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March 2013 Archive for From the Editor

RSS By: Brian Grete, Pro Farmer

Pro Farmer Editor Brian Grete takes time to talk with Pro Farmer Members about some of the key issues in each week's Pro Farmer newsletter.

It will be tough to get bullish reports next week.

Mar 22, 2013

Chip Flory

From The Editor

March 22, 2013

Hello Pro Farmer Members!

Don't say the 2013 growing season is off to a "late start" -- yet. But it sure feels late after 2011's early start and 2012's ultra-early start. I was in Ontario this week visiting with the guys at Southwest Ag Partners and the farmers I talked with expect to get started in about 2 weeks. Here in northeast Iowa, conditions could be absolutely perfect for the next two weeks and I don't think we'd see much activity in the field; three weeks of really good conditions would probably get the activity started.

There's also growing consensus in the market that much of the drought from last year is over for the central and eastern Corn Belt, but still in place in the western Belt. That's exactly right on the western Belt, but the central Belt (Iowa, Minnesota, Missouri) are still very dry. And the rain that Iowa saw March 9-10 didn't do as much good as the market seems to think. I left northeast Iowa on March 9 and drove in rain almost all the way to Oklahoma City. The rains were clearly soaking in the further south I traveled, but when I returned home on March 15, the first think I noticed were farm ponds that were overflowing and creeks and rivers that were running nearly bank full. Just one week later, the level of the Cedar River is falling again... and falling fairly quickly. That tells me a lot of the rain we saw March 9 ran off and didn't get a chance to soak into the frozen ground. We've still got some dry-soil problems to fix in Iowa before I'll start to get comfortable with crop prospects this year.

We've got big reports coming next week. The Quarterly Grain Stocks Report will give us a better idea of just how quickly we're using up the 2012 corn, soybean and wheat crops. The Prospective Plantings Report will give us the first survey-based estimate of 2013 plantings. Informa Economics released its updated plantings estimates this morning and the corn acreage estimate was a bit surprising. Compared to the Memphis-based consulting firm's January estimate, Informa reportedly cut the corn planting peg by 1.6 million acres. It now sees plantings up just 600,000 from last year. We've been working with a corn planted acreage estimate of 98 million for several weeks.

The Informa estimate, and other slight-increase-from-year-ago estimates, might make it difficult to get a bullish estimate from USDA next Friday. And it will probably be tough to get a bullish stocks estimate for corn, too. The reason has been well documented -- we're just not using corn very quickly and in the last three months, livestock feeders have been using alternative feeds.

If you haven't checked out My Grain Trades on your homepage yet, please do that this weekend. This is an exceptionally valuable tool that will help simplify your marketing efforts in the year ahead. Click here to go to the introductory page. It's a free service for Pro Farmer Members that helps you keep track of your grain sales and figures your profit potential on the fly. Just check it out...

Pro Farmer's Marketing Education Series is also now available. It is what the title suggests... a series of workbooks designed to help you make better marketing decisions. Click on the link to learn more about this new project we're putting together.

That's it for now...

I'll be in Jackson, Minnesota, on Tuesday, March 26. If you're coming to the meeting... we'll see you there!

Follow me on Twitter at @ChipFlory

To join Pro Farmer, click here!

The weather is better, but the drought isn't dead

Mar 12, 2013

Chip Flory

From The Editor

March 8, 2013

Hello Pro Farmer Members!

Change in the weather... change in market momentum. That was the focus of the conversation PF Sr. Market Analyst Brian Grete and I had for Pro Farmer's Profit Briefing on AgDay this week. And there has been a change in the weather... all for the better, if we're thinking about yield potential.

 

 

NOAA added to the speculation of improved growing conditions for spring 2013 with Thursday's release of the Seasonal Drought Outlook. It shows expectations of "ongoing drought, some improvement" over most of the western Corn Belt. It seems, however, that most looking at this outlook saw the "green hatches" on the map and assumed it meant "drought over."

That's not what it means... just because there's expected to be "some improvement" in western Iowa, Nebraska and parts of the northern Corn Belt in Minnesota and the Dakotas, that doesn't mean conditions will be "good." Some that call themselves "crop watchers" have turned rather smug about the outlook.

I'll summarize it this way:

We've got a long way to go before this drought is dead.

That means the 2013 corn, wheat and soybean markets will likely be filled with rally stops and starts all spring long. It will be interesting to see how the market responds to the first USDA Crop Condition Report of the spring when April gets here. It will include state-by-state winter wheat crop condition ratings and all the talk of improved conditions in the Southern Plains will undoubtedly have traders looking for crop ratings of mostly fair to good.

In reality, it depends on when that crop was planted. Early seeded wheat did get a bit of a stand established last fall and recent precip is helping the crop get established this spring. Late-seeded wheat, however, is just now trying to emerge. If stands are taken into consideration, not much of the Kansas and Oklahoma wheat crops will be able to be called either "fair" or "good."

And wheat is the first market that will show us if traders are tuned into potential crop problems... or if they've decided recent precip and change in weather patterns has fixed the drought problem.

As a reminder, it did rain last spring. Not a lot, but it did rain. And most long-term weather forecasters have been calling for normal- to below-normal precip this spring. That suggests some rain in the Midwest to at least dampen soils to get the crop started.

The other thing that most long-term weather forecasters have been calling for is below-normal rain and above-normal temps in July and August. That ought to be just enough time to lull the markets into a false sense of security before yield-robbing weather once again ignites a weather scare.

Pro Farmer has not recommended any 2013-crop corn, bean or wheat sales at this time. If we had it to do over again, we'd have some sold. At current prices, the first round of downside price coverage will likely be done with hedges or put options, rather than cash sales. (Cash-only marketers will likely be advised to make small cash sales to "get something" on the books.) The hedges will provide the flexibility needed in a year like this when we know there's likely to be a weather-scare rally at some point.

 

If you haven't checked out My Grain Trades on your homepage yet, please do that this weekend. This is an exceptionally valuable tool that will help simplify your marketing efforts in the year ahead. Click here to go to the introductory page. It's a free service for Pro Farmer Members that helps you keep track of your grain sales and figures your profit potential on the fly. Just check it out...

Pro Farmer's Marketing Education Series is also now available. It is what the title suggests... a series of workbooks designed to help you make better marketing decisions. Click on the link to learn more about this new project we're putting together.

That's it for now...

After a very active seminar season, I'll be out of the office March 11-15. You'd think I'd stay home to relax, but with my son Tom off for spring break, we're heading to Texas to see my old buddy Steve Cornett. Steve is the Editor Emeritus of Farm Journal Media's Beef Today and lives south of Amarillo. If you know me (or Tom), you've probably got a good idea what we'll be doing. Let's just say the hogs, coyotes and (hopefully) the bobcats on Steve's ranch aren't going to get a moment of rest for the next few days!

 

Follow me on Twitter at @ChipFlory

To join Pro Farmer, click here!

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