Aug 1, 2014
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Current Marketing Thoughts

RSS By: Kevin Van Trump,

Kevin Van Trump has over 20 years of experience in the grain and livestock industry.

Will Argentine Default Squeeze the Farmer More?

Jul 31, 2014

The news of the Argentine default has certainly rattled the macro markets but what kind of ripple effects could we see in the grain markets?  This is the second time in 12 years that the country has gone through this process and this time around, does it have the potential to dictate sizable shifts and changes in Agriculture in Argentina?  There has always been government involvement with tariffs and taxes, to the tune of $76 million over the past ten years, with very little of those funds left in the bank.  But with the economy so heavily weighted to the ag sector, will they need to rely more on the local farmers who have been pinched with rising inputs and lower prices?  Will China come to the rescue, and at what expense?  What will happen with the already high grain export duties and tariffs? Will the government be forced to raise them even further and will producers be able to take the hit?  How will the farmers respond? What will happen with the Argentine currency and in return what will happen with the price of agricultural inputs inside Argentina? In fact, recent data indicates there is now 30,000 fewer farms in Argentina than there were 10-years ago, while planted acreage has increased almost 30% and their national harvest has risen by close to 50%, with total exports soaring from $15 to now over  $45 billion. Moral of the story, the Argentine government appears to be in a major financial pinch and their only real assets or major cash-flow seems to continually point back towards agriculture.  How they will squeeze the agricultural sector this time around is currently a bit of a mystery and something we need to closely monitor?  I just hope this isn't a blue-print for other nations in the years ahead (squeezing their ag sector) as the global debt burden continues to rise.  If this scenario plays out, will the local Argentine growers hold bean bushels, as hedge against their currency, as we have seen in the past?

Corn Bulls Thinking Market Could be Ahead of Itself....

Jul 30, 2014

As we have continued to see corn prices trend lower, the question many are asking is have we reached a bottom yet, and that has the bulls excited.  Not for sure if that is the case but we have seen another bank, Goldman Sachs, begin to think the end is near on the corn price descent or at least stabilize.  I would have to agree that the market has a fairly high yield number priced into the market at this point, that may be inching up to the mid 170's bpa.  With the recent dry spell, although coupled with season cool temps, there is enough uncertainty out there that could have many questioning these yield numbers.  I know it seems like the deck is stacked against us, but as I mentioned yesterday, the amount of fund buying power on the sidelines, is unprecedented for the grains.  With a any bullish, or not as bearish, slant on this corn crop and you could see a knee jerk reaction that could whipsaw these prices higher.  The trade appears to be able to digest a yield number up to a 176bpa yield estimate, without too much negative repercussions but anything higher and the wheels could come off.  With that being said, we could still see some price stabilization, as most of the bears question the downside that is still left in the market.  As we have heard over the past weeks, the downside still could slip drastically lower to that $3.10 area, that many tech guys have mentioned, and even further if the crop continues to get better, as many in the trade think.  If we drift to these levels, I still feel like this is in an area we start to see demand pick up.  I think at these price levels guys should be patient and continue to focus on the production side to insure higher yields.  From a marketing perspective, the "basis" is my biggest concern at the moment. Make sure that you have your "basis" information on the radar screen, and if there an opportunity to lock in at an attractive level, pull the trigger.      CLICK HERE for my daily report.... 

Is China's Corn Crop Seeing Some Setbacks? Yes, Chinese production may be pulling back a bit. I'm hearing talk that extremely dry conditions in some minor corn production areas could ultimately cause the Chinese crop totals to be reduced by 6-7 MMTs from their current estimate. The problem is this won't be much different than last years record crop, so don't get overly excited just yet.

Soybean Prices Struggle as Crop Grows....

Jul 29, 2014
We continue to see the bean market backpedal despite many still questioning the record USDA projected yields.  The overnight markets showed some follow through from Monday's rally, but quickly sold off as the trade discounted any weather premium that its tried to build into this market. The old-crop balance sheet tightness provided additional short term bullish sentiment in the market yesterday, but was it too little too late?  Will the US have early beans that will be harvested in the southern growing states?  From what we are hearing, the beans will be harvested early but where will they end up?   The beans appear to be all about weather right now, being to wet early, not enough moisture now, planted late, susceptible to an early frost or freeze and short term cooler temps, with no moisture, on the bullish side.  On the flip side, the bears continue to remind us that, with 85 million acres projected to be planted, if this is not a record crop it will be one of the biggest ever. Most have estimated yields to be between 44 bushels per acre, on the low side, to 48 bushels per acre on the high side.  Say we end up with harvested acres around 84.5 million acres, with these mentioned yields, your looking at a production in the neighborhood of 3.718 million bushels to 4.056 million bushels.  Anyway you slice it, we are talking a big bean crop, with a large carry, that will push these prices lower, unless demand spikes dramatically.   With the new crop beans trading near $11, do we you take more risk off the board, to insure a profitable sale?  I still see the old crop beans providing some support to prices, potentially trying to fill the gap in the chart in the $11.30 range, which would see the new crop trading in the $10.50 to $11.50 range through the month of August. CLICK HERE for my daily report..   

Nearby Bean Balance Sheet, Keeps Bulls in the Game....

Jul 28, 2014

Soybean bulls keep trying to revive the glory days by stoking the potential flames associated with the old-crop balance sheet.  Anyway you want to slice it this story is still not 100% dead, but there is only 30-45 days left before the story is "officially" over.   In other words, as bearish as the new-crop balance sheet may appear longer-term, there are still some traders in the marketplace very uncertain about nearby availability of supply.  In other words, it wouldn't surprise me anytime between now and the end of August to see a $0.30 to $0.50 cent rally, maybe even a $0.50 cent to $1.00 rally if we can catch some type of bullish weather story from down South to go along with the old-crop supply shortage headlines.  All we need is talk of a delayed harvest or flooding conditions down South and the front-end of the soybean market takes back off to higher ground.  Remember, the trade is desperately counting on the early new-crop bushels to immediately solve the current supply shortage concerns.  Understand, I am by no means bullish the soy market longer-term (just too many US and South American acres in the ground), but I do believe we might get an opportunity to make some additional new-crop sales between $11.00 and $11.30 vs. NOV14 if we catch the final tail winds that the old-crop bulls are trying to stir up. Pay close attention and keep one finger on the trigger.  I'm afraid our opportunities to reduce more long-term risk may be fleeting at best between now and harvest.  To say the August weather is going to be extremely important to the soybean market would be an obvious and gross understatement...sorry to keep pointing out the obvious!Keep your eye on the USDA's latest crop condition ratings, most suspect soybeans to stay at our near the 73% "Good-to-Excellent" rating reported last week, the highest in the past 20-years.                                 CLICK HERE for my daily report...      

Geopolitical News Lifts Wheat Prices....

Jul 25, 2014

Wheat bulls are trying got stoke the flames in regard to ongoing conflicts in the Black Sea region. There were some rumors out this morning that Ukraine could lose 500,000 or more tons of grain due to war in country's eastern areas.  The US late on Thursday accused Russia of firing artillery across the border into eastern Ukraine, and of planning to send new missile launchers and heavy weapons to separatist groups.  From what I can see early this morning the market isn't overly excited about the headlines. In fact the story of "Little Red Ridding Hood" comes to mind... I think the bulls have "cried wolf" one to many times.  In the end we simply see Black Sea wheat prices moving lower and their exports making it tougher on US suppliers ability to compete.  Closer to home the bears are quick to point out the Wheat Quality Council's spring wheat tour of North Dakota, showed a final yield estimate of 48.6 bushels per acre, the highest in 22 years of the event.  We are also hearing reports that South Dakota is looking at extremely strong yields and very high quality spring wheat as well.  From my perspective, the only real hope from the bullish side of the fence is that the Spring crop is late-developing, where as a cool and wet weather could create some problems later on, especially if the market starts to eventually question complications that could arise from an early frost...unfortunately that's still a ways off.                            CLICK HERE for my daily report...

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