AgWeb.com Farm Journal Legacy Project Top Producer Dairy Today Beef Today Pro Farmer Ag Day TV US Farm Report AgriTalk Cattle-Exchange.com Farm Journal Media Ultimate Farm Quest Corn College Marketing Rally Farmers Feeding the World Farmers Feeding the World - test Outdoors on the Farm Baxter Black Machinery Minute Consumer Ag Connection Radio AgWeb Radio Tractor Tales PFA Pioneer Blog TPEN
May 22, 2013
Home| Tools| Events| Blogs| Discussions Sign UpLogin

 

July 2009 Archive for MGEX Research

RSS By: Joe Victor, AgWeb.com

Joe Victor is a Business Development Specialist with Minneapolis Grain Exchange, Inc., where he monitors cash grain activity and cash grain opportunities. He provides marketing advice through this blog.

Soybean Maturity & Condition Influence on Yield:

Jul 30, 2009
There is plenty of present discussion with regards to potential forthcoming acreage adjustments for corn and sorghum and Allendale Inc addressed the potential impact on 2009-10 corn end stocks in last week’s special report release. Allendale Inc would like to switch gears or in this case, switch fields. There is a need to look into present day soybean maturity and good to excellent conditions and the potential impact on yield as the 2009 crop moves forward.
As of July 26th, 2009, the nation’s soybean crop maturity registers 63% bloom vs a five year average of 76%. Allendale Inc discovered three years, one recent in 2008 with 60% bloom and two distant years of 1995 and 1996 when the crop was lagging in maturity, very similar to 2009. Taking into consideration genetic developments more closely associated with 2008, we were interested to see how yield responded by month from the starting point of July into the January annual report.
The attached graph does detail the month by month yield decline in 2008 from July’s 41.6 bushels per acre into the month of November with 39.3 bushels per acre and a January annual estimate of 39.6 bpa for a total decline of 4.8% with 1995 exhibiting a 3.1% decline. 1995 had the similar month by month trend down with the exception of 1996 when the January annual yield report finishing 2.4% higher than the July yield estimate.  
By using the resulting decline in 2008, final yield could result in 2009 yield per acre of 40.55 and end stocks of 118 million bushels vs Allendale’s present outlook of 275 mil bu and USDA’s 250 million bushels. Using the 1995 decline of 3.1%, US end stocks would project to 174 million bushels and by using the 2.4% increase in 1996, end stocks would be 353 million bushels.
What about present 67% good to excellent crop conditions, are they enough to offset the late maturity impact on yield? Allendale Inc was able to identify two years when the good to excellent conditions were very near the same conditions for the last Monday of July. The two years identified are 2000 and 2003. Both years saw month yields drop from July to November with only the Jan 2000 yield 1/10th of a bushel higher than Nov. The July to Jan 2000 yield loss was 4.8% while 2003 experienced a whopping 15.9% yield loss. IF similar yield losses were to impact the 2009 projected yield of 42.6 bpa, the 2000 model would imply 119 mil bu end stocks and the 2003 model result in stocks well under 100 million bushels. We must include in 2003 the G-E soybean conditions dropped 27% vs July and 2000 dropped 12%. What are the chances 2009 G-E conditions drop by a similar amount as 2003?
 What are your thoughts regarding these scenarios? Is the 2009 soybean yield of 42.6 bpa out of the woods? Are the 2009 soybean yields more likely to follow 1996 or 1995,2000,2003 and 2008? The most important question is do you have a marketing plan in place for such scenarios? We welcome your questions.........Joe Victor
 
Allendale Inc welcomes any questions you may have by calling 800-551-4626 or
 
 
 
The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. Commodity trading may not be suitable for recipients of this publication. This is not a solicitation of the purchase or sale of any commodities. Those acting on this information are responsible for their own actions. Any republication, or other use of this information and thoughts expressed herein without the written permission of Allendale, Inc., is strictly prohibited. Allendale Inc. c2009
Comments (4)

Corn Acreage and Yield What Ifs:

Jul 23, 2009
USDA’s National Agriculture Statistic Service announced on 07/22/09 it will re-survey seven corn and two sorghum producing states, in response to variable weather conditions. If planted acreage adjustments are needed, USDA will include the cause and effect within its August 12th crop production report.
Allendale Inc needs to clarify, USDA’s additional data collection of this magnitude at the end of July, before the August crop production report is rather rare, however a similar adjustment was made just one year ago. The results of last years revision discovered 100 K fewer acres planted in IL, IN, MO and 50 K fewer acres in WI vs USDA June 30th, 2008 planted acres estimated. Immediately a number of “what ifs” for 2009 are circulating within the corn trade with regards to the anticipation USDA is likely to reduce corn acres planted but tempering outright enthusiasm by keeping in mind USDA is likely to increase its corn yield estimate. Within this special report, Allendale Inc includes a graph of several “what ifs” for you to glean prior to the USDA August crop production report release.
The starting point is the here and now which uses USDA’s most recent supply demand data estimates of 87.04 million acres planted, 80.11 mil acres harvested, 153.4 bushels per acre, and ending stocks of 1.55 billion bushels vs old crop stocks of 1.77 billion bushels. By comparison, Allendale Inc’s 2009/10 end stocks estimate would be 1.587 billion bushels of 2009/10 end stocks before any yield or acreage adjustment and represented in the far left column. What if USDA left the corn yield unchanged but reduced planted acres by 500,000, then end stocks could narrow by 5% to a level of 1.511 billion bushels. Based on present crop condition reports, Allendale Inc estimates the national corn yield average at 157.2 bushels per acre and if acres are reduced by 500,000 suggest end stocks of 1.813 billion bushels for a 14% increase.
Yet another “what if” USDA were to trim planted acres by a heavy 1 million acres and using Allendale Inc yield could suggest end stocks increase of 6.6% larger than presently estimated or 1.692 billion bushels. Our fourth scenario utilizes the corn trade yield talk of 159.5 bushels per acre with a 500,000 acre reduction and presents the potential for ending stocks of 1.996 billion bushels. Our fifth and final “what if” utilizes a University of Illinois record breaking national yield estimate of 161.9 bushels per acre associated with the trades notion of a 500,000 planted acre reduction, producing ending stocks over 2 billion bushels.
Some questions to muse over with regards to USDA’s Wednesday announcement, is it likely to reduce corn acres and increase sorghum acres (Illinois and Missouri) to suggest safe feed and fuel stocks? Are you considering similar corn acreage reductions as the trade of 500,000? Are you anticipating a mild increase to 157.2 bushels per acre as Allendale suggest or are you anticipating a heavy yield increase as University of Illinois is considering?
What are your thoughts regarding these scenarios? Are you more likely to implement marketing plan adjustments before or after the USDA August 12th crop production report?.........Joe Victor
 
Allendale Inc welcomes any questions you may have by calling 800-551-4626 or
 
  
The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. Commodity trading may not be suitable for recipients of this publication. This is not a solicitation of the purchase or sale of any commodities. Those acting on this information are responsible for their own actions. Any republication, or other use of this information and thoughts expressed herein without the written permission of Allendale, Inc., is strictly prohibited. Allendale Inc. c2009
Comments (5)

Odds Suggest the Low is In

Jul 16, 2009
 
The general perception is once the annual winter wheat harvest has reached sixty percent complete it may be used as a measure to suggest wheat futures have reached a seasonal low. The thought is the majority of the new crop wheat harvest is complete and less likely to produce further significant supply price pressure. Allendale Inc’s research measured each harvest year dating back to 2001 and analyzed the CBOT Soft Red Winter Wheat (SRWW) open futures price for the month of July, low, high and closing price as well as the closing price for the month of August. As a side note the winter wheat harvest reached a minimum of 60% complete within the first eight days of July from 2001-2006 and between the 12th and 15th from 2007-2009 to imply the majority of the harvest complete within the first half of the month.
Of the most recent eight years, the closing price futures level for the month of July exceeded the opening price six of the years (75%) with the exception of 2008 by 62 cents per bushel and 2004 by 23 cents per bushel. On average the closing price exceeded the opening price for the month of July by 27.5 cents per bushels with a range of +2 to +47 cents per bushel. As of July 15th, 2009, the SRWW futures have reached a high of thirteen and a half cents over the opening for the month.
            When analyzing the performance of the SRWW futures price from the month of July close to the month of August close, odds declined suggesting strength in futures was more difficulty to maintain. Over the most recent eight years, odds were 37.5% the August close was lower than the July close.
            The above research suggest there may be a 75% chance the month of July closing price could be higher than the opening futures price but odds decline into the closing price for August suggesting it may not be prudent to over extend the bullish enthusiasm.
            On a side note there may be a correlation between a year on year notable stock build of wheat and why in 2004 and 2008 the month of July wheat futures were not successful in closing higher than the month opening price. The year on year world wheat stock build of wheat from 2003-2004 was 14% and 2007-2008 was 38%.
Producers of wheat may consider how the potential climb in the month of July wheat futures may adversely impact basis levels response and end users may want to consider how harvest pressure may present an opportunity to secure needs especially in the months of July and August when working with flat cash forward contracts.
What are your thoughts regarding the odds of the month of July futures price to be higher at the end of this month vs the opening? Is there an opportunity for the producer, investor as well as the end users?.........Joe Victor
 
 
Allendale Inc welcomes any questions you may have by calling 800-551-4626 or
 
 
 
 
 
 
The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. Commodity trading may not be suitable for recipients of this publication. This is not a solicitation of the purchase or sale of any commodities. Those acting on this information are responsible for their own actions. Any republication, or other use of this information and thoughts expressed herein without the written permission of Allendale, Inc., is strictly prohibited. Allendale Inc. c2009
Comments (7)

Corn and Soybean Yield June to July WASDE:

Jul 09, 2009
Allendale Inc’s research found two previous years when the percentage slow rate of silking was near the 2009 level of 8%  as we approach the July World Agriculture Supply Demand Estimate report. What we are trying to ascertain is what are the prospects could make a yield adjustment to the nations corn crop from the June to WASDE report based on present crop progress first and then give a degree of weight to the crop conditions for a crop that is behind in its growth progress (16% five year average for silking).
The two years identified with similar progress were 2003 and most recently 2008. As you are able to view via the chart is how in 2008 the % silking was 6 and the good to excellent crop condition was rated 9% less than present levels of 71%. USDA chose to reduce the nation’s June to July 2008 corn yield by half a bushel per acre. If USDA were to follow through with a similar yield reduction in its July 10th 2009 report, production would drop from the present 12.288 billion bushel to 12.248 bil bu. Equally important 2009/10 end stocks would drop from Allendale Inc’s present estimate of 1.354 billion bu (11% end stocks to use) to a level of 1.313 billion bushel (10.5% end stocks to use).
In 2003 the percent silk was 9 and crop ratings were 73% good to excellent and very much likely the reason why USDA decided to increase the yield from June to July report by 3 bushels per acre. If USDA were to follow a similar pattern in 2009, the nation’s corn yield would increase to a level of 12.529 billion bushels and end stocks increase to 1.594 billion bushels (12.7% end stocks to use).
With regards to soybeans the adjustment is much less likely even though the 2009 progress (% blooming) remains more than half of its five year average of 30%. At the present 14% bloom Allendale Inc identified two years which had similar rates and they are 2008 and 2003. As you are able to view the 2008 soybean crop has 12% of the crop blooming and was rated 59% good to excellent vs the present 2009 66% good to excellent. One year ago USDA did drop the soybean yield from June to July by a half a bushel per acre. If USDA were to follow a similar pattern in Friday’s report total production would drop from 3.261 billion bushels to a level of 3.223 bil bu and end stocks to a level of 239 billion bushels with an end stocks to use level of 8% vs 2008’s level of 4%. Even though the percent bloom in 2003 was less at 11 and good to excellent crop ratings were 70%, USDA made no revision to yield from June to July.
In conclusion, if there is to be a yield adjustment in the July 10th WASDE report, Allendale Inc would suggest USDA may be more likely to increase corn rather than leave yield unchanged or decrease or make any adjustment to the soybean yield. In this case Allendale Inc would suggest the July WASDE to provide production data which would provide more pressure than lift to corn futures.
What are your thoughts will USDA make any change to corn and or soybean yields in the July WASDE or leave them status quo?.........Joe Victor
 
Allendale Inc welcomes any questions you may have by calling 800-551-4626 or
 
 
The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. Commodity trading may not be suitable for recipients of this publication. This is not a solicitation of the purchase or sale of any commodities. Those acting on this information are responsible for their own actions. Any republication, or other use of this information and thoughts expressed herein without the written permission of Allendale, Inc., is strictly prohibited. Allendale Inc. c2009
Comments (4)

Corn Acres and Quarterly Stocks: Not Out of the Woods Yet

Jul 01, 2009
With the June 30th USDA Planted Acres and Quarterly Grain Stocks released, Allendale’s research suggests USDA’s forthcoming World Agriculture Supply and Demand Estimates are likely forced to produce revisions to projected 2009/10 end stocks.
By viewing the chart, you will observe three distinct columns on the righthand side. In the first 2009/10 column, you will see the days supply of corn and wheat as a result of the USDA June WASDE, which suggests decade record low number of days supply of corn at 32, two days less than the previous record low of 2001/02. The second of the three columns has revised the number of days supply to 36 as USDA’s June planted acres reported 87.035 million acres vs. its present WASDE estimate of 85 million, creating a growing supply of corn while leaving yield per acre unchanged at 153.4 bu. per acre. The third and final column includes the upward acre revision as well as  USDA’s June 30th quarterly corn stocks report estimate of 4.266 billion bushels.
Knowing the most recent three-year average 4th corn use as well as lag in 2008/09 corn use, Allendale Inc suggests USDA has a discrepancy of 323 million bushels from its present old crop end stocks of 1.6 billion bushels and likely to cause a larger 2009/10 carry-in stocks estimate. Allendale’s research suggests by adding in the potentially larger carry-in stocks and increased planted acres, the days supply of corn may reach 46. Though building a degree of comfort for end users as well as grain handlers, corn is not out of the woods just yet, as the 10-year average days of corn supply is 54 and there is evidence of a downward trending bias since 2004/05’s 72-day supply.
With reference to corn’s starch cousin wheat, the trend bias is notably upward since 2003/04’s level of a relatively tight situation of 85 days. USDA launched another acreage surprise on June 30th with regard to wheat by discovering an additional 1.175 million acres vs. its June WASDE estimate of 58.6 million acres. Before the June 30th USDA acres and quarterly stocks reports, the days supply of wheat numbered 110. By adding the additional acres, the 2009/10 days supply of wheat has reached a level of 120 days, and by adding in the quarterly stocks data suggest the outlook for 121 days.
Allendale Inc.’s most immediate response to this time-sensitive data is the wheat supply may in fact be the darkest starch cloud for producers, which may produce a gray cloud over corn’s ability to stage a significant weather rally for 2009. Allendale’s research does advise we have likely experienced the 2009 December futures high in the month of May with the potential to reach $4.40 to $4.60 and a $3.40 to $3.50 low before the fall harvest. Allendale encourages you to utilize the fundamental and projected price range data with an Allendale representative to formulate your specific marketing plan.
Speculative investment traders may want to explore the potential of a long Sept futures corn vs. short Sept wheat futures position as technical chart data suggest the spread remains confined within a 20-cent trade range.
What are your thoughts about the most recent USDA reports? Does USDA have the right acreage and stocks estimates? Could USDA begin to make immediate abrupt acreage and stocks adjustments in the July WASDE, or wait until the January Annual WASDE? The trade may suggest there is plenty of the growing season ahead and El Nino could cause crop stress. Ask yourself this: What if there is not a major weather issue -- are you prepared?..........Joe Victor
 
Allendale Inc. welcomes any questions you may have by calling 800-551-4626 or
 
 
The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. Commodity trading may not be suitable for recipients of this publication. This is not a solicitation of the purchase or sale of any commodities. Those acting on this information are responsible for their own actions. Any republication, or other use of this information and thoughts expressed herein without the written permission of Allendale, Inc., is strictly prohibited. Allendale Inc. c2009
Comments (8)
Log In or Sign Up to comment

COMMENTS

 
 
 
AgWeb.com Farm Journal Legacy Project Top Producer Dairy Today Beef Today Pro Farmer Ag Day TV US Farm Report AgriTalk Cattle-Exchange.com Farm Journal Media Ultimate Farm Quest Corn College Marketing Rally Farmers Feeding the World Farmers Feeding the World - test Outdoors on the Farm Baxter Black Machinery Minute Consumer Ag Connection Radio AgWeb Radio Tractor Tales PFA Pioneer Blog TPEN
The Home Page of Agriculture
About Farm Journal Media|Careers|Contact Us|Advertise|Lite Version|RSS||Facebook|YouTube
© 2013 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions