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February 2010 Archive for Hedging Corn and Soybeans

RSS By: Howard Tyllas, AgWeb.com

Howard Tyllas is currently a member of the Chicago Board of Trade and registered with the Commodity Futures Trading Commission as a floor broker and as a Commodity Trading Advisor.

Stop the Gamble-Hedge!

Feb 19, 2010

                                                   

                
Stop the Gamble-Hedge!

I am not going to write about where I think grain prices are going from here. That has nothing to do with this article and I will use this going forward to have new clients read my mindset.  My subscribers know well about everything I think relating to the grain markets and price in time. All my producers have hedged most or all of their crops both old and new, custom tailored to their need for protection and their desire for the upside. Their task is now to produce at least their average trend yields on their farm.

I do not want to talk about price with you because it really does not matter where the price is now or in the future to YOU, because until you sell or "hedge" in some way, the price does not matter. No matter higher as in 2008 when soybeans went to $16+, it really did not matter to YOU, unless you sold it somewhere on the way up or down. Until you do sell,  you are long cash grain and gambling risking your money to make money.

With the proper option strategy, you would have captured money all the way up and have protection on the way down. You would have captured money no matter how high the market would go. Your only risk is in producing the crop you have hedged, a below normal trend yield would need to be adjusted if and when you feel some crop loss will occur. Your risk if I can say so casually, but we know there is plenty of risk if weather does not cooperate, but also rewards you when it does. This is all the risk a producer should have to deal with, being un-hedged and never knowing what you will ultimately get for your crop is stressful, and not necessary when prices are profitable after input costs are figured, and profits are kind. You just hedge it the best way you can, and with my knowledge I believe I have empowered the producers that are on my book with knowledge, and most tell me they know more now than the people who helped them before.    

What I do want to talk about is a person who is a gambler and uses the farm as an excuse to gamble. As in 2008 when prices went to the moon and back, without a hedge you saw $7.50 soybeans and $2.90 corn at harvest. So whatever you did not sell somewhere on the way up or down, was no different than being in a casino and making more money than you ever dreamed of, and watched yourself turn into a loser, without ever leaving the table when you still had good profits. A professional gambler or trader knows that you should never turn a good winner into a loser. They also know how to manage money and manage risk, and this is where a producer runs into trouble, no different than a speculator who lacks these necessities of successful trading.

All my producers who have paid for services in the past, or been doing it themselves for decades, tell about and know what to do if the market goes up in price, but have little plans if it goes down. The most common mistake I see being made is, the risk reward in what they do is like a player betting on the long shots and not even getting decent odds to make the gamble worthwhile.

Most farmers have a price in their mind where they will sell their crop if it goes higher from here, but how many have a plan of where they will sell if it goes down? Take the January 12, 2010 USDA Final Crop Report which is always big and this year turned out to be a game changer. I had been recommending for weeks no matter the day to hedge 100% of your crop before that report. At those profitable levels almost never seen before, the prudent thing to do was to have a business mentality of locking in profits and try to make more next year, by hedging your crop. Almost everyone on my book hedged most or all, and some limited to their account value, indeed hedged.

Now for the first time in my producers lives they called to tell me that they did not care what the report shows, up or down, because they are hedged where they are protected if the market would go down, and they know if it really rallied hard, they would make much more money. A few said the same thing, they are bored, but I like it when they tell me I gave them their life back.

Before the report I made it clear almost daily and the slow to hedge picked up the pace when I asked, how much higher are you going to sell, and if they go down instead how much lower is your plan to sell? If you said 50 cents higher in soybeans, I hope that you did something on the way down, hopefully selling not more than 50 cents lower as when asked the question. If not, you could be losing over $1.50 right now. Does that sound like a professional gambler? Does that sound like a professional trader? With odds like that, now you can see why the casino gives people free dinners, rooms, and show tickets, because when the casino loses they give you 50 cents, and when they win they get $1.50. Now it is only a matter of time before they build another casino, and the player goes home to make more money so they can come back.

Now ask yourself, in 2009 you could have gotten around $4.50 for December 2009 corn during planting intentions. What did you do when it went to the $3.20 area in late summer? This time you did get a second chance to sell at a $4+ level going into the Final report. If it went to $5 was it really worth the money found in the bush rather that the money that was in hand and the pain you had to go through to get it? And would you have sold if it did go to $5?

The producers I had on my book since planting intentions in 2009 had protection all the way down to $2.90 and were always protected, and rolled into March where they had locked in $4, plus they had 38 cents in their pocket picked up through the option strategy used since planting intentions (including all costs). With the burden of the gamble off their plate they went fishing and hunting, or just got more time to know their children, did normal things, and wake up in the morning without care as to what the market was doing on any given day. This time even with $1 protection to the downside when originally hedged, they got their protection for free and outperformed the market. That is like getting free life insurance. What is it worth to become a producer and not a gambler?

Need to take it further? "Bet the farm", why is that a known expression? Because that is what so many farmers have done for 150 years, some with no choice, and many had a choice (like now) but chose to gamble. They used the farm as an excuse to gamble. I tell all my producers, hedging is not going short hoping the market goes down. Rather it is a way to have no position, long or short, but a way to market your grain and take your paycheck. If you do not hedge it is no different than calling your wife and telling her "I have my paycheck (the last trade price) but I am going to Vegas and I will let you know what we made from working when I see what I bring home (when you actually sell or hedge). I do not know too many households that can get away with that in the city, but it is almost programmed into farmers from birth.

But I must make you face the truth, unless you hedge and lock in a profit for your hard work and risk, you are a gambler. I also say that you should be like every businessman that likes to gamble, you lock in income from your business, and take a small % of your income to gamble with. Now since you are hedged you are truly "without position", you are truly free to go long or short. If you do not run your farm as a business, you are truly at the mercy of the market when you need money.

Maybe some years you hedge higher than where the market is after you do, and sometimes the market goes higher after you hedge, it really does not matter, what matters is that you put yourself and your family needs over what your next door neighbor is doing. It really does not matter to your family if they got more or less than you did, what matters to them is what you provide for them.

I tell my producers, "The most important thing to protect is the downside, because .50 to $1 lower can really hurt you and have you work for nothing or worse, but not making $.50 to $1 more if they go higher will NOT hurt you". With the right option strategy you will still own your crop if they go higher.

Let's be real about gambling. The "thrill" of making money and the "sadness" of losing more than you should is produced by the drugs your brain produces, before, during, and after the wager is over. These drugs produce emotions that will insure failure in any form of gambling including the farmers favorite betting parlor wager "what will be the price of corn in the future" game. There is a percentage of your income you can do that with, but not the amount that turns the farm into the gambler and not you, because it is really you gambling with the farm.

With gamblers, the only "high" they get from winning is that they are allowed to gamble again. It is not the money they are truly after, it is that drug release, the shot is in the air on the buzzer and if they make the basket you win the bet, and if he misses you lose the bet....... that is the moment in time that your brain is giving you the shot in the arm full dose of drugs it produces including  good old adrenaline to boost it up. That feeling is the ultimate rush, after the basket is made, the feel good is still there but the rush is over and what a feeling that you welcome repeating. Throw in a little ego (as well as other things) and we can add to the problem. If you lose the bet, maybe you like the "sadness" you feel. Maybe you feel you do not deserve to be successful and put yourself in that situation, a kind of masochism.  The more that is bet, the more the drug release. But if you do keep the gamble to a minimum so it never becomes emotional and could jeopardize your lifestyle, the "thrill is taken out".   

Another problem is that many farmers are more worried about what their neighbors get for their crop, than worried about what they themselves are getting for theirs. If they get $11 for their beans and their neighbor gets $12 they feel bad they only got $11. But the next year your neighbor got $9 and you got $10, but now you are happier than the year before when you got $1 more. Why? It is almost like betting against them. In reality like in all pari-mutuels wagering, you are not betting against your neighbor, you're betting alongside him.   

I know by talking with my producers that 1. They did not like sending me margin money (known risk and margin) even though they knew they were actually making more money from what was in their bins than what they were losing in their hedge account and 2. as the market went down their accounts swelled, they felt great, even though they were not making or losing money on the way down because what they made in their hedge account they were equally losing in the bin. That is what a hedge is intended to do, protect you on the way down and with my strategies could cost you nothing for the protection, and still allowed you to make unlimited profits if the market should take off and rally.

I know you must overcome the way we as humans are wired when it comes to money. Logic tells me If you hedge 50% of your crop you could be no worse than being 1/2 right or 1/2 wrong in doing so. When it doubt, this is always my choice in what I should do. For that reason alone it is the right thing for a producer to do who does not want to hedge.

The size of the gamble in relation to your net worth is what really matters when it comes to gambling, and again if you do not hedge you are gambling. I have no problem in gambling but seeing thousands of new members not lasting more than 6 months, because of the wrong mindset, exposure to too much risk, or the unimaginable happened, instilled in me to always manage risk.  

Most traders do not make money, why do you expect you will be successful in trading? I encourage all my producers as well as my speculators to "gamble on a future outcome" but always keep the risk insignificant, and if in time you prove to trade well, your account will reflect that and the gains will increase your size. If you are in for the long haul, it is not what you did in a year; it is what you do at all time, because without the right risk management, you are an accident waiting to happen.  

My job is not to tell you at what price to hedge, my job is once you make that decision, is to hedge you the best way possible custom tailored to your thoughts ideas, and of course I know the time frames. My daily numbers service does give you my comments daily, and at what price is best on the day you decide to hedge. With all the information we have to work with that is provided to us all, my daily commentary is like on the trading floor, everyone who has been around for awhile has a few people in the morning who they ask "what do you think about the market today". The first couple of years I gave my numbers for free but then started to sell them. I always gave my thoughts for free, but if I was going to be bothered every day, and some of these people I would have liked to have made 1/2 of what they paid in taxes, so why not. I will say this, unless you have been trading for at least 6 months to a year, nobody will talk to you let alone provide you information. My daily service is just that, "Howard, what do you think today, and can I have your numbers".

I do not take credit or profit if you get more than the last trade price, as well as I take no loss if you do not hedge and they go down. This is your business and you must do what is right for you. I will try and keep your hands on the wheel as you get to your destination. I see almost all the services telling you what to do if they go up, but no plan at all if they go down.

I really do not have a problem in finding a farmer who wants to learn a better way to hedge, but it is very rare to find someone with my knowledge, let alone 34 years of actually having traded the grain market and the wisdom and experience that goes with it. Trading options since their inception on the Chicago trading floors helped launch a learning experience for me that have me regarded by people who know me on the trading floor as an option expert.

As long as I have good health, I have everything that I will need in life. That leaves me in the position to continue to make money the old fashioned way, "by earning it" and providing real knowledge, as well as in my opinion the best service for order execution on the trade floor. You will know from the first hedge by using a 3 way call into the trading pit where you will hear my friend bid and offer your options and while you are in control of your bid and offer you can change the price in a heartbeat. You could not fill your order better if you had your own membership and was on the floor executing it yourself. What I offer is a service that is priceless if you can find it, and ask people who do 200 contracts at a time and they will tell you they cannot find this high profile service. No producer is too small or too large to use my service.

Open an account and start to hedge some of your crop and in time I will earn most or all your business because you will see for yourself how my strategies work out. I always make sure you understand in full what you are doing before you do it. You are in control of what you want to do.

I will make it clear about the give and take for whatever upside you want, and what downside you need to protect.  I am your calculator, you put in the information and press total, and you see the answer. In time you will know how to do it when the battery dies. That is how I am your market strategist, you give me your thoughts and my answer is based on 20+ years of real time trade experience in options, and I give you the "total" answer. I save you the years of knowledge and put it on your plate, made easy. It is not difficult and requires simple math using addition and subtraction for you to learn.

What services are out there to help you hedge even if they are honest and ethical is limited to their knowledge. They could be the best grammar school teacher, but they cannot teach a PhD program with a Master's degree, let alone a 4 year college degree. I am the person that teaches the "PhD program".

Without the proper option strategy you could be wrong in how and what you do and it would turn out to not bring you the desired result. I will pass my knowledge to you and explain a better way to hedge based on your thoughts and ideas, and I realize it is your decisions on what you want to accomplish in your hedge. Without the proper option strategy you can be right the market and wrong what you do, and with the right one you can be wrong the market and still make money. Knowledge is power if you want to use options.

You are not a trader, it does not matter what they did an hour ago, yesterday, tomorrow, next week, or even next month, what matters is that you no longer have the same risk or reward with what the market might do, and you have accepted a paycheck for your hard work, and risk in production. What I can do is try and capture basis using options against futures, the same way you look to gain basis in cash for futures, but going after more than a dime, and more than once.

So whatever you do, however you do it, take the gamble out of the farm when you have good income for your work. Then you can gamble part of your income on whatever you think. I hope you will be right, but I know the farm will never go broke taking the income.

You are a unique business, and one that has years where there is no choice than to gamble, but you do have years where profits are able to be locked in before production begins. You cannot open a clothing store, or 7-11 and be guaranteed an income before you start the business, where you can lock in costs and if production goes as planned, lock in income no matter what the market bears when your production is completed. On years when you are forced to gamble is one thing, but on years like 2010, income above your average should be locked in.

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           May Your Next Trade Be The Best                          

                     Howard Tyllas            

   Tel.1-312-573-2699, 1-312-961-4390


Disclaimer:     No guarantee of any kind is implied or possible where projections of future conditions are attempted. Futures trading involve risk. In no event should the content of this be construed as an express or implied promise, guarantee or implication by or from Howard Tyllas, that you will profit or that losses can or will be limited in any manner whatsoever. No such promises, guarantees or implications are given. Past results are no indication of future performance.

USDA Ag Forum

Feb 19, 2010



Agricultural Outlook Forum 2010 Released: Friday, February 19, 2010

GRAINS AND OILSEEDS OUTLOOK FOR 2010/11

Prepared by Members of the

Wheat, Feed Grains, Rice, and Oilseeds Interagency Commodity Estimates Committees

U.S. Department of Agriculture

Introduction

This paper provides USDA's current 2010/11 supply and demand outlook for wheat, corn, rice, and soybeans and products. These projections will be updated in the May 11 World Agricultural Supply and Demand Estimates (WASDE) report. The May WASDE will incorporate survey-based forecasts for U.S. planted area and winter wheat production, as well as global, country-by-country supply and demand projections. Projections presented in this paper are based on the Winter Wheat Seedings report and analysis by members of USDA's Interagency Commodity Estimates Committees for Wheat, Feed Grains, Rice, and Oilseeds. Projections assume the current net returns outlook and normal weather conditions for spring planting and summer crop development.

Summary

The 2010/11 outlook for the major grains and oilseeds in the United States is heavily influenced by the unusual 2009 growing season. Late planting and a cool, wet fall delayed summer-crop harvesting and combined with a lower price outlook to limit last fall's winter wheat seedings to a 97-year low. Combined planted area for corn and soybeans is expected to expand for a fourth straight year with lower winter wheat area and higher expected net returns. Not all of the unseeded wheat area is expected to be made up dropping the combined 3-crop planted area total to its lowest level since 2007/08. Wheat production is projected lower with sharply reduced winter wheat area and lower expected yields because of the area reduction in higher-yielding soft red winter wheat. Wheat stocks are expected to decline modestly in 2010/11, but remain burdensome as U.S. wheat exports struggle under pressure from continued large world supplies. Corn plantings are expected to expand with less winter wheat area and higher expected net returns. A return to trend yields, however, is expected to keep production nearly unchanged from this past year's record. Ending stocks are projected to decline slightly as higher corn use for ethanol and exports more than offset increased carryin and lower feed and residual use. Soybean planted area is expected to decline slightly from last year when a sharp rise in soybean prices resulting from the Argentina drought led to record planted area. In addition, sharply lower winter wheat area is expected to reduce double cropped soybean plantings. Soybean supplies are projected to decline only modestly as higher beginning stocks partly offset lower production. Ending soybean stocks are projected to rise due to reductions in crush and exports. Rice planted acreage for 2010 is projected higher with long-grain accounting for all of the area increase as medium/short-grain acreage is expected to decline across the South. Total rice supplies are projected to be record high, a result of a larger crop, near-record imports, and a very large carryin. Total rice use is projected up from the current year at a near-record level with exports accounting for most of the increase. Rice ending stocks are projected to be the largest since 1986/87.

1This paper incorporates contributions by analysts from the World Agricultural Outlook Board, the Economic Research Service, the Farm Service Agency, and the Foreign Agricultural Service.

Planted Acreage Outlook for 2010 (Table 1)

The 2010 outlook for plantings of the major grains and soybeans in the United States is significantly influenced by last year's unusual growing season weather. Planting delays resulting from a wet spring and early summer in the United States combined with worsening drought in Argentina, to boost prices sharply during May and June, which encouraged producers to increase 2009 corn and soybean planted area a combined 2.9 million acres from their March intentions. Abundant moisture and a lack of heat stress during the summer months pushed yields for corn, soybeans, and spring wheat to record levels pressuring prices lower into the fall. A cool, wet fall delayed summer-crop harvesting and combined with a lower price outlook to limit winter wheat seeding for the 2010 crop to a 97-year low. With higher expected net returns for both corn and soybeans compared to last year at this time and lower winter wheat area, combined planted area for corn and soybeans is expected to expand for a fourth straight year to a record 166 million acres. Not all of the area lost from wheat is expected to go to corn and soybeans, with the combined 3-crop total falling 3.3 million acres to its lowest level since 2007.

Less land is expected to be cropped in 2010 as prices continue to ease from their record levels in 2008. Despite a 2.4-million-acre reduction in land enrolled in the Conservation Reserve Program (CRP), total planted area for the 8 major crops (wheat, corn, barley, oats, sorghum, soybeans, upland cotton, and rice) is expected to decline to 247.3 million acres, down 1.6 million from 2009. Much of the land that came out of CRP due to expiring contracts was in the Great Plains and mostly suitable for wheat. Last fall's wet weather provided little opportunity to put idled land back into production and historically only a limited portion of former CRP land actually returns to production, particularly in the first year. Lower fertilizer prices boost the net returns outlook year-to-year for the major field crops, but the sharp reduction in winter wheat area cannot be completely made up by spring plantings. The projected 8-crop total is down 5.7 million acres from the recent high in 2008 as the net returns outlook remains less favorable than 2 years ago when commodity prices, except for rice, were much higher. Soybean planted area for 2010 is expected to fall from last year's record as improved returns for corn and rotational considerations related to unplanted soft red winter wheat favor corn plantings in many areas. Increased cotton area and reduced double cropping will also limit soybean area.

Wheat planted area for 2010 is expected to decline 5.3 million acres to 53.8 million. Winter wheat seeded area at 37.1 million acres is down 6.2 million from 2009 and the lowest since 1913. The January 12, 2010, Winter Wheat Seedings reported hard red winter wheat seedings down 3.8 million acres to 27.8 million and soft red winter wheat seedings down 2.4 million acres to 5.9 million. Partly offsetting the decline in winter wheat area is an expected increase in spring wheat (including durum) plantings with most of the increase expected in areas of the northern Plains where winter wheat seeding was limited by fall weather. Higher marketing assistance loan rates for durum wheat in the northern Plains are also expected to limit declines in durum area.

Corn plantings for 2010 are expected to rise 2.5 million acres from last year to 89.0 million. This year's planted area is expected to be up sharply from producer planting intentions last March of 85.0 million acres. Net returns to corn production are expected to be much improved from 2009 as fertilizer prices have fallen from their highs during the fall and winter of 2008/09. Also boosting corn area for 2010 is lower winter wheat seedings, particularly in the eastern Corn Belt where soft red winter wheat typically follows soybeans in the crop rotation. A disproportionate share of this unplanted wheat area is expected to be planted to corn in 2010. Corn area expansion, however, is constrained well below the recent high in 2007 as strong relative returns for soybeans over the past 3 years continue to support historically high soybean plantings.

Soybean area is projected at 77.0 million acres, down 0.5 million from 2009. This year's planted area is expected to decline from last year's record level as corn and cotton are expected to see strong gains in the Corn Belt and Southern States, respectively. Lower projected area also results from reduced double cropping as soft red winter wheat plantings decline in the Delta and the eastern Corn Belt. In addition, last year's soybean plantings, up 1.4 million acres from March intentions, were influenced by the sharp price rise last spring and early summer as the drought worsened in Argentina.

Rice planted acreage for 2010 is projected at 3.2 million acres, up 65,000 acres from last year. An increase of plantings of long-grain rice-grown almost entirely in the South-is expected to offset smaller U.S. medium/short-grain plantings. The increase in long-grain acreage is based on strong returns for rice production in the Delta compared with competing crops-primarily soybeans and corn. Adverse weather limited long-grain plantings in the Delta in 2009. As in 2009/10, projections for world prices in 2010/11 indicate growers will not receive loan deficiency payments.

Wheat Supply, Demand, and Price Outlook for 2010/11 (Table 2)

Wheat Supplies: Wheat production for 2010 is expected to decline 12 percent to 1,945 million bushels with lower harvested area and yields. Harvested area is projected at 45.7 million acres based on the 5-year average harvested-to-planted ratio of 0.85. The national average yield is projected at 42.6 bushels per acre, 0.9 bushels below the simple trend of national average yields for 1985-2009, reflecting reduced area in higher-yielding soft red winter wheat states. The projected 2010 wheat yield is down 1.8 bushels per acre from last year when yields for durum and other spring wheat hit new records. Although wheat conditions have declined since early December in the hard red winter wheat states, current conditions remain substantially improved from last year in Oklahoma and Texas. State crop weather reports indicate that more than half of all wheat in Kansas, Nebraska, and Oklahoma is in good-to-excellent condition. Weighted by seeded area, the hard red winter wheat states have 12 percentage points more wheat in good-to-excellent condition as compared to last year at this time. The Midwestern soft red winter wheat crop is generally in less favorable condition this year. Only 38 percent of Illinois winter wheat was reported in good-to-excellent condition as of early February compared with 73 percent last year at that time.

Production in 2010 is expected to fall for all classes of wheat except white wheat. Lower area accounts for most of the decline in hard red winter and soft red winter wheat production. A return to trend yields, from last year's records, is expected to account for the drop in hard red spring and durum wheat. Spring wheat area is expected to be higher as northern Plains producers offset some of the lost winter wheat acres with spring plantings. Planted area for white winter wheat is mostly unchanged for 2010. A rebound to trend yields in the Pacific Northwest is expected to push white wheat production higher.

Despite lower expected production, wheat supplies for 2010/11 are projected 2 percent higher as beginning stocks jump 324 million bushels or nearly 50 percent from those for 2009/10 and imports fall only slightly. Total supplies, projected at 3,036 million bushels, would be a 10-year high.

Wheat Domestic Use: Domestic use of wheat for 2010/11 is expected to increase by 64 million bushels year-to-year. Food use is expected up 20 million bushels from the 2009/10 forecast. The projected 960 million bushels for food use for 2010/11 assumes a population growth rate of just less than 1.0 percent, constant per capita flour consumption, and a flour extraction rate that reflects both the higher-than-average extraction rate for carryin stocks from the 2009 crop and the expectation of a more normal extraction rate for the 2010 crop. A high extraction rate means that fewer bushels of wheat are needed to produce a given quantity of flour.

Seed use for 2010/11 is projected up 4 million bushels from the low of 72 million bushels forecast for 2009/10. The low seed use forecast for 2009/10 is due to the small winter wheat seedings for the 2010 crop. Winter wheat seedings for 2010 were down 14 percent from 2009 and the lowest since 1913 because of the delayed 2009 row crop harvest and lower prices.

Wheat feed and residual use for 2010/11 is projected at 210 million bushels, up 40 million bushels from the 2009/10 projection. A large carryin is expected to provide opportunities to move more wheat into feeding during the summer months; however, wheat prices are expected to remain relatively strong, limiting the overall increase in wheat feeding.

Wheat Exports: U.S. wheat exports for 2010/11 are projected at 850 million bushels, bouncing back slightly from this year's expected 38-year low. U.S. exports will face another difficult year as large stocks in most major exporting countries and an expected bumper world wheat crop continue to limit market opportunities. Canada's exportable supplies are expected to be lower, but Argentina's wheat crop is likely to return to normal after back-to-back years of drought-reduced production. Argentina's 2010/11 exportable supplies will not be available until the second half of the 2010/11 U.S. marketing year, providing a window for U.S. exports to the Western Hemisphere. Large supplies from the Black Sea region will also continue to limit opportunities for U.S. wheat in North Africa and the Middle East where favorable early-season weather is supporting production prospects for 2010.

Wheat Ending Stocks and Farm Prices: Lower expected production and higher use more than offset the large increase in carryin to reduce ending stocks 4 percent in 2010/11. At 940 million bushels, ending stocks would be the second highest in 10 years. The stocks-to-use ratio for 2010/11 is projected at 44.8 percent, down 4 percentage points from the current year projection, but still the second highest in 23 years. The 2010/11 season-average farm price is projected at $4.90 per bushel, up $0.05 from the midpoint of the projected range for 2009/10. Domestic prices remain under pressure from large global supplies, but prices during the early months of the 2010/11 marketing year, when producers market the largest share of the crop, are expected to find support from seasonally higher corn prices.

Corn Supply, Demand, and Price Outlook for 2010/11 (Table 3)

Corn Supplies: Corn supplies are projected at a record 14,894 million bushels for 2010/11. This is up less than 1 percent or just 60 million bushels from the current year's record with small expected increases in both carryin and production. Production is projected at 13,160 million bushels, nearly unchanged from the 2009 record crop of 13,151 million. Higher area more than offsets a return to trend yield. Area harvested for grain is projected at 81.8 million acres based on the 2004-08 average of area harvested for silage plus abandonment. At 7.2 million acres, this is higher than the 6.9 million acres estimated for 2009. Record high silage yields and abundant supplies of forages in 2009 reduced silage harvested area to its lowest level in 13 years. The national average corn yield is projected at 160.9 bushels per acre based on a simple trend of national average yields for 1990-2009. This is down 4.3 bushels per acre from the record 2009 yield.

Corn Use: Total corn use is expected to increase only 125 million bushels or 1 percent in 2010/11, as the rise in projected ethanol use and exports is mostly offset by lower feed and residual use. Domestic disappearance is projected at a record 11,140 million bushels, up 25 million bushels from the current year forecast, mostly due to increased use for ethanol production.

Corn Feed and Residual Use: Feed and residual use for 2010/11 is projected at 5,350 million bushels, down 4 percent from 2009/10 with lower expected residual use and increased feeding of distillers grains.

Animal numbers are expected to be little changed as relative high feeding costs and slow growth in meat demand continue to pressure margins. Per capita meat consumption is expected to remain relatively flat and weaker than earlier highs. Export prospects are improved for pork and beef, but broiler export prospects remain under pressure because of trade disputes with a number of countries. Broiler production and turkey production are expected to increase in 2010. In 2011, poultry, egg, and milk production are expected to increase but red meat production is forecast to decline.

Corn Food, Seed, and Industrial Use: Food, seed, and industrial (FSI) use of corn in 2010/11 is expected to total 5,790 million bushels, up 225 million from 2009/10. Most of the increase will come from growth in corn use for ethanol production. The remaining FSI categories rise modestly as the economy begins to recover from the recent recession; however, weakness in consumer demand for caloric soft drinks is expected to limit growth in sweetener production.

Corn Ethanol Use: Corn used to produce ethanol in 2010/11 is projected at 4,500 million bushels, up 5 percent from 2009/10. At this level, ethanol production will account for 34 percent of total corn use, up from 33 percent forecasted for 2009/10. The recently released Renewable Fuel Standard 2 (RFS2) rule is not expected to have a significant impact on the ethanol sector in the near term and any potential policy change allowing for mid-range ethanol blends (e.g., E12 or E15) is not assumed.

Rising corn ethanol use in 2010/11 reflects higher mandates for biofuels. Under the Energy Independence and Security Act of 2007, the amount of the Renewable Fuel Standard that can be met from conventional biofuels (mostly corn starch based ethanol) is set at 12.0 billion gallons for 2010 and 12.6 billion gallons for 2011. These RFS conventional biofuels levels translate into a 2010/11 September-August corn marketing year level of about 12.4 billion gallons, the equivalent of nearly 4.6 billion bushels of corn. This is slightly above the 2010/11 ethanol corn use projection which allows for ethanol from other feedstocks and for a minimal level of imports. The year-to-year increase in projected corn use is lower than for 2009/10, as the increase in the 2011 calendar year RFS is smaller than the increase from 2009 to 2010. Another factor limiting growth in ethanol demand is continued weakness in gasoline demand as recovery in gasoline consumption remains slow in the wake of the recession. Fuel efficiency gains in the vehicle fleet are also expected to slow the growth in gasoline consumption.

Ethanol production capacity during the 2010/11 marketing year is expected to expand, but at a slower pace than in past years. Ethanol plant data reported by the Renewable Fuels Association (RFA) as of February 9, 2010, puts currently operating ethanol production capacity at 12.0 billion gallons per year with total existing capacity at 13.1 billion gallons. RFA reports new plant construction and existing plant expansions that will add 1.3 billion gallons bringing the total annual available capacity to 14.4 billion when these projects are completed. Last year at this time, RFA reported existing capacity at 12.4 billion gallons annually.

Corn Exports: U.S. corn exports for 2010/11 are projected up 100 million bushels to 2,100 million. Global corn imports are expected to increase modestly as world livestock production rebounds from the global economic recession. The increase in U.S. corn exports is expected to be limited by continued large global supplies of feed-quality wheat. Argentina is expected to remain the largest competitor to the United States. Exports from Brazil are expected to decline as increased domestic feeding reduces exportable supplies with Brazil losing market share to Argentina and the United States.

Corn Ending Stocks and Farm Prices: Corn ending stocks for 2010/11 are projected to decline 65 million bushels or 4 percent from the current year projection. The stocks-to-use ratio is projected at 12.5 percent, down slightly from the 13.1 percent projected for 2009/10. The season-average price received

by farmers is projected at $3.60 per bushel, down $0.10 from the midpoint of the projected range for 2009/10 forecast as forward pricing opportunities will be at lower levels than they were for the current year. Cash bids for fall delivery in Central Illinois have averaged $3.56 per bushel since mid-January. During the same period last year, prices for fall delivery at these locations averaged $3.67 per bushel. Prices for fall delivery also advanced sharply during last year's delayed planting season. With a return to more normal planting weather, such a rally is unlikely ahead of the 2010/11 marketing year.

Rice Supply, Demand, and Price Outlook for 2010/11 (Table 4)

Rice Supplies: Rice planted acreage for 2010 is projected at 3.2 million acres, up 2 percent from last year. Long-grain accounts for all of the area increase. Medium/short-grain acreage is projected to decline, with most of the decline occurring in the South. Assuming a normal harvested-to-planted ratio, harvested rice area is projected to increase 2 percent to 3.17 million acres in 2010. Based on 1990-2009 trend yields, the 2010 average field yield is forecast at 7,136 pounds per acre, up 51 pounds from a year earlier and the second highest on record. Production in 2010 is projected to increase almost 3 percent to 226 million cwt, with long-grain accounting for all of the increase. The total crop is second only to the 2004 record.

Total supplies are projected to increase 6 percent to a record 287.8 million cwt, a result of a larger crop, near-record imports, and very large carryin stocks. Long-grain accounts for almost all of the buildup in supplies in 2010/11. Carryin of all rice is projected at 39.8 million cwt, up 31 percent from a year earlier, with medium/short-grain accounting for most of the increase. Imports are projected to increase 5 percent to a near-record 22 million cwt, with both long- and medium/short-grain imports projected to increase.

Rice Use: Total use of rice has increased 15 percent over the past decade, with increases in exports accounting for almost 58 percent of the expansion. Total use in 2010/11 is projected at a near-record 238 million cwt, up 3 percent from a year earlier. Exports account for most of the increase in total use in 2010/11.

Rice Domestic Use: Total domestic and residual use is projected at a record 133 million cwt, an increase of almost 2 percent from a year earlier. The rate of annual increase in domestic and residual use in 2010/11 is higher than the population growth rate, indicating an increase in per capita disappearance of rice.

Rice Exports: Total U.S. rice exports in 2010/11 are projected at 105 million cwt (rough equivalent of rough, brown, and milled rice exports), up 4 percent from a year earlier. Larger U.S. supplies and more competitive prices are the main factors behind the stronger export forecast for 2010/11. Both milled rice (including brown rice) and rough-rice exports are projected to increase in 2010/11. Rough rice is shipped mostly to Latin America. By class, long-grain exports are projected to account for all of the U.S. rice export expansion, mostly due to the larger supplies and increased price competition in certain milled rice markets. Medium/short-grain exports are projected to remain unchanged from the 2009/10 record. U.S. medium/short-grain growers continue to benefit from export restrictions by Egypt and a lack of exportable supplies in Australia.

Rice Ending Stocks and Farm Prices: U.S. rice ending stocks are projected at 49.8 million cwt in 2010/11, a 25-percent increase from a year earlier and the largest since 1986/87. The stocks-to-use ratio is calculated at 20.9 percent, up from 17.2 percent a year earlier and the highest since 1992/93. The U.S. season-average farm price is projected at $12.50-$13.50 per cwt, down from the 2009/10 midpoint of $14.30. The forecasted price decline for 2010/11 is based on weaker global rice prices and larger U.S. supplies. U.S. prices for both long-grain and medium/short-grain are projected to be lower in 2010/11.

Soybean Supply, Demand, and Price Outlook for 2010/11 (Table 5)

Soybean Supplies: Soybean supplies for 2010/11 are projected at 3,478 million bushels, down only slightly from 2009/10 as decreased production is mostly offset by higher expected carryin. Soybean production for 2010 is projected at 3,260 million bushels, 3 percent below last year due to both decreased area and a return to trend yields. Soybean plantings are projected to decrease 0.5 million acres to 77.0 million for the 2010 crop. Most of the decrease is expected in the Corn Belt as lower fertilizer prices boost corn plantings. In addition, increased cotton area will trim soybean plantings in the South. However, soybean area losses are limited by fewer winter wheat plantings. With normal abandonment, soybean harvested acreage is projected at 76 million acres. The national average yield is projected at 42.9 bushels per acre based on a simple trend of national average yields for 1989-2009. This is 1.1 bushels per acre below 2009 when abnormally cool weather and abundant moisture during the growing season resulted in a record yield of 44 bushels per acre.

Soybean Domestic Use: Soybean domestic use is projected at 1,822 million bushels, 4 percent below 2009/10. Soybean crush is projected to decrease by 65 million bushels (3.8 percent) in 2010/11 to 1,655 million. This would be the lowest crush since the 2003/04 marketing year. The expected reduction is driven by lower projected soybean meal exports as U.S. crushers face unprecedented competition from record soybean crops in South America. Minimal expansion of U.S. livestock herds and poultry flocks expected in 2010/11 will limit projected gains in domestic soybean meal disappearance to less than 1 percent. At a projected 30.8 million short tons, domestic soybean meal use for feeding is down 10 percent from the peak year of 2006/07. This decline is in part due to lack of growth in the livestock sector and in part due to increased availability of substitute protein supplies such as distillers grains and canola meal. Soybean meal prices for 2010/11 are projected to average $260 per short ton, down 12 percent from the midpoint of the projected range for 2009/10.

U.S. domestic disappearance of soybean oil is expected to increase to 17 billion pounds in 2010/11 as increased use for biodiesel production is only partly offset by declining domestic food use. U.S. biodiesel production from soybean oil is projected at 2.8 billion pounds, up 600 million from 2009/10. At this level, soybean oil accounts for just under half of expected U.S. biodiesel production from all fats and oils.

Soybean oil used for domestic food consumption is projected to decline again in 2010/11 as manufacturers continue to replace soybean oil with other vegetable oils to reduce transfats. This would be the sixth consecutive annual decline in food use of soybean oil for a 2.8 billion pound (16 percent) overall reduction since 2004/05. Soybean oil prices are projected at 33 cents per pound, down 2 cents from the projected range for 2009/10.

Soybean Export Demand:

U.S. soybean exports are projected to decline in 2010/11 to 1,325 million bushels from this season's record 1,400 million. Although only a slight decrease in U.S. soybean supplies is anticipated, the U.S. share of global trade is expected to be reduced due to sharply larger South American supplies. Record 2009/10 crops in Brazil and Argentina are expected to swell those countries' carryin stocks for 2010/11. Exports from both countries in 2010/11 will intensify global competition for U.S. exports. China will again dominate the global soybean market accounting for more than half of world imports. Key factors affecting China's soybean imports for 2010/11 include growth in livestock production and government policies regarding stocks. Increases in soybean trade from other major importing countries--including the EU-27, Japan, Taiwan, and South Korea-are expected to be minimal.

Intense competition from Argentina and Brazil in 2010/11 is also projected to scale back U.S. exports of soybean meal and soybean oil from this year's record levels. U.S. soybean meal exports are projected to drop to 8.8 million short tons from 10.0 million in 2009/10. Although foreign soybean meal consumption growth will be steady, rising demand for imports will be met primarily by South American processors. For the EU-27, a modest rise in imports of soybean meal next year is expected to be offset by lower soybean imports.

U.S. soybean oil exports are projected to decline to 2 billion pounds in 20010/11, down from 3.25 billion this year. In the international market for soybean oil, both China and India will still play leading roles, but lower prices in 2010/11 will also encourage import gains from developing countries in the Middle East and North Africa. For the EU-27, import demand for soybean oil is expected to be constrained by another large domestic supply of rapeseed, which (supplemented by expanding biodiesel imports from Argentina) will provide most of the continent's biodiesel feedstock.

Soybean Ending Stocks and Farm Prices:

U.S. soybean ending stocks for 2010/11 are projected at 330 million bushels, up 120 million from the level projected for 2009/10. If realized, this would be the highest soybean ending stocks since the 2006/07 record of 574 million bushels. With the soybean stocks-to-use ratio at 10.5 percent compared with 6.4 percent forecast for 2009/10 and slightly lower corn prices, the season-average farm price for soybeans is projected at $8.80 per bushel, down from the $9.45 midpoint of the 2009/10 projected range.

 

Table 1. Wheat, Corn, and Soybean Planted Acreage, 2003-2010

2003

2004

2005

2006

2007

2008

2009

2010 1/

- Million Acres -

Wheat

62.1

59.6

57.2

57.3

60.5

63.2

59.1

53.8

Corn

78.6

80.9

81.8

78.3

93.5

86.0

86.5

89.0

Soybeans

73.4

75.2

72.0

75.5

64.7

75.7

77.5

77.0

Total

214.1

215.7

211.0

211.1

218.7

224.9

223.1

219.8

1/ Projection

Source: 2003-2009, USDA, National Agricultural Statistics Service.

 

 

 

Table 2. Wheat Supply, Demand, and Price, 2007/08-2010/11

2007/08

2008/09

2009/10 1/

2010/11 2/

Area planted (mil. ac.)

60.5

63.2

59.1

53.8

Area harvested

51.0

55.7

49.9

45.7

Yield (bu./ac.)

40.2

44.9

44.4

42.6

Production (mil. bu.)

2,051

2,499

2,216

1,945

Beginning stocks

456

306

657

981

Imports

113

127

115

110

Supply

2,620

2,932

2,988

3,036

Feed & residual

16

258

170

210

Food, seed & industrial

1,036

1,002

1,012

1,036

Total domestic use

1,051

1,260

1,182

1,246

Exports

1,263

1,015

825

850

Total use

2,314

2,275

2,007

2,096

Ending stocks

306

657

981

940

Stocks/use (percent)

13.2

28.9

48.9

44.8

Season-avg. farm price ($/bu.)

6.48

6.78

4.85

4.90

1/ Acreage, yield, production, and beginning stocks are estimates from the National Agricultural Statistics Service. Imports, use, ending stocks, and season average farm price are projections from the World Agricultural Supply and Demand Estimates, February 9, 2010. The season-average price is the midpoint of the projected range from the same report.

2/ Projections based on analysis by USDA's Wheat Interagency Commodity Estimates Committee.

Note: Totals may not add due to rounding.

 

 

Table 3. Corn Supply, Demand, and Price, 2007/08-2010/11

2007/08

2008/09

2009/10 1/

2010/11 2/

Area planted (mil. ac.)

93.5

86.0

86.5

89.0

Area harvested

86.5

78.6

79.6

81.8

Yield (bu./ac.)

150.7

153.9

165.2

160.9

Production (mil. bu.)

13,038

12,092

13,151

13,160

Beginning stocks

1,304

1,624

1,673

1,719

Imports

20

14

10

15

Supply

14,362

13,729

14,834

14,894

Feed & residual

5,913

5,246

5,550

5,350

Ethanol fuel

3,049

3,677

4,300

4,500

Food, seed & other industrial

1,338

1,276

1,265

1,290

Total food, seed & industrial

4,387

4,953

5,565

5,790

Total domestic use

10,300

10,198

11,115

11,140

Exports

2,437

1,858

2,000

2,100

Total use

12,737

12,056

13,115

13,240

Ending stocks

1,624

1,673

1,719

1,654

Stocks/use (percent)

12.8

13.9

13.1

12.5

Season-avg. farm price ($/bu.)

4.20

4.06

3.70

3.60

1/ Acreage, yield, production, and beginning stocks are estimates from the National Agricultural Statistics Service. Imports, use, ending stocks, and season average farm price are projections from the World Agricultural Supply and Demand Estimates, February 9, 2010. The season-average price is the midpoint of the projected range from the same report.

2/ Projections based on analysis by USDA's Feed Grains Interagency Commodity Estimates Committee.

Note: Totals may not add due to rounding.

 

 

Table 4. Rice Supply, Demand, and Price, 2007/08-2010/11

2007/08

2008/09

2009/10 1/

2010/11 2/

Area planted (mil. ac.)

2.76

3.00

3.14

3.20

Area harvested

2.75

2.98

3.10

3.17

Yield (pounds/ac.)

7,219

6,846

7,085

7,136

Production (mil. cwt)

198.4

203.7

219.9

226.0

Beginning stocks

39.3

29.4

30.4

39.8

Imports

23.9

19.2

21.1

22.0

Supply

261.6

252.4

271.3

287.8

Total domestic & residual use

127.4

128.4

130.5

133.0

Exports

104.7

93.6

101.0

105.0

Total use

232.2

222.0

231.5

238.0

Ending stocks

29.4

30.4

39.8

49.8

Stocks/use (percent)

12.7

13.7

17.2

20.9

Season avg. farm price ($/cwt.)

12.80

16.80

14.15

13.00

1/ Acreage, yield, production, and beginning stocks are estimates from the National Agricultural Statistics Service. Imports, use, ending stocks, and season average farm price are projections from the World Agricultural Supply and Demand Estimates, February 9, 2010. The season average price is the mid-point of the projected range from the same report.

2/ Projections based on analysis by USDA's Rice Interagency Commodity Estimates Committee.

Note: Totals may not add due to rounding.

 

Table 5. Soybeans Supply, Demand, and Price, 2007/08-2010/11

2007/08

2008/09

2009/10 1/

2010/11 2/

Area planted (mil. ac.)

64.7

75.7

77.5

77.0

Area harvested

64.1

74.7

76.4

76.0

Yield (bu./ac.)

41.7

39.7

44.0

42.9

Production (mil. bu.)

2,677

2,967

3,361

3,260

Beginning stocks

574

205

138

210

Imports

10

13

8

8

Supply

3,261

3,185

3,507

3,478

Crush

1,803

1,662

1,720

1,655

Seed 3/

89

90

89

86

Residual

5

12

88

82

Total domestic use

1,897

1,764

1,897

1,822

Exports

1,159

1,283

1,400

1,325

Total use

3,056

3,047

3,297

3,147

Ending stocks

205

138

210

330

Stocks/use (percent)

6.7

4.5

6.4

10.5

Season-avg. farm price ($/bu.)

10.10

9.97

9.45

8.80

1/ Acreage, yield, production, and beginning stocks are estimates from the National Agricultural Statistics Service. Imports, crush, exports, ending stocks, and season-average farm price are projections from the World Agricultural Supply and Demand Estimates, February 9, 2010. The season-average price is the midpoint of the projected range from the same report.

2/ Projections based on analysis by USDA's Oilseeds Interagency Commodity Estimates Committee.

3/ Seed use estimates are revised from the World Agricultural Supply and Demand Estimates, February 9, 2010, based on updated average row width estimates. Changes from previous seed use estimates are offset by adjustments to residual use.

Note: Totals may not add due to rounding.

 

Table 6. Soybean Meal Supply, Demand, and Price, 2007/08-2010/11

2007/08

2008/09

2009/10 1/

2010/11 2/

Production (thou. short tons) 3/

42,284

39,104

40,525

39,435

Beginning stocks

343

294

235

300

Imports

141

88

140

165

Supply

42,768

39,486

40,900

39,900

Domestic Use

33,232

30,743

30,600

30,800

Exports

9,242

8,508

10,000

8,800

Total use

42,474

39,251

40,600

39,600

Ending stocks

294

235

300

300

Avg. price ($/short ton) 4/

335.94

331.17

295.00

260.00

1/ Beginning stocks are estimates from the U.S. Census Bureau. Production, imports, use, ending stocks, and average price are projections from the World Agricultural Supply and Demand Estimates, February 9, 2010. The average price is the midpoint of the projected range from the same report.

2/ Projections based on analysis by USDA's Oilseeds Interagency Commodity Estimates Committee.

3/ The soybean meal marketing year is October through September.

4/ The average price is for 48-percent protein soybean meal at Decatur, Illinois.

Note: Totals may not add due to rounding.

 

Table 7. Soybean Oil Supply, Demand, and Price, 2007/08-2010/11

2007/08

2008/09

2009/10 1/

2010/11 2/

Production (mil. lbs.) 3/

20,580

18,746

19,160

18,785

Beginning stocks

3,085

2,485

2,742

2,227

Imports

65

90

75

85

Supply

23,730

21,321

21,977

21,097

Domestic Use

18,335

16,385

16,500

17,000

Methyl Ester

3,245

1,907

2,200

2,800

Exports

2,911

2,193

3,250

2,000

Total use

21,246

18,578

19,750

19,000

Ending stocks

2,485

2,742

2,227

2,097

Avg. price (cents/lb.) 4/

52.0

32.2

35.0

33.0

1/ Beginning stocks are estimates from the U.S. Census Bureau. Production, imports, use, ending stocks, and average price are projections from the World Agricultural Supply and Demand Estimates, February 9, 2010. The average price is the midpoint of the projected range from the same report.

2/ Projections based on analysis by USDA's Oilseeds Interagency Commodity Estimates Committee.

3/ The soybean oil marketing year is October through September.

4/ The average price is for crude soybean oil at Decatur, Illinois.

Note: Totals may not add due to rounding.

 

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Disclaimer:     No guarantee of any kind is implied or possible where projections of future conditions are attempted. Futures trading involve risk. In no event should the content of this be construed as an express or implied promise, guarantee or implication by or from Howard Tyllas, that you will profit or that losses can or will be limited in any manner whatsoever. No such promises, guarantees or implications are given. Past results are no indication of future performance.

 

April Cattle Daily Numbers & Trade Ideas for 2/12/10

Feb 13, 2010


This report was sent to subscribers on 2/11/10 6:00 p.m. Chicago time to be used for trading on 2/12/10. Everything is done by Howard Tyllas, no program or black box.

Grains: My resistance was $.04 from the actual high and my support was $.07 1/2 from the low in soybeans, and my resistance was $.02 1/4 from the actual high and my support was $.03 from the low in corn.

Crude Oil: My resistance was 0.07 from the actual high; my support was 0.06 from the actual low.

S&P: My resistance was 1.75 from the actual high; my support was 0.50 (2 ticks) from the actual low.

Gold: My resistance was $0.70 from the actual high; my support was $6.70 from the actual low. 

Euro:  My resistance was 0.19 from the actual high; my support was 0.53 from the actual low.

Bonds: My resistance was 1 from the actual high; my support was 1 from the actual low. 

Natural Gas: My resistance was .004 from the actual high; my support was .022 from the actual low. 

Cattle: My resistance was .15 from the actual high; my support was .10 from the actual low. 

Do yourself a favor and get your numbers after the market is closed to be used for the next session trading. Ask yourself how much would it have been worth to read my comments and get my numbers 14 hours before today's open outcry?  

April Cattle

After the close on 2/12/10 for April Cattle: My pivot acted as resistance and was 91.52, $0.15 from the actual high, and my support was 90.80 FG, only $0.10 from the actual low.

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92.25

--------------91.52      Pivot

90.80 FG

89.82                          200 day moving average

  Use the same numbers ass used on 2/ 10 & 11 /10

           

Trend                       89.85 is the 200 day MA

5 day chart....…      Up (last week same day)                                                          

Daily chart   ……   Up            

Weekly chart ……. Sideways   

Monthly chart …... Sideways 

ATR .92                   Extremely Overbought 92%   




I said "Bracket line is now support; weekly numbers give me the resistances.  Gaps and uptrend line (green) are longer term supports". Bulls are in control above the line.

 Notice how I use the open outcry chart to locate gaps, but I do my numbers for the electronic market as always. Open outcry is where I find the major players doing business. 

In my daily numbers on Thursday; my pivot acted as resistance and was .30 from the actual high, my support was .30 from the actual low.    

April Cattle (elec.) for 2/12/10: 

Cattle: Helpful numbers. Same thoughts as yesterday and I want to take the trade idea to sell.

April Cattle (elec.) for 2/11/10: 

Cattle: Spot on numbers. Chart is bullish and taking a breather to generate enough energy to push higher. Charts like this like to back and fill and that means to test the bracket line (but hold it), but this one has been on both sides and takes away from the bullish performance. Only positive is that it has managed to close above the line the last 2 days.

I am skeptical of this chart from here, but I would not risk much if I take the sell against 92.25 using a buy stop at 92.42 to protect. This market might be going much higher, the sell is for a day trade because it is extremely overbought and made a bracket line to bracket line move in just 5 days.

USDA updated on Tuesday its monthly supply and demand estimates and overall the release contained few surprises.

April Cattle (elec.) for 2/10/10: 

Cattle: Accurate numbers. My trade idea would have been stopped out for a small loss. Bulls need to hold that bracket line that will surely be tested even if they want to go higher (most of the time in a day or two after being violated). Chart is bullish now though. Close below that line would be considered a failure and more corrective action should follow.

April Cattle (elec.) for 2/9/10: 

Cattle: Helpful numbers at best. Bulls are trying to cheerlead the market through the bracket line resistance but since it is in extremely overbought condition it will be harder to do so. I would try and sell near the bracket risking little with a buy stop just above to protect. (A bracket line trade)

April Cattle (elec.) for 2/8/10: 

Cattle: Spot on support and resistance was off .40. Since 1/13/10 we had 3 bracket line to bracket line moves in this market. Patience to wait for these trades pays off. What took 3 weeks might have taken 3 months in another market, and sometimes we do not see this at all.  Now you can again see the value of bracket to bracket trading. When wrong you lose little, when right you can really be rewarded. When you lose .50 to 1.00 when wrong and you make 2.00 to 4.00 when right, you become a casino. Think about it, if you are wrong 2 out of 3 times you lose 1.50 to 3.00 on the 2 times wrong, and made 2.00 to 4.00 when right the one time, and are profitable being wrong 2 of 3 trades. But when right 2 out of 3 trades, you lose .50 to 1.00 on the loser, 4.00 to 8.00 on the two that worked. When wrong you make money, and when right you get paid handsomely. Money management coupled with risk reward is a big part of successful trading.

April Cattle (elec.) for 2/5/10: 

Cattle: Accurate numbers. Bulls have struggled but are managing to test strong resistance; I would look to sell resistance with a buy stop just above the gap to protect.

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USDA Crop Production Report 2/9/2010

Feb 09, 2010


USDA Crop Production Report 2/9/2010
 

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 Released February 9, 2010, by the National Agricultural Statistics Service

(NASS), Agricultural Statistics Board, U.S. Department of Agriculture. Crop Production

 

     Crop Summary:  Area Planted and Harvested, United States, 2009-2010     

                               (Domestic Units) 1/                             

--------------------------------------------------------------------------------

                                :     Area Planted      :    Area Harvested    

              Crop              :-----------------------------------------------

                                :   2009    :   2010    :   2009    :   2010   

--------------------------------------------------------------------------------

                                :                  1,000 Acres                 

                                :                                              

Grains & Hay                    :                                              

  Barley                        :  3,567.0                 3,113.0             

  Corn for Grain 2/             : 86,482.0                79,630.0             

  Corn for Silage               :                          5,605.0             

  Hay, All                      :                         59,755.0             

    Alfalfa                     :                         21,227.0             

    All Other                   :                         38,528.0             

  Oats                          :  3,404.0                 1,379.0             

  Proso Millet                  :    350.0                   293.0             

  Rice                          :  3,135.0                 3,103.0             

  Rye                           :  1,241.0                   252.0             

  Sorghum for Grain 2/          :  6,633.0                 5,520.0             

  Sorghum for Silage            :                            254.0             

  Wheat, All                    : 59,133.0                49,868.0             

    Winter                      : 43,311.0    37,097.0    34,485.0             

    Durum                       :  2,554.0                 2,428.0             

    Other Spring                : 13,268.0                12,955.0             

                                :                                              

Oilseeds                        :                                              

  Canola                        :    827.0                   814.0             

  Cottonseed 3/                 :                                              

  Flaxseed                      :    317.0                   314.0             

  Mustard Seed                  :     51.5                    49.8             

  Peanuts                       :  1,116.0                 1,081.0             

  Rapeseed                      :      1.0                     0.9             

  Safflower                     :    175.0                   165.5             

  Soybeans for Beans            : 77,451.0                76,407.0             

  Sunflower                     :  2,030.0                 1,953.5             

                                :                                               

Cotton, Tobacco & Sugar Crops   :                                              

  Cotton, All                   :  9,149.2                 7,690.5             

    Upland                      :  9,007.5                 7,552.0             

    Amer-Pima                   :    141.7                   138.5             

  Sugarbeets                    :  1,183.2                 1,145.3             

  Sugarcane                     :                            877.7             

  Tobacco                       :                            354.1             

                                :                                              

Dry Beans, Peas & Lentils       :                                              

  Austrian Winter Peas          :     20.5                    13.7             

  Dry Edible Beans              :  1,537.5                 1,463.0             

  Dry Edible Peas               :    863.3                   837.9             

  Lentils                       :    415.0                   407.0             

  Wrinkled Seed Peas 3/         :                                              

                                :                                              

Potatoes & Misc.                :                                               

  Coffee (HI)                   :                              6.3             

  Hops                          :                             39.7             

  Peppermint Oil                :                             69.8             

  Potatoes, All                 :  1,069.8                 1,045.0             

    Winter                      :      9.0                     8.7             

    Spring                      :     79.2                    73.7             

    Summer                      :     44.5                    43.0             

    Fall                        :    937.1                   919.6             

  Spearmint Oil                 :                             20.5              

  Sweet Potatoes                :    109.6                    97.7             

  Taro (HI) 4/                  :                              0.4             

--------------------------------------------------------------------------------

1/  Data are the latest estimates available, either from the current report or 

    from previous reports.  Current year estimates are for the full 2010 crop  

    year.                                                                      

2/  Area planted for all purposes.                                             

3/  Acreage is not estimated.                                                  

4/  Area is total acres in crop, not harvested acreage.                        

                                                                                

          Crop Summary:  Yield and Production, United States, 2009-2010        

                               (Domestic Units) 1/                             

--------------------------------------------------------------------------------

                              :     :        Yield        :     Production     

             Crop             :Units:-------------------------------------------

                              :     :   2009   :   2010   :   2009   :   2010  

--------------------------------------------------------------------------------

                              :     :                      ----- 1,000 ----    

                              :     :                                           

Grains & Hay                  :     :                                          

  Barley                      :Bu   :   73.0                  227,323          

  Corn for Grain              :"    :  165.2               13,151,062           

  Corn for Silage             :Tons :   19.3                  108,209          

  Hay, All                    :"    :   2.47                  147,442          

    Alfalfa                   :"    :   3.35                   71,030          

    All Other                 :"    :   1.98                   76,412          

  Oats                        :Bu   :   67.5                   93,081          

  Proso Millet                :"    :   33.7                    9,865          

  Rice 2/                     :Cwt  :  7,085                  219,850          

  Rye                         :Bu   :   27.8                    6,993          

  Sorghum for Grain           :"    :   69.4                  382,983          

  Sorghum for Silage          :Tons :   14.5                    3,680          

  Wheat, All                  :Bu   :   44.4                2,216,171          

    Winter                    :"    :   44.2                1,522,718          

    Durum                     :"    :   44.9                  109,042          

    Other Spring              :"    :   45.1                  584,411          

                              :     :                                          

Oilseeds                      :     :                                           

  Canola                      :Lbs  :  1,811                1,474,130          

  Cottonseed 3/               :Tons :                         4,178.0          

  Flaxseed                    :Bu   :   23.6                    7,423          

  Mustard Seed                :Lbs  :    991                   49,364          

  Peanuts                     :"    :  3,412                3,688,350          

  Rapeseed                    :"    :  1,700                    1,530           

  Safflower                   :"    :  1,462                  241,970          

  Soybeans for Beans          :Bu   :   44.0                3,361,028          

  Sunflower                   :Lbs  :  1,554                3,036,460          

                              :     :                                          

Cotton, Tobacco & Sugar Crops :     :                                          

  Cotton, All 2/              :Bales:    774                 12,401.3          

    Upland 2/                 :"    :    763                 12,011.0          

    Amer-Pima 2/              :"    :  1,353                    390.3          

  Sugarbeets                  :Tons :   25.8                   29,519          

  Sugarcane                   :"    :   34.4                   30,151          

  Tobacco                     :Lbs  :  2,325                  823,290          

                              :     :                                          

Dry Beans, Peas & Lentils     :     :                                          

  Austrian Winter Peas 2/     :Cwt  :  1,328                      182          

  Dry Edible Beans 2/         :"    :  1,733                   25,360          

  Dry Edible Peas 2/          :"    :  2,045                   17,137          

  Lentils 2/                  :"    :  1,440                    5,859          

  Wrinkled Seed Peas 3/       :"    :                             874          

                              :     :                                           

Potatoes & Misc.              :     :                                          

  Coffee (HI)                 :Lbs  :  1,270                    8,000          

  Hops                        :"    :  2,383                 94,677.9           

  Peppermint Oil              :"    :     91                    6,379          

  Potatoes, All               :Cwt  :    413                  431,425          

    Winter                    :"    :    245                    2,132          

    Spring                    :"    :    289                   21,321          

    Summer                    :"    :    336                   14,469          

    Fall                      :"    :    428                  393,503          

  Spearmint Oil               :Lbs  :    132                    2,698          

  Sweet Potatoes              :Cwt  :    201                   19,647          

  Taro (HI) 3/                :Lbs  :                           4,000          

--------------------------------------------------------------------------------

1/  Data are the latest estimates available, either from the current report or 

    from previous reports.  Current year estimates are for the full 2010 crop  

    year.                                                                       

2/  Yield in pounds.                                                           

3/  Yield is not estimated.                                                    

                                                                               

       Crop Summary:  Area Planted and Harvested, United States, 2009-2010     

                                (Metric Units) 1/                              

--------------------------------------------------------------------------------

                                :     Area Planted      :    Area Harvested    

              Crop              :-----------------------------------------------

                                :   2009    :   2010    :   2009    :   2010   

--------------------------------------------------------------------------------

                                :                   Hectares                   

                                :                                               

Grains & Hay                    :                                              

  Barley                        : 1,443,530               1,259,800            

  Corn for Grain 2/             :34,998,400              32,225,460            

  Corn for Silage               :                         2,268,290            

  Hay, All 3/                   :                        24,182,250            

    Alfalfa                     :                         8,590,350            

    All Other                   :                        15,591,900            

  Oats                          : 1,377,560                 558,070            

  Proso Millet                  :   141,640                 118,570             

  Rice                          : 1,268,700               1,255,750            

  Rye                           :   502,220                 101,980            

  Sorghum for Grain 2/          : 2,684,310               2,233,890            

  Sorghum for Silage            :                           102,790            

  Wheat, All 3/                 :23,930,530              20,181,080            

    Winter                      :17,527,530  15,012,780  13,955,730            

    Durum                       : 1,033,580                 982,590            

    Other Spring                : 5,369,430               5,242,760            

                                :                                              

Oilseeds                        :                                              

  Canola                        :   334,680                 329,420            

  Cottonseed 4/                 :                                              

  Flaxseed                      :   128,290                 127,070            

  Mustard Seed                  :    20,840                  20,150            

  Peanuts                       :   451,630                 437,470            

  Rapeseed                      :       400                     360            

  Safflower                     :    70,820                  66,980            

  Soybeans for Beans            :31,343,650              30,921,150            

  Sunflower                     :   821,520                 790,560            

                                :                                              

Cotton, Tobacco & Sugar Crops   :                                              

  Cotton, All 3/                : 3,702,590               3,112,270            

    Upland                      : 3,645,250               3,056,220            

    Amer-Pima                   :    57,340                  56,050            

  Sugarbeets                    :   478,830                 463,490             

  Sugarcane                     :                           355,200            

  Tobacco                       :                           143,320            

                                :                                              

Dry Beans, Peas & Lentils       :                                              

  Austrian Winter Peas          :     8,300                   5,540            

  Dry Edible Beans              :   622,210                 592,060            

  Dry Edible Peas               :   349,370                 339,090            

  Lentils                       :   167,950                 164,710            

  Wrinkled Seed Peas 4/         :                                              

                                :                                              

Potatoes & Misc.                :                                              

  Coffee (HI)                   :                             2,550            

  Hops                          :                            16,080            

  Peppermint Oil                :                            28,250            

  Potatoes, All 3/              :   432,940                 422,900            

    Winter                      :     3,640                   3,520            

    Spring                      :    32,050                  29,830            

    Summer                      :    18,010                  17,400            

    Fall                        :   379,230                 372,150            

  Spearmint Oil                 :                             8,300            

  Sweet Potatoes                :    44,350                  39,540            

  Taro (HI) 5/                  :                               180            

--------------------------------------------------------------------------------

1/  Data are the latest estimates available, either from the current report or 

    from previous reports.  Current year estimates are for the full 2010 crop   

    year.                                                                      

2/  Area planted for all purposes.                                             

3/  Total may not add due to rounding.                                         

4/  Acreage is not estimated.                                                  

5/  Area is total hectares in crop, not harvested hectares.                    

                                                                               

          Crop Summary:  Yield and Production, United States, 2009-2010        

                                (Metric Units) 1/                              

--------------------------------------------------------------------------------

                                :         Yield         :      Production      

              Crop              :-----------------------------------------------

                                :   2009    :   2010    :   2009    :   2010   

--------------------------------------------------------------------------------

                                :                  Metric Tons                 

                                :                                              

Grains & Hay                    :                                               

  Barley                        :    3.93                  4,949,370           

  Corn for Grain                :   10.37                334,052,360           

  Corn for Silage               :   43.28                 98,165,550            

  Hay, All 2/                   :    5.53                133,757,130           

    Alfalfa                     :    7.50                 64,437,330           

    All Other                   :    4.45                 69,319,800           

  Oats                          :    2.42                  1,351,070           

  Proso Millet                  :    1.89                    223,730           

  Rice                          :    7.94                  9,972,230           

  Rye                           :    1.74                    177,630           

  Sorghum for Grain             :    4.35                  9,728,220           

  Sorghum for Silage            :   32.48                  3,338,440           

  Wheat, All 2/                 :    2.99                 60,314,290           

    Winter                      :    2.97                 41,441,590           

    Durum                       :    3.02                  2,967,640           

    Other Spring                :    3.03                 15,905,060           

                                :                                              

Oilseeds                        :                                              

  Canola                        :    2.03                    668,650           

  Cottonseed 3/                 :                          3,790,220           

  Flaxseed                      :    1.48                    188,550           

  Mustard Seed                  :    1.11                     22,390           

  Peanuts                       :    3.82                  1,673,010           

  Rapeseed                      :    1.91                        690           

  Safflower                     :    1.64                    109,760           

  Soybeans for Beans            :    2.96                 91,472,190           

  Sunflower                     :    1.74                  1,377,320           

                                :                                              

Cotton, Tobacco & Sugar Crops   :                                              

  Cotton, All 2/                :    0.87                  2,700,070           

    Upland                      :    0.86                  2,615,090           

    Amer-Pima                   :    1.52                     84,980           

  Sugarbeets                    :   57.78                 26,779,190            

  Sugarcane                     :   77.01                 27,352,530           

  Tobacco                       :    2.61                    373,440           

                                :                                              

Dry Beans, Peas & Lentils       :                                              

  Austrian Winter Peas          :    1.49                      8,260           

  Dry Edible Beans              :    1.94                  1,150,310           

  Dry Edible Peas               :    2.29                    777,320           

  Lentils                       :    1.61                    265,760           

  Wrinkled Seed Peas 3/         :                             39,640           

                                :                                              

Potatoes & Misc.                :                                              

  Coffee (HI)                   :    1.42                      3,630           

  Hops                          :    2.67                     42,950           

  Peppermint Oil                :    0.10                      2,890           

  Potatoes, All 2/              :   46.27                 19,569,110           

    Winter                      :   27.47                     96,710           

    Spring                      :   32.43                    967,100           

    Summer                      :   37.71                    656,300           

    Fall                        :   47.96                 17,849,000           

  Spearmint Oil                 :    0.15                      1,220           

  Sweet Potatoes                :   22.54                    891,170           

  Taro (HI) 3/                  :                              1,810           

--------------------------------------------------------------------------------

1/  Data are the latest estimates available, either from the current report or 

    from previous reports.  Current year estimates are for the full 2010 crop   

    year.                                                                      

2/  Production may not add due to rounding.                                    

3/  Yield is not estimated.                                                    

 All Orange Production Down 3 Percent from January               
                                                                               
The U.S. all orange forecast for the 2009-10 season is 7.94 million tons,
down 3 percent from the January 1 forecast and down 14 percent from the
2008-09 final utilization.  The Florida all orange forecast, at 129 million
boxes (5.81 million tons), is down 4 percent from the previous forecast and
down 21 percent from last season's final utilization.  Early, midseason, and
Navel varieties in Florida are forecast at 66.0 million boxes (2.97 million
tons), down 4 percent from January 1 and 22 percent lower than last season. 
The Florida Valencia orange forecast, at 63.0 million boxes (2.84 million
tons), is 5 percent below the previous forecast and down 19 percent from the
2008-09 crop.  Eight days of sub-freezing temperatures were recorded during
the period of January 5-13, 2010.  A freeze damage survey was conducted
January 26-27, 2010.  Additional assessments will be made through mid-March. 
Fruit size decreased for the early, midseason, and Navel varieties, while
fruit drop increased.  Fruit size has been below average for the Valencia
crop all season.
                                                                               
Florida frozen concentrated orange juice (FCOJ) yield forecast for the
2009-10 season is 1.56 gallons per box at 42.0 degrees Brix, down 3 percent
from the January 1 forecast and down 6 percent from last season's final yield
of 1.66 gallons per box.  The early-midseason portion is projected at
1.50 gallons per box, down 6 percent from last season's record yield of
1.60 gallons per box.  The Valencia portion is expected to total 1.65 gallons
per box, 6 percent lower than last year's final yield of 1.75 gallons per
box.  All projections of yield assume the processing relationship this season
will be similar to those of the past several seasons.                                      

                                                        

            

                                        

         Fruits and Nuts Summary:  Production, United States, 2008-2010        

                               (Domestic Units) 1/                             

--------------------------------------------------------------------------------

                            :         :               Production               

            Crop            :  Units  :-----------------------------------------

                            :         :    2008     :    2009     :    2010    

--------------------------------------------------------------------------------

                            :         :                  1,000                 

                            :         :                                        

Citrus 2/                   :         :                                        

  Grapefruit                :   Tons  :      1,548         1,331       1,160   

  Lemons                    :   "     :        619           950         855   

  Oranges                   :   "     :     10,076         9,198       7,936   

  Tangelos (FL)             :   "     :         68            52          41   

  Tangerines and Mandarins  :   "     :        527           443         511   

                            :         :                                        

Noncitrus                   :         :                                         

  Apples                    :   Lbs   :    9,609.3       9,953.6               

  Apricots                  :   Tons  :       81.6          68.3               

  Bananas (HI)              :   Lbs   :   17,400.0      15,400.0                

  Grapes                    :   Tons  :    7,319.3       7,067.6               

  Olives (CA)               :   "     :       66.8          42.8               

  Papayas (HI)              :   Lbs   :   33,500.0      31,300.0               

  Peaches                   :   Tons  :    1,135.3       1,105.7               

  Pears                     :   "     :      869.9         936.2               

  Prunes, Dried (CA)        :   "     :      129.0         157.0               

  Prunes & Plums (Ex CA)    :   "     :       15.5          18.8               

                            :         :                                        

Nuts & Misc.                :         :                                        

  Almonds (CA) (shelled)    :   Lbs   :  1,630,000     1,390,000               

  Hazelnuts (OR) (in-shell) :   Tons  :       32.0          47.0               

  Pecans (in-shell)         :   Lbs   :    194,080       290,500               

  Walnuts (CA) (in-shell)   :   Tons  :      436.0         415.0               

  Maple Syrup               :   Gals  :      1,912         2,327               

--------------------------------------------------------------------------------

1/  Data are the latest estimates available, either from the current report or 

    from previous reports.  Current year estimates are for the full 2010 crop  

    year, except citrus which is for the 2009-10 season.                       

2/  Production years are 2007-08, 2008-09, and 2009-10.                         

                                                                               

         Fruits and Nuts Summary:  Production, United States, 2008-2010        

                                (Metric Units) 1/                               

--------------------------------------------------------------------------------

                             :                    Production                   

             Crop            :--------------------------------------------------

                             :      2008      :      2009      :      2010     

--------------------------------------------------------------------------------

                             :                   Metric tons                   

                             :                                                 

Citrus 2/                    :                                                 

  Grapefruit                 :   1,404,320        1,207,460        1,052,330   

  Lemons                     :     561,550          861,830          775,640   

  Oranges                    :   9,140,790        8,344,290        7,199,420   

  Tangelos (FL)              :      61,690           47,170           37,190   

  Tangerines and Mandarins   :     478,090          401,880          463,570   

                             :                                                 

Noncitrus                    :                                                 

  Apples                     :   4,358,710        4,514,880                    

  Apricots                   :      74,040           61,980                    

  Bananas (HI)               :       7,890            6,990                    

  Grapes                     :   6,639,920        6,411,660                    

  Olives (CA)                :      60,600           38,830                    

  Papayas (HI)               :      15,200           14,200                    

  Peaches                    :   1,029,940        1,003,090                     

  Pears                      :     789,110          849,320                    

  Prunes, Dried (CA)         :     117,030          142,430                    

  Prunes & Plums (Ex CA)     :      14,060           17,060                     

                             :                                                 

Nuts & Misc.                 :                                                 

  Almonds (CA) (shelled)     :     739,360          630,490                    

  Hazelnuts (OR) (in-shell)  :      29,030           42,640                    

  Pecans (in-shell)          :      88,030          131,770                    

  Walnuts (CA) (in-shell)    :     395,530          376,480                    

  Maple Syrup                :       9,560           11,630                    

--------------------------------------------------------------------------------

1/  Data are the latest estimates available, either from the current report or 

    from previous reports.  Current year estimates are for the full 2010 crop  

    year, except citrus which is for the 2009-10 season.                       

2/  Production years are 2007-08, 2008-09, and 2009-10.                        

                                                                                

                            January Weather Summary                            

                                                                               

A protracted and severe cold outbreak struck Florida's peninsula during the

first half of the month, causing varying degrees of damage to citrus,

sugarcane, vegetables, and specialty crops.  Much of the significant damage

occurred on January 6-7 and 10-12, when temperatures dipped below 20 degrees

Fahrenheit in some northwestern citrus areas and fell to 32 degrees

Fahrenheit or below as far south as the winter vegetable production area near

Homestead, south of Miami.

                                                                                

Monthly temperatures averaged at least 5 degrees Fahrenheit below normal

across most of Florida's peninsula, and were also below normal across the

remainder of the Southeast.  Below-normal temperatures were also noted in

much of the western Corn Belt, where a very deep snow cover had become

established during December and persisted through January.  In contrast,

above-normal January temperatures dominated the Nation's northern tier and

much of the West.  Monthly readings averaged at least 5 degrees Fahrenheit

above normal in northern New England and portions of the Northwest.  At some

Northwestern locations, it was the warmest January on record.

                                                                                

Relatively dry conditions accompanied the Northwestern warmth, consistent

with the maturation of a strong El Niño.  Meanwhile, a barrage of mid- to

late-month storms struck areas from California to the southern Plains, more

than doubling the water content of the Sierra Nevada snow pack and improving

water-supply prospects throughout the Nation's southwestern quadrant.

                                                                               

Across the Nation's midsection, short-term dryness on the central Plains

contrasted with wetter than normal conditions on the northern and southern

Plains.  On the northern Plains, snow helped to protect winter wheat from a

variety of weather extremes.  On the southern Plains, several episodes of

wintry precipitation caused travel disruptions but aided pastures and winter

grains.

                                                                               

Farther north and east, wintry weather added to already impressive snow

depths in the western Corn Belt.  In contrast, relatively dry conditions

prevailed in the eastern Corn Belt, another signal consistent with a strong,

mature El Niño.  Elsewhere, frequent precipitation maintained unfavorably

soggy conditions from Alabama, Georgia, and northern Florida into the

southern Mid-Atlantic States.  The Southeastern wetness hampered fieldwork,

including final summer crop harvest efforts, and left standing water in some

winter wheat fields.  However, heavy rain largely bypassed southern Florida

and the central Gulf Coast region.

                                                                               

                          January Agricultural Summary                         

                                                                               

With the exception of the Great Lakes and New England, January temperatures

were below normal east of the Great Plains.  The mercury plunged to as many

as 6 degrees below normal in portions of the Southeast, with recordings

across much of Florida's peninsula falling to 8 degrees below normal.  In

contrast, the Pacific Northwest, northern California, and the Rocky Mountains

experienced warmer than normal temperatures, with recordings reaching

8 degrees above average across the eastern halves of Oregon and Washington. 

Precipitation totals varied dramatically from one region to another.  Strong

winter storms delivered above average rain and snowfall to much of the

Southwest, Texas, and northern Great Plains where monthly accumulations

totaled as much as 400 percent of normal.  Elsewhere, large portions of the

Rocky Mountains, Corn Belt, Delta, and New England were abnormally dry. 

Isolated locations in Colorado, Montana, and Wyoming received as little as

2 percent of their normal monthly precipitation.

                                                                               

Producers in several States were busy cultivating, fertilizing, and

irrigating fields in preparation for spring planting.  Cotton harvest in

Texas and Arizona was complete by mid-month, while fruit, nut, and vegetable

growers harvested their crops throughout January.  An arctic cold front

delivered several nights of subfreezing temperatures to Florida early in the

month.  Freeze damage reduced strawberry production, and completely ruined

some snap bean, squash, and tomato fields.  Young sugarcane acreage was

burned back, while the tops of the older crop were frozen.  As a result,

producers have been rapidly harvesting their cane fields to help limit the

loss of sucrose content.

                                                                               

A wave of storm systems provided favorable soil moisture to developing small

grain crops in California, Oklahoma, and Texas.  Conversely, excessively wet

fields coupled with below average temperatures in Florida and Georgia

hampered seed germination, emergence, and crop growth in winter wheat.

                                                                                

                                 Crop Comments                                 

                                                                               

Sugarcane:  Production of sugarcane for sugar and seed in 2009 is forecast at

30.2 million tons, of which 28.3 million tons will be utilized for sugar and

1.87 million tons for seed.  Total production for sugar and seed is down

fractionally from the previous forecast but up 9 percent from 2008. 

Sugarcane producers are expecting to harvest 877,700 acres for sugar and seed

in 2009, unchanged from January but up 1 percent from last year.  Yield for

sugar and seed is estimated at 34.4 tons per acre, down 0.1 ton from the

previous forecast but up 2.6 tons from 2008.

                                                                               

Production in Florida is forecast at 14.1 million tons, down 1 percent from

January but up 6 percent from 2008.  Freezing temperatures mid-month

negatively impacted the sugarcane crop in the Everglades region of Florida. 

As a result, yield is forecast at 36.1 tons per acre, a decrease of 0.3 ton

from the previous forecast.  Estimates for Hawaii, Louisiana, and Texas were

carried forward from January.

                                                                               

Grapefruit:  The forecast of the 2009-10 U.S. grapefruit crop is 1.16 million

tons, down 3 percent from the January 1 forecast and down 13 percent from the

2008-09 final utilization.  Florida's grapefruit production is forecast at

18.8 million boxes (799,000 tons), down 4 percent from the January 1 forecast

and 13 percent below last season.

                                                                               

The Florida all white grapefruit forecast is 5.30 million boxes

(225,000 tons), down 4 percent from January and down 20 percent from the

previous year.  The colored grapefruit forecast, at 13.5 million boxes

(574,000 tons), is down 4 percent from the January 1 forecast and 11 percent

lower than last season.  The decrease is due to a slowing of the grapefruit

growth rate.  California and Texas grapefruit production forecasts are

carried forward from the January 1 forecast.

                                                                                

Tangerines and Mandarins:  The U.S. tangerine and mandarin crop is forecast

at 511,000 tons, down 6 percent from the January 1 forecast but 15 percent

above the 2008-09 crop.  Florida's tangerine crop is forecast at 4.00 million

boxes (190,000 tons), down 15 percent from the January 1 forecast but up

4 percent from the previous season.  Harvest of the later maturing Honey

variety is well underway and fruit size measurements are down.  Arizona and

California tangerine and mandarin production forecasts are carried forward

from the January 1 forecast.

                                                                          

Tangelos:  Florida's tangelo forecast is 900,000 boxes (41,000 tons),

unchanged from the January 1 forecast but down 22 percent from last season's

final production.  If realized, this will be the smallest tangelo crop since

1962, when Florida had a damaging December freeze.

                                                                                

Papayas:  Hawaii fresh papaya production is estimated at 2.65 million pounds

for December 2009, up 6 percent from November but 7 percent lower than a year

ago.  Total crop area for December is estimated at 1,975 acres, unchanged

from November but 18 percent below December 2008.  Harvested area totaled

1,320 acres, unchanged from the previous month but 10 percent lower than last

year.  Warm, dry weather in December aided fruit development and ripening.

                                                                                

Florida Citrus:  The citrus region experienced several nights of low

temperatures during the first half of January.  Weather stations reported

high temperatures in the 30's and 40's.  In an attempt to protect the fruit

and limit crop losses, grove caretakers irrigated heavily and accelerated

harvest.  Temperatures returned to a 70 to 80 degree range by mid-January. 

Harvesting of early, midseason, and Navel oranges neared completion while

Valencia harvest was just getting started.

                                                                               

All of the processing plants had opened and were mainly receiving early and

midseason oranges and grapefruit.  Primary grove activities were irrigating

and harvesting.

                                                                               

California Citrus:  During the first half of January picking of tangerines,

navel oranges, and grapefruit continued in the Central Valley.  The lemon

harvest continued in both the desert region and Central Valley.  Citrus fruit

harvest slowed significantly in mid-January due to storms moving through the

Central Valley and desert region.  The Valencia orange crop continued to

develop well.

                                                                               

California Noncitrus Fruits and Nuts:  Pruning and pre-emergent spraying

occurred in grape vineyards.  Dormant sprays to control pests were applied in

prune and peach orchards.  Pruning continued in nut orchards, while herbicide

applications to berms also took place in almond and walnut orchards.  During

the middle of January most maintenance work in vineyards and orchards was

suspended or slowed due to heavy rains and strong winds throughout central

and southern California.  Some fallen almond trees were reported.  Honeybees

were shipped in from other States and hives were placed in almond orchards

for the upcoming pollination season.

                                                                               

Reliability of February 1 Orange Forecast

                                                                               

Survey Procedures:  The orange objective yield survey for the February 1

forecast was conducted in Florida, which produces about 75 percent of the

U.S. production.  Bearing tree numbers are determined at the start of the

season based on a fruit tree census conducted every other year, combined with

ongoing review based on administrative data or special surveys.  From

mid-July to mid-September, the number of fruit per tree is determined.  In

September and subsequent months, fruit size measurement and fruit droppage

surveys are conducted, which are combined with the previous components to

develop the current forecast of production.  California and Texas conduct

grower and packer surveys on a quarterly basis in October, January, April,

and July.  California conducts an objective measurement survey in September

for navel oranges and in March for Valencia oranges.

                                                                               

Estimating Procedures:  State level objective yield estimates for Florida

oranges were reviewed for errors, reasonableness, and consistency with

historical estimates.  Reports from growers and packers in California and

Texas were also used for setting estimates.  These three States submit their

analyses of the current situation to the Agricultural Statistics Board (ASB). 

The ASB uses the survey data and the State analyses to prepare the published

February 1 forecast.

                                                                               

Revision Policy:  The February 1 production forecasts will not be revised.  A

new forecast will be made each month throughout the growing season. 

End-of-season estimates will be published in the Citrus Fruits Summary

released in September.  The production estimates are based on all data

available at the end of the marketing season, including information from

marketing orders, shipments, and processor records.  Allowances are made for

recorded local utilization and home use.

                                                                                

Reliability:  To assist users in evaluating the reliability of the February 1

production forecasts, the "Root Mean Square Error," a statistical measure

based on past performance, is computed.  The deviation between the February 1

production forecast and the final estimate is expressed as a percentage of

the final estimate.  The average of squared percentage deviations for the

latest 20-year period is computed.  The square root of the average becomes

statistically the "Root Mean Square Error."  Probability statements can be

made concerning expected differences in the current forecast relative to the

final end-of-season estimate, assuming that factors affecting this year's

forecast are not different from those influencing recent years.

                                                                               

The "Root Mean Square Error" for the February 1 orange production forecast is

3.8 percent.  However, if you exclude the 5 abnormal production years (3

freeze seasons and 2 hurricane seasons), the "Root Mean Square Error" is

3.2 percent.  This means that chances are 2 out of 3 that the current orange

production forecast will not be above or below the final estimates by more

than 3.8 percent, or 3.2 percent excluding abnormal seasons.  Chances are 9

out of 10 (90 percent confidence level) that the difference will not exceed

6.6 percent, or 5.6 percent, excluding abnormal seasons.

                                                                               

Changes between the February 1 orange forecast and the final estimates during

the past 20 years have averaged 335,000 tons (309,000 tons excluding abnormal

seasons), ranging from 18,000 tons to 655,000 tons (18,000 tons to

638,000 tons, excluding abnormal seasons).  The February 1 forecast for

oranges has been below the final estimate 7 times and above 13 times (below

6 times and above 9 times, excluding abnormal seasons).  The difference does

not imply that the February 1 forecasts this year are likely to understate or

overstate final production.

                                    

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Disclaimer:     No guarantee of any kind is implied or possible where projections of future conditions are attempted. Futures trading involve risk. In no event should the content of this be construed as an express or implied promise, guarantee or implication by or from Howard Tyllas, that you will profit or that losses can or will be limited in any manner whatsoever. No such promises, guarantees or implications are given. Past results are no indication of future performance.

 

 

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