Crop Insurance May Not Save All Producers
Aug 17, 2012
Good Morning! Paul Georgy with early morning comments for August 17, 2012 at 5:00 am. Grain futures are mixed in a narrow trading range overnight. The weather forecast is cooler with chance of showers for next 10 days. We realize that will not change corn dramatically but will slow the dry down hopefully add a bit more quality. Soybeans should benefit from the moisture and cooler temps. Futures markets have been quiet this week as traders deal with the transition from a focus on supply to a focus on demand deterioration. Corn, beans and wheat are now cheaper for export in other countries than in the US. Many have commented that the farmer will be saved this year by crop insurance. We have looked at the data from RMA that shows only 65% of the planted acres of corn are covered by Revenue Protection insurance with the majority of those acres covered by the 75% or less plan. There are a total of approximately 76 million acres covered by some type of crop insurance plan. We are hearing stories of farmers already advising landlords that they were not going to get paid for rent this year. We are also hearing of producers without a crop and without crop insurance preparing for bankruptcy. It might be time to analyze the bushels you have sold and the bushels your crop insurance protects and lock in some revenue. Ex: 180 APH X 75% RP insurance X 8.00 Dec futures = $1080 per acre revenue. Talk to your Allendale Rep to help you with calculations and strategies for your operation. The USDA will be releasing the cattle on feed report this afternoon. Trade is looking for a decrease in July placements. However with the drought spreading west during July, pasture conditions may have forced more cattle to the feed yards. Boxed beef was higher again on Thursday with choice up .96 and select up 1.16. While pork cutout values were down .88. Sign up for the Allendale Ag Leaders Webinar on August 28.
Markets as of 5:00 AM
Dec Corn -1 1/4
Nov Beans +8 1/2
Sep Wheat +7
Oct Cattle -.15
Oct Hogs +.52
Sep S&P -1.00
Sep Dlr -.02
Sep Crude -.45
Dec Gold -.20
Allendale Advanced Charts
Yesterday’s close in Dec Wheat is what is classified as a "throwback" day. A throwback day in when we trade back inside of the formation that we broke out of in this case a triangle formation. We have violated the 7/24 pivot low of $8.64 ¼ which we were using as our level to place bearish/priced decisions. However based on yesterday’s rejection of the downside breakout we must revert to a neutral position in the Wheat in fear of continued whipsaw risk…Frank La Placa
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Nelson Notes from the desk of Rich Nelson
Strategie Grains, an EU based analysis firm, lowered its expectation for EU corn production sharply, from 65.2 million tonnes to 58.1. They see problems for the Eastern areas such as Hungary, Romania, and the Czech Republic. This is even lower than USDA which on Friday lowered their EU production estimate from 65.5 to 61.5 mt.
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