhat hard for me to believe considering the abnormally low temps and improved rainfall totals we have been experiencing. You can't possibly tell me the USDA was expecting this kind of weather when they came out with their initial 165.3 estimate, especially when you take into account the extreme weather cycle we have been in the past few years??? All I'm trying to say is the market isn't buying it and believes "total" US production is going to work it's way higher (increased ear weights, etc...).  In return I have to believe the corn market will continue to make lower highs and lower lows. The tech guys will want to argue the charts are setting up for a possible short-term reversal, and this might actually be the case (perhaps a bounce back up towards $4.80 is in the cards), but longer-term I still believe we are going lower.  I should note, the USDA lowered their average farm price for new-crop down to between $3.55 and $4.25.  CLICK HERE for my daily report...

Will USDA Conservative Approach and Trader Uncertainty Keep Markets Volatile?

Aug 12, 2014

There were many in the trade that thought that before todays USDA report, that a 170bpa yield estimate was a given.  The majority of estimates from crop surveys were will above the USDA 165.3bpa yield that was given this May.  We have all heard of about the near ideal conditions that most of the higher yielding production areas witnessed during this crop years pollination.  Add to that, the cool summer weather, with above average rainfalls, most of the corn crop enjoyed after pollination, up until the past three weeks.  I mentioned today in my morning report, that if the USDA, takes a conservative approach, as I believe they have, with the 2.1bpa increase, the trade will have to digest and fear higher yields are coming in the Sept-Jan reports.  In other words, the corn market might not bottom-out until post harvest or during the 4th quarter of 2014.  Remember, the markets don't trade data and or numbers, rather they move based on the "psychology" of the trade.  My point is the bottom won't be in until the trade believes the USDA and other analyst have clearly OVERESTIMATED the upcoming crop. It seems that if the weather stays favorable, in finishing the corn crop this year, and the crop tours continue to see above average production estimates you can see the markets comfortably trading a 172bpa type final yield number and possibly as high as 175bpa.  I think anything beyond 175 however seems to be a bit of stretch and may ultimately set the bears up for a bit of disappointment in regard to total production.  CLICK HERE for my daily report... 

There were many soybean traders that were totally uncertain on the direction and tone that this mornings report would show us.  There were may in the trade that thought for the same reason the corn crop was getting larger this year, the same would hold true for the soybeans.  Moderate temps through most of the summer and adequate rainfall have been there to support a big crop.  Though the USDA current estimate at 45.2bpa would produce a record crop, many in the trade were poised for an aggressive move higher in yields.  Yes, things have been dry over the past few weeks, but with near ideal conditions for most of the growing year and catching a couple of late August rains and a higher yield was a given.  On the other side of the fence, the bulls have seen in two of the biggest years for bean crops, 2004 and 2009, the bean yields actually get lowered in the August report before trending higher towards the end of the year.  Still a bigger bean crop but a little reprieve to make some catch up sales.  It seems most feel the bean crop is getting bigger but the question is how do we get there?  We saw the USDA raise the yield  mere .2bpa, to 45.4, bringing total production to 3.816.  The weather uncertainty could keep the trade on its heels awhile longer, as moisture will be the key factor for price direction, but if we catch a couple late rains, all bets are off, as beans should trend lower.  CLICK HERE for my daily report...   

Can Beans Extend Rally Into Reports?

Aug 11, 2014

The bears continue to be baffled on the price strength that the beans have been able to sustain. There are many in the trade that think unquestionably overbought  and we should be trading aggressively lower, considering the recent rains that were near perfectly timed, with cooler than normal temps here in the US, and the fact that Braxzil is getting ready to plant another record soybean crop, increasing possibly 3-4 million acres over last year.  The acreage, both here in the US and South America, which could be a record for both, but also digesting the possibility of record yields in the US at 46bpa to 48bpa.  The most bearish in the trade think that we could see ending bean stocks swell to 550 million bushels.  Pulling down new crop bean prices eventually in the sub $9.00 range.  The bulls have stuck with their old crop story that things continue to be tight on the balance sheet, which continues to provide support by asking how long the rains will delay the new-crop harvest supplies down south?  Also, reminding everyone that the Chinese demand is alive and well, continuing to book sales that could have the current USDA estimate 3 - 5 MMT's too low.  To add a little extra unexpected gas on the bullish flame is the Argentine default, which many expect will keep bushels in the farmers hand for a much longer timeframe.  How much additional pressure will this put on US suppliers?  Bottom-line is this, yes I suspect we will eventually be swimming in soybeans and prices will be lower, but how we get their could be a very strange path. In fact, it wouldn't surprise me to see the USDA leave their current 45.2 bushel yield estimate "unchanged" in tomorrow's report and actually reduce new-crop ending stocks a bit as they adjust the demand side of the equation a bit higher.   This would obviously be viewed as "bullish" near-term and might actually catch some by surprise. For me, I'll be using any type of major surprise rally to the upside as an opportunity to reduce a bit more risk. I don't want to wait until the USDA starts making the adjustments to the supply side of the equation...I'm afraid that's when it could get painful to the  downside.  CLICK HERE for my daily report....   

Will Soybean Condition Estimates Improve This Afternoon?  There is talk inside the trade that the recent round of rounds could improve the US soybean crop by 1-2% this afternoon when the USDA releases their crop condition estimate. Look for the numbers at 3:00pm CST.

 

Could We See a Bullish Bean Story by USDA?

Aug 08, 2014

We have seen soybean prices continue to search for direction as traders still seem somewhat torn between the tight old-crop story and what appears to be an extremely burdensome new-crop story.   There seems to be a bit of a squeeze taking place in the front-end of the trade as the market thins out and old-crop cash supplies remain tight.  The problem is the trade isn't giving the old-crop story near as much weight as it once was, therefore it's ability to broadly influence price has been diminished but coupled with some neutral to bullish USDA news next week could you see bean prices pushed higher?  Soymeal was the part of the bean complex that lead us to higher ground during this past run up and we have continued to see strong meal demand, even against substantial headwinds.  Next weeks USDA report will almost for certain give us a corn production number, that is in record territory.  Most in the trade are calling for a 170bpa number for yields but the bean yield number is one that could come under some question.  All of the crop reporting agencies have been above the current USDA estimates on the corn side but the beans have been viewed not as rosy.  We have seen, just this week, two reporting agencies come out with estimates at or below the USDA current 45.2 bean yield number.  It is a known fact that for most areas the beans were planted in cool temps and wetter than normal conditions.  The talk in the trade was that beans do not like wet feet and if it continues does it have a negative effect on yields?  More recently, we experienced the driest stretch of the summer pushing many areas to the point the bean crop was close to beginning to go backwards. Now the rains have come but is there enough uncertainty out there for the USDA to leave the bean yields unchanged or even go lower?  We have compared this crop year to '04 and '09, which both had record yields, but there were some glitches in those years bean crops.  In both years, the USDA lowered yields before pushing higher in later reports.  In '09 it was the next month in the September S&D report but in "04 it was not until the October S&D report that the yields were increased by 3.5bpa.  My point being, is that we all think this bean crop is getting bigger, me included, but the road that takes us there may not be without some detours.  Could we see a short term pop to make additional sales?  With 85 million acres going in the ground, we will have a record crop but is there the possibility of a bullish bean story next week in the USDA report?  A little setback on yields could be seen before things push higher by the end of the year.  CLICK HERE for my daily report.... 

Can Black Sea "Wild Card" Support Grain Prices?

Aug 07, 2014

Russia...Whats NEW That You Need To Know - Most of you heard or read the headlines yesterday in regard to Russian President Vladimir Putin ordering food import restrictions in retaliation against countries that seek to punish Russia.  What does this mean to US producers?  From what I can gather Russia has threatened to completely ban ALL US agricultural products from its market and slap an import ban on all fruit and vegetables from the EU.  This will also include all US poultry being exported into Russia. About 20-years ago that would shave been a huge pinch considering about 40% of our poultry exports went to Russia, which now only accounts for about 7%. Overall, the US exported $1.3 billion in food and agricultural products to Russia in 2013, while the EU export total came to $15.8 billion. In other words, Putin has chosen a more hardline response to western sanctions and tensions are starting to flare.  There is no question the situation in the Black Sea is a huge "wild card." But I honestly don't see the US getting involved militarily at any juncture. Sure we could impose deeper sanctions and continue with a war of words, but I'm just not sure how that plays out as bullish longer-term? The trades natural knee-jerk reaction to political uncertainty is almost always to add in additional "risk-premium" for commodities... I'm just not so sure the "premium" is needed.   From a purely fundamental perspective, cutting off imports simply decreases overall global demand and puts more available supply in the marketplace, hence lower prices. I also don't see how a food related import ban even happens, considering Russia imports about 40% of all their food.  Some economist say it could be economic and political suicide for Putin as inflation inside Russia would skyrocket as supplies of everyday grocery items disappear.  Just this morning Moscow announced a blacklist detailing which foreign agricultural goods and food products will be banned under the new order...Below are the details:   CLICK HERE for my daily report....

Russia will ban fruit, vegetables, meat, poultry, fish, milk and dairy imports from the United States, the European Union, Australia, Canada and Norway, Prime Minister Dmitry Medvedev reported at a government meeting on Thursday.  The ban is valid from Aug. 7 and will last for one year.

  • cattle meat, fresh, chilled or frozen;
  • pork, fresh, chilled or frozen;
  • poultry and its subproducts, fresh, chilled or frozen;
  • all salted, dried or smoked meats;
  • fish, shellfish, scallops and other aquatic invertebrates;
  • milk and dairy products;
  • vegetables;
  • fruits;
  • nuts;
  • sausage and similar meat products;
  • cheese and similar products. 

Corn Bulls Find Tailwinds from Geopolitical News ...

Aug 06, 2014

The corn bulls have been hard fought to find any smidgen of sentiment that was in their favor.  Now, will the wheat rally, spurred by the geopolitical tailwinds in Russia, provide the gift that they have been waiting for, or will this rally be short lived, as each of the last rallies have been sold off?  Wheat has put on its rally cap over the last few trading days, being up in those sessions.  The weather story continues to be less of a story as each day passes and the temps stay low and the rain chances increase.  Maybe the rains don't come to fruition and we see things to continue to remain dry and push the lofty USDA yield estimates in question?  You can argue that the USDA is going to raise new-crop demand a bit, perhaps a 25-50 million bushel jump in corn used for ethanol and perhaps a slight jump in corn used for feed as lower prices entice more usage. But I still see no way to offset the rise in new-crop production. The USDA is currently projecting a 13.860 billion bushel crop on a 165.3 average yield.  The trade seems to think we are now closer to a 14.2 to 14.5 billion bushel crop with a 172 type average yield.  Informa came out yesterday and appears to believe the USDA will move form their current 165.3 yield estimate to around 168.0.  This would obviously be on the low side of what the trade is currently estimating, but I wouldn't be surprised to see the USDA be fairly methodical and patient in their upward revisions.  Can the cautious tone give the corn bulls a sliver of hope, to allow for additional sales?  I don't think that I would bank on that sentiment and continue to reward any rally by adding more protection to the downside.  Lets not fall asleep at the wheel and think that the fundamentals will not push this market lower, with USDA news over the next two reports.  CLICK HERE for my daily report....

Can Bean "Key Bullish Reversal" Outweigh Supply Story?

Aug 05, 2014

The soybean "technicians" are looking back at prices noticing that they are at the same levels as they were on July11th.  Many are also noting that a "key bullish reversal" could be building.  As I have mentioned over th past several reports, we are definitely in the midst of a major weather market, but we are also transitioning from a bullish old crop story to a potentially extremely bearish new crop story.  That has provided some volitility in the markets where we have seen extreme noves each way as it tries to establish its true direction.  The USDA left the bean crop conditions unchanged in yesterdays report despite continued talk dry conditions in many of the key growing areas.  Even with the dry conditions, the current soybean crop rating is one of the best ever in this area and should relate to a record crop with the estimated 85 million acres that went in the ground with beans.  Will we see an all time record production crop of beans?  Most Definitely!!  Understand, this is not the best looking soybean crop I have ever seen, especially with some of the issues in key bean areas, but as a whole things look good, with limited fields that are poor to very poor, in the ratings.  The other kicker is that with the acres planted we may not need record yields to produce the largest bean crop ever. From a producers perspective, I'm hoping the technicians are right and we rally this market back above the $11.10 area vs. NOV14 so I can make a few more cash sales. CLICK HERE for my daily report...  

Should you Make Sales with the Bean Market Bounce?

Aug 04, 2014

As we saw at the beginning of last week, the grains, and especially soybeans rallied early in the week before selling off by .50 cents by the end of the week.  The beans were the driving force that supported all the grains.  Most of that initial runup was due to the projection that the crop conditions would be lower for soybeans.  Last week saw a 2% reduction, in the gd/ex range and some in the trade are thinking that we could see another 2% reduction, this afternoon when the USDA releases its latest crop condition update.  Many insiders are asking themselves, if last week was the start of a string of crop condition reports, that will show that this dry spell and cooler temps that we are in, has actually begun to work backwards on the bean yields.  The bulls are quick to point out, that not only is the crop being stressed more now but it is setting up to be adversely effected by an early frost.  I am not in that camp long term but do agree you may see some short term bounces, as weather updates provide the bulls much needed news. The bears have stated this weather pattern has done nothing but added to yields as plants are slower to mature.  Along with great growing conditions, throw in the fact that no matter how you slice it 85 million acres of beans, pencils to making a huge crop!!  My thoughts have stayed the same that as we see any bounce in these prices we should use them as selling opportunities to get caught up on sales.  I have been saying for several weeks that the bearish technicians are thinking the $10.06 area vs. the NOV14 contract could be the next major downside target.  Perhaps we take a bit of a "wait-and-see" approach from there, but if the August rains can simply deliver somewhat adequate moisture across the Midwest, I have to believe the trade will fire back up the bearish momentum and look to push soy prices down even further, perhaps closer to the $9.50 range.  CLICK HERE for my daily report...

With Higher Yields, Make Sure Protection is in Place...

Aug 01, 2014

The trade continues to focus on the US weather updates that continue to look more and more favorable, as we look out into the first couple weeks of August.  The weather has remained cool but the moisture has been limited up until the latest reports.  That uncertainty on the rains have kept the bean market supported to some degree but will taht last?  Most were thinking that if we could get at least two rains during this time frame that we would see yields continue to increase.  With the latest forecast updates, the rains look to be more consistent and widespread then what we were expecting just over the past few days.  Now, we are hearing more and more, that these recent cool temps possibly could help the beans add to their yields, as the growing process is slowed down, similar to what we experienced with corn over the past few weeks.  For most, July 2014, will go down as one of the coolest July's on record and the effects that it has on grain production could be unprecedented.  Will it relate to record yields, for both corn and beans like most anticipate?  Several well respected sources think that we could see the current USDA bean yield estimate of 45.2bpa, be pushed higher by up 3% to 4%, meaning a 46.5bpa to 47bpa, may not be out of the question.  A jump in yields that substantial could push ending stocks north of 500 million bushels and prices below $10.00.  As a producer, we have to make sure to be prepared for such a situation.  What about the additional yields that many will have?  Make sure that these bushels are also protected. We see the bean market continue to be under pressure, as these rains come to fruition.          CLICK HERE for all my grain comments & get my daily report....

 
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