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April 2011 Archive for Current Marketing Thoughts

RSS By: Kevin Van Trump,

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

What In the World Happened in the Grain Markets!?

Apr 28, 2011

  Today was what we call a "bloody day" in the grain markets with the board lit up with Red.  July corn ended Limit-down today finishing at 729 3/4, July wheat ended down 34 1/2 cents  finishing at 775 1/4 and July Soybeans ending down 31 cents finishing at 1351 3/4.  Throughout the day I have been hearing folks in the media giving out their different opinions on why the market broke so hard.  I want to share with you what I wrote in my opening comments in this morning's report.  If you are still scratching your head over today's session, I think this will make some sense to you.


With the Fed and their All-Star Mr. Bernanke on the mound yesterday, the crowd was expecting a real barn-burner.  Carefully articulated words and crafted thoughts have however left fans leaving the park scratching their heads.  In a nutshell, the Feds elected to let QE2 expire as planned, in addition the Fed left rates unchanged and have suggested that extremely low rates will more than likely be maintained for an "extended" period.  There was some verbiage and a little more talk than normal about "inflation" and the continued thoughts that inflation is "NOT" an issue.  The Fed, and in particular, Bernanke believe the current level of "inflation" is right were it needs to be, and in a sense, I get the feeling this is exactly where they wanted it.  Additional comments confirmed that QE2 is still right on schedule to end in June, and that not only rates, but the US Dollar and inflation are not really a major concern into the foreseeable future.  In essence, I believe they feel the problems will eventually take cafe of themselves.  

What does all of this mean?  I am of the opinion that Mr. Bernanke has a plan and that his plan is going according to schedule.  Yes, he would like to see more improvements in jobs, and he would like to see US Housing data improve, but it seems that he is starting to get the ship turned in the right direction.  I have learned through the years to listen intently to those who have more experience, education and training.  Rather than simply sitting back and arm-chair quarterbacking their every move, and critiquing each mistake, I prefer to try and understand their thoughts and predict their "next" move.  Any idiot can talk about what "has" happened, and what they "would" have done, but when given the wheel most would fold in a heart beat.  Bernanke has certainly been around the block a time or two, and I am fairly certain he has "forgotten" more about these markets than I know about them.  Therefore I am choosing to listen intently rather than criticize. 


Let me give you a brief little rundown on Mr. Bernanke before you jump on the bandwagon and play into the rhetoric that the man doesn't know what he is talking about.  Bernanke was in Dillon, South Carolina.  From what I am told, his father was a pharmacist, and his mother was an elementary schoolteacher.  He has a brother and a sister, and grew up very much just like you and I.  During his youth he worked on construction crews, and waited tables.  He graduated valedictorian and played saxophone in the marching band.  I have read that since his high school did not offer calculus, he learned it on his own.  Bernanke achieved an SAT score of 1590 out of 1600, and went on to attend Harvard University were he graduated with a B.A. in economics summa cum laude in 1975.  From there he jumped over to the Massachusetts Institute of Technology were he received his Ph.D. in economics in 1979. Bernanke went on to teach at the Stanford Graduate School of Business from 1979 until 1985, and was a visiting professor at New York University.  From There he went on to become a tenured professor at Princeton University in the Department of Economics.  He resigned his position at Princeton in order to serve as a member of the Board of Governors of the Federal Reserve System from 2002 to 2005.  In June 2005, Bernanke was named Chairman of President George W. Bush's Council of Economic Advisers, and resigned as Fed Governor.  The appointment was widely viewed as a test run to ascertain if Bernanke could be Bush's pick to succeed Greenspan as Fed chairman the next year.  On February 1, 2006, President Bush appointed Bernanke to a fourteen-year term as a member of the Federal Reserve Board of Governors, and to a four-year term as Chairman of the Fed.  On August 25, 2009, President Obama announced he would nominate Bernanke to a second term as chairman of the Federal Reserve, bringing us to where we are today.  

I think Bernanke knows exactly what he is doing, whether it plays out the way he plans is another story.  I think he honestly doesn't fear inflation because he knows the recent commodity rally and US Dollar weakness is self induced.  He believes QE1 & QE2 did exactly what he had envisioned and that was to spark inflation, weaken the US Dollar, and jump start the economy.  Obviously with a major goal of turning around the stock market and getting earnings back on track he has done just that.  By him not fearing inflation and in fact calling it "transitory"  (transitory: meaning existing or lasting only a short time; short-lived or temporary) you have to recognize or read between the lines that he believes commodity prices will not remain at these levels for long.  In essence you have to feel that when QE2 ends and with no QE3 in the deck, commodity prices in general may start to ease.  With this in mind, I will be looking to make more sales on the rallies and downgrade my overall bullish stance towards commodities as a whole.  Do I think the bull run is over?  No, I think global "demand" will continue to be a driving force for years to come, but I do however think the self-induced steroid needle will soon be pulled out of the commodity markets arm, and a brief stint in "rehab" may be required in order to deal with the withdrawals.  
* I doubt the big boys will stop playing the game "cold-turkey", rather look for them to start easing their way out slowly.  You have to believe QE2 will last at least another 45 days.  From that point forward the big players could become a little sceptical of further price appreciation and the risk to reward...use your time wisely.   

* My friend and subscriber Dean Ohrt over at Heartland Cooperative made a simple but great statement last night.  Dean said, "It is important to take some time and have a plan...If you don’t have a price on paper, more than likely your price will never be reached and you will be selling on the way down."  Remember my friends; greed, fear and panic.  They are always with us.   

* In today's trade I would expect poor export sales numbers in corn and beans, and improved weather forecasts for many areas could lean on todays ag markets, despite weakness in the US Dollar and help from the outsides.  


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Be Careful Betting Against The American Farmer

Apr 26, 2011

I usually don't like to point out the obvious, but I thought maybe a picture might be worth it's weight in gold.  Before I start, please remember not one time during this entire run higher have I ever wavered from my "bullish" convictions regarding corn prices, and I still continue to believe we have some room left to move even higher.  However, you have to believe with corn prices at these levels, every producer out there will be doing absolutely the most with their God given powers to get as much corn in the ground as humanly possible this year.  Rest assured everyone will be pushing the planting envelope to the last available moment trying to get each and every seed in the ground.  This crop has the potential to mean more to producers here in the US than any single crop in our lifetime, and I highly doubt the farmer is going to simply let it slip by without a major fight.  I know planting has become questionable at best with the recent weather patterns, and I am starting to doubt we can meet the USDA's projected planted acreage estimates, but if there is one group of people I do not want to bet against it is the "American Farmer."  Equipped with massive modern machinery like the one pictured below (John Deer 48 row planter) and incredibly high stakes on the line, it wouldn't surprise me to see the American Farmer burn the midnight oil until every last seed is in the ground.  Talk and projections are cheap.  Remember, the market is also of the belief that "actions" are much louder than words... I know what the American Farmers are capable of, I continue to ask the doubters to be careful thinking that the weather will pitch a "shut-out".




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Another Reason I Am Still Bullish Corn

Apr 25, 2011

Weather continues to push the corn market as we traded up 22 1/4 to close at 766 3/4 in the July contract in today's day session.  Along with the weather issues, extremely tight ending stocks and a very "optimistic" USDA estimated 162 bu. average are cause for enough concern to push us higher.  I wanted to include one article from today's report that illustrates another aspect of this weather issue that I don't think most in the trade are looking at. I was chatting with one of our well respected readers, friend and grain analyst William Fordham from C&S Grain Market Consulting the other day via e-mail.  Bill made some great points that I wanted to pass on.  I included some excerpts from the conversation, hope you enjoy.   

Bill wrote:  Corn production in 2009 was overstated in the Midwest anywhere from 5% to 10%, depending on the area, the planting date and the maturity of the hybrids that were planted.  I have two 48' diameter bins that each hold 40,000 bushels of 56# Test Weight dry corn to the eaves.  In high Test Weight years, I have been able to get as much as 43,000 bushels to the eaves.  In 2009, both bins were full to the eaves at 36,000 bushels!  One of the reasons why WASDE has had such a hard time in estimating corn stocks on hand is because of their refusal in 2009 to adequately account for the low test weights.  Yes, cool growing seasons can produce a lot of kernels of corn, but those kernels will not always be packed real tight.  The tightness of packing the starch from the leaves into the kernels every night is determined by the temperature differential from the daytime highs to the nighttime lows.  From my extensive experience in corn test plots and daily weather data collections from 1970 through 1998, it is my opinion that the optimum temperatures from Day 21 through Day 55-60, after silking, is for a daytime high of 86 degrees and a nighttime low at 54 degrees, thereby providing 20 GDD per day with a 32 degree temperature spread.  It is the spread in the day-to-night temperatures that squeezes the starch into the kernels, packing the kernels tighter and tighter and tighter.  The problem is we are now in the 31st month of Solar Cycle 24, and data indicates it is going to be a cold cycle!  I doubt it is going to be very easy to increase the world production of grains in this environment.


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Great Opportunities Ahead in the Markets: Are You Ready?

Apr 20, 2011

Today was a wild ride with both wheat and corn, up for the better part of the session before ending with July Wheat down a about penny, July Corn down 16 and a half cents and New Crop Corn ending down 20 cents.  I wanted to include the first half of this morning’s report as I feel we have a fairly good handle on these markets.  These are difficult markets to be in, whether you are all cash or trading.  There are a few possible scenarios that could present some great opportunities in the coming weeks.  If you aren’t already signed up for the free full report, you should go ahead and give us a shot, I think you’ll find the advice very timely....


....Be careful buying into the fact that we will not have a good corn crop.  Personally, I still believe it is too early.  Remember back in 2009 we only had 30% planted by May 1st (historical average 40%) and ended up with huge yields, a national average of 164 plus if I recall correctly.  I totally agree that we have very little room for error, I am just thinking we may be a little premature with the additional premiums. Obviously the further the trade thinks we will be pushed back into May the higher prices will go.  I remember talking to several producers back last August telling them that I thought corn could go to $8 based on the way demand was setting up and the lower US yields that were being projected.  Well, that is exactly where we are headed, beyond that point I am fairly suspect.  I feel as if this entire time we have been in a tremendous "demand" driven market.  All of a sudden global demand has to be questioned to a degree with the possibilities of higher fuel prices, raging inflation, and higher interest rates potentially strangling out global economic growth.  I have never wavered this entire "bull-run" from my convictions, but for the first time I am starting to question how much higher we can go without wishing for doom and gloom on our crop. For the first time there are signs of demand being questioned.  The poultry industry seems to be suspect and China is trying to alter uses for corn.  Yes, the hog, cattle and ethanol trade are still eager for supplies.  All I am saying is that for the first time I am seeing a few signs that make me question demand and whether or not we can sustain our current global economic growth pattern.  We may in fact be better off if we are to take a few steps back in the coming months, build a more stable base then push higher, rather than going straight up.  All I know is the last time fuel prices surged to these level there was a short delay before it actually hit global consumers right between the eyes.  Understanding that thousands of jobs have been lost since those days and not regained, and that home equity lines have been depleted and buffers are no longer accessible, and that wages and bonuses have not risen, I highly doubt consumers will be able to play the game as long as they did the last go around.  In a nutshell, I think demand runs it course at the $8 to $8.50 range, from there on out its a crap shoot...anyones guess.  If the weather cooperates...we break, if the global economies buckle under the pressure of inflation, rising interest rates and higher fuel cost...we break substantially.  If the weather throws us a few serious curve balls that we can not hit...prices could skyrocket.  If you are looking to gamble you have stepped up to the right table.  Right now these markets are truly at the mercy of the weather.  I don't know about you but I have never had much luck betting on weather, I will defer this feat to the guys that count tree rings, measure the ocean tides, and the phases of the moon.  I do know these are phenomenal prices and you have to take advantage of them at this level.  If I would have told you 12 months ago you could sell $7 or $8 corn you would have told me to sell you out for the next three years, now many of those very same producers don't want to get themselves 50% sold...I have a tough time understanding that logic.  I believe in carefully mapping out a plan and when the plan plays it self out just the way you predicted then you have to take action.  Not get emotional and change your mind.  That is why I am going to make more cash sales on the rallies until I get myself at least 70% sold.  Playing the game on the board could be a lot less costly once you get to this level.  I like gambling some myself but remember you have a business to run and a family that depends on it.  Take some profits off the board when an opportunity like this presents itself is only prudent.  The corn market has added over $1.50 in just the past 25 trading days following the Tsunami lows.  Yes, we could go higher, so keep some gun powder dry and be ready to take some additional shots on the rally.  I hope you are smart and use up to 70% of your ammo between here and the $8.50 price target. Take advantage of the weather rally that presents itself during the next couple of weeks it should be a great opportunity!  


* The outside markets are going to give us a huge push today higher, lets hope the rally can be sustained, the markets have tried to sell into the rallies late in the day the past couple of sessions so be  heads up towards the close.  The long extended weekend should keep the "bears" on the sideline as I highly doubt many want to go into a three day break short with anything being possible in today's highly volatile weather market.  


*Check that soybean basis, many areas are reporting significant gains in the old crop. 


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Weather Drives Farmers out of the Fields and the Markets Higher

Apr 19, 2011

 Obviously, what is driving these markets higher is the same thing that is driving many of you inside and out of the fields: wind, rain, hail and for many of you, snow. There is absolutely no debating that the weather concerns are driving these markets higher, and I continue to urge you take advantage of these rallies in order to get caught up on your cash sales. I would normally remind you that just as quick as these weather premiums have blessed us they could be taken away, but with such abnormal conditions in many parts of the country, and our extremely tight stocks situation I highly doubt they will be able to take a lot of the weather premium out these markets during the next couple of weeks.  Soy really has no story right now as Chinese demand fades and the South American crop grows larger.  This is  causing soy to once again struggle against both corn and wheat in comparison again today.  You have to believe with more fears of the Chinese canceling soybean exports traders will be very cautious about adding additional premium.  Remember, last week we had poor new-crop export sales and the cancellation of about 50,000 tons of new-crop beans. But I continue to believe we are going to push higher, I am a little concerned as exporters in the Gulf are seeing very little in the way of "new" demand.  With this in mind I would start limiting your downside exposure to those bushels you can absolutely risk with no sever consequences.  I am telling you now, the next $1 or $2, if it happens, will take us through extremely rough waters.  I would personally advise lightening the load.  In other words, get every thing out of the canoe if you do not want it to get wet or lost down-stream...  The ride could certainly be fun, but there may be a cost involved before it is all said and done.      


Wheat is obviously once again leading the way today on near term weather concerns.  Wheat being the driver tends to make me nervous.  Money-flow can pressure this market and force it to change directions on dime.  Weather is certainly an issue and you can not discount the poor conditions here in the US at this time, conditions in the EU and China are still debatable in my opinion. As the weather goes so will the trade.  I would anticipate some consolidation today as the market looks towards more 7 to 10 day weather forecasts for direction.  



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More Inside Info Chinese Corn & Bean Demand

Apr 14, 2011

I was relayed some fantastic information from a trusted source inside China regarding what is currently happening with Chinese corn and soybeans.  In a nutshell, it was their opinion that the Chinese farmers are not really the ones holding much of last years corn crop, but rather the small local merchants that were buying like mad during harvest and have been sitting on the inventory expecting higher prices.  The problem now is that a portion of those stocks will need to start finding their way into the marketplace as temperatures are raising very quickly and a portion of this corn was stored with high moisture levels. Normally this wouldn't be an issue, and the stock would be scooped up very quickly but feed demand has been a little slow mainly due to delay of replacement of animals. Insiders believe the main reasons for this delay is the high cost of piglets combined with lower then normal temperatures in the main producing areas for this time of the year, exposing the animals to diseases, basically forced the breeders to be more cautious on when to start replacing of the animals and more conservative in order to avoid risk of loosing animals. With this issue tapering off they believe demand should start to pick up, but it may take a while.  There are thoughts that heavy demand could ramp back up by June or July, but not any sooner. If this is true you have to believe we will not see China come back to the table for US corn anytime soon. My bet is not until they have a better assessment of their crop and what they will produce or how the crop in the US is progressing. Nothing really different, or that we didn't already know from soybeans.  Essentially they are overburdened with soybeans stocks right now, the crusher margins are some of the worst ever, they have huge shipments on the way to the ports, and the Chinese government is restricting price increases for soybean oil.  Throw in the fact that they are going to flood the market with another 3 million tons of there own soybeans and you can start envisioning the situation.  To top it off, the Chinese government has agreed to sell this surplus of beans well below current market price. Delay in animal replacements have also hurt soy meal demand, locals however expect meal demand to slowly improve from about here on, hopefully by June or July we will once again see the Chinese demand we had seen prior to this.  This is the exact reason I have been telling you to get your butt out there and get some things priced.  Sure higher prices could be in the cards if production becomes a concern, but it is of my opinion this is a "demand" driven bull-market, right now demand is being manipulated and curtailed.

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My Thoughts on Soybeans

Apr 13, 2011

A Deeper Look Into The Soybean Trade
I have had a lot of calls as of late about Soybeans.  If you look back on reports at the end of March and the beginning of April, I told you to consider being long corn and short soybeans.  I hope some of you took that information to the bank, as it has been a terrific play.  Moving forward however you have to wonder how much of the bearish news the trade already has priced into to the soybean market.  My buddy, Andy Daniels, made a great analogy yesterday. Explaining that if you were to look back to the beginning of 2011, the trade had us all convinced that China would be buying 60 million metric tons of soybean in 2011, now it looks more like they will only be buying 53-54 million metric tons at best.  Also take into account that we were all thinking the Brazilian soybean crop would be around 66 million metric tons and the Argentine crop was going to be around 46 million metric tons.  Today the market is thinking more like 72 million metric tons for Brazil and maybe over 50 million metric tons now for Argentine.  It doesn't take a rocket scientist to figure out with China reducing their demand for soybeans by 6 million metric tons, and South America producing an additional 10-12 million metric tons of soybeans that the trade is now trying to digest and figure out what they are going to do with an extra 16 to 18 million metric tons of soybeans.  Because of these thoughts the bean trade has fallen apart versus the corn trade.  The market essentially has been able to justify the lack of fewer soybean acres being planted because of setbacks in demand and a boost in production.  Let's take this one step further however and conclude that we are not the only birds in the nest that know which way is up.  In other words, most who are on top of this market know this information and that is exactly why it has been under extensive pressure in comparison to corn.  Do I think there is more room to push beans lower?  Certainly, especially if money-flow continues to scale back, and China cancels more shipments.  I do however feel a ton of the "bearish" news has been priced into the market.  Those cards have been turned over and are no longer in the deck.  Leaving the deck now with a slight "bullish" count.  You have the weather cards still in play, you have the thought of China cutting more soybean acres in play, you have political issues and unknowns in Argentine, you have a rapidly rising Brazilian currency compared to the US Dollar, you really only have one way that Chinese crush margins can go from here (and that is up).  Yes, the soybean market has been the dog of the group, but deservedly so.  Moving forward, I doubt it becomes the leader, but I am starting to like the risk to reward in relevance to both corn and wheat. We still need to produce a crop, and we still do not know for sure how many acres will be planted, I think after news of falling Chinese demand is digested you have to try and start hunting for bargains in the bean market. I just wanted to give you some thoughts on where I think beans are headed and what has happened recently in their markets...

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Grains Down Across the Board and Goldman's Early Exit

Apr 12, 2011

We had a WILD Ride as it was a "risk-off" day of trading in the markets.  I hope you folks are signed up and receiving my daily report as I have been talking about a possibility of a set-back and what you can do to position yourself.  Money flow was king today, as I had written early this morning, "if the commodity ETFs and funds begin to reallocate into different investment vehicles, it won’t matter what the fundamentals or technicals are telling us about the markets, the "money-flow" could simply be too extreme causing a major price break."  This was illustrated in today’s trading as wheat, which had some very bullish news recently, closed down 38 cents.  Beans closed down 38 cents as well, with Corn going limit down before closing the day at 23 cents lower.  Now before you get too excited and go out and sell 11’ and 12’, I do believe this is a healthy correction, but would advise folks to probably lighten up the load just to make certain you can ride out any storm that could possibly come our direction as the "money-flows" continue.  I have attached below a story from today’s report that illustrates adjustments that Goldman and other big players might be making...


Goldman Spook's The Market On Early Exit

As I continue to talk about money-flow, our friends over at Goldman yesterday decided to fire one across the "starboard" side letting us all know just how real it is.  If you are listening to advisers who are telling you crude oil prices broke because of a possible cease fire in Libya, think again.  Goldman jumped in and closed their "CCCP" basket trade, that included long positions in Crude Oil, Copper, Cotton and Platinum.  Goldman first recommended the basket of positions on December 1st, since then this investment strategy has returned 25%.  From what I have been able to gather, their goal was a return of 28%.  Rather than risking it all they opted to leave that last 3% on the table.  I am also told the cotton position was a actually a split between cotton and soybeans.  Of which the soybeans they still especially like.  Goldman traders are telling the insiders that they still believe there is upside potential in the entire basket, but the risk to reward ratios have drastically changed as of late.  Which is exactly what I have been telling you in our daily report the past couple of days.  From what I have heard, Goldman feels that crude oil demand at these levels may start to stagnate, and problems in the Middle-east may actually start to subside offsetting some of the upside potential and increasing some of the downside risk.  It is not so much that they are bearish, I just have a feeling they believe the current amount of upside potential is not worth the risk of the position.  Rumors are they still see big upside potential in soybeans, but closing and recommending that investors take profits in their positions certainly add downside pressure. 


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Will They Ration Corn? When?

Apr 11, 2011

As I mentioned last week after the USDA decided to leave "Ending Corn Stocks" at 675 million bushels, the trade is now going to be left with the job of rationing demand to ensure such a number is correct.  You have to believe the USDA is trying to tell us something and myself and others are beginning to pick up on it.  It is fairly obvious the USDA did not want to project ending stocks falling much lower.  The great worry is a potential that end users will run out of corn late into the summer.  Now I’m not going to go as far to say that, but with China now in the market and ethanol demand staying strong, prices will have to reach a high enough level to curtail the current demand and make some end users take a step back and look in another direction.  I continue to remain bullish corn thinking that higher prices will be seen, but I am starting to feel the trade is becoming over crowded, therefore I will be moving one-step closer to the door.  I am primarily concerned about managed money flow moving forward, the recent set-back in sugar prices, how it will effect our global ethanol exports, and thoughts of weaker feed usage.  There are still too many bullish cards left in the deck to just fold and walk away,  but for the first time in a few weeks I am starting to see a few bearish cards being thrown in as well.
 I doubt any major sustained set-back will gain long-term traction as of yet with ending stocks this tight and the weather still a major concern, however with prices at these levels, a quick 10-20% price correction could amount to a fair-sized break. Remember this as we move forward, do not get yourself overextended. Price breaks and profit taking could happen in a heartbeat, be extremely cautious as the waters are getting swift and deep... Make certain you have manageable positions, use the rallies to make additional cash sales and the major breaks as re-ownership opportunities. Talk with your advisor for more help on these strategies or give us a call here at 816-322-5300.

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Soybeans Could Win Acres Over Corn

Apr 06, 2011

 I spoke with many of my readers this week on the phone, and talked extensively on the hotline about making soybean sales over corn sales on the rally.  My thoughts are somewhat simple.  A couple of the largest corn acreage increases were in the Dakota's, where planting is already somewhat suspect.  If the trade starts to focus on weather issues and planting delays, "soybean acres planted" this year will start to grow.  You have to believe producers will quickly switch to bean acres if there is any indication that corn may falter...especially with beans trading close to $14.

Most now estimating the Dakotas already at best 10 days behind historical schedule.  Remember, the USDA is counting on South Dakota to plant an additional 850,000 acres of corn and North Dakota an extra 450,000 acres of corn.  We also have to be concerned that yields in the Dakota's will come in short of USDA estimates.  If you look at the past few years North Dakota is averaging close to 127 bushels an acre and South Dakota is around 140 bushels per acre. As you can see both are well below the national average.  
Don't let this rally slip away, take advantage with a cash sale, and hopefully you can price another 20-30% over the next 4-5 months. 

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Now Entering the Weather Markets

Apr 05, 2011

 Let the weather markets begin.  As I mentioned a few days back, the trade will become "extremely" volatile the next several weeks as traders inject and take away weather premium at the blink of an eye.  The US crop is obviously being watched by the entire world, any signs of issues will not be taken lightly.  If you are an end user that still needs coverage or a speculator looking to play the game from the long side, I would suggest patiently waiting to secure the breaks.  I would anticipate some nice set-backs along the road to "new" all-time highs as traders continue to bank profits on the rallies and re-own on the breaks.  I wouldn't be afraid to join the party at these levels, I think we still have some nice upside potential.  As I have mentioned all along, buy the dips...not the rips!  Since the last Thursday’s Report corn and wheat have obviously led the way trading off the low ending stocks and midwest drought issues respectively.  Soybeans have been a different issue with global demand slowing for the time being.  I hope you are signed up for the reports as I have written in greater detail on this in the last two days.  I will say that I continue to stay long-term bullish, but it looks as if some supplies will have to be worked through till we see the market focus much on supply issues in beans. 


Fear of La Nina Still Lingering 

I am not sure if you caught it on the wire services Friday, but the British Weather Services and Telvent DTN are predicting that dry weather related to this years La Nina weather patterns may hang around for a couple of more months both here in the US and in China.  Some of the big boys are saying this could put a floor in wheat price until the end of June.  With this said, those of you who are still holding bullish wheat positions or looking to make additional wheat sales may want to hang on a little longer.  I have recently scaled out of a large portion of my bullish wheat positions maybe mistakenly so.  If we get a push lower I will certainly consider reestablishing.  I am still long, but just have very little on.  You don't need me to tell you that if dry conditions persist for a couple of more months wheat prices will skyrocket.  As you know I hate playing the weather game, unfortunately that is the position we are in.  With China's 115 million tons on the line and a significant portion of the US wheat crop in poor condition, you can guarantee the trade is concerned.  The cost of seeing this thing play itself out might be worth price of admission.  Understand going in this is truly a weather play.  If it rains, kiss the premium goodbye.  If it stays dry you might just hit a home run.  


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