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July 2012 Archive for Current Marketing Thoughts

RSS By: Kevin Van Trump, AgWeb.com

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

There Will Be a "Demand" Story for Soybeans

Jul 24, 2012

    

Soybeans "bears" are talking about the Chinese canceling some new-crop soybean shipments in the Oct-Nov time frame. They are also rejoicing over what they expect to be crop saving rains in the next few weeks. I don't see the break in bean prices being a long-term trend. In my opinion we are eventually going to end up trading a "DEMAND" story rather than a weather related "production" type story. Certainly there has been fear that the US soybean crop is shrinking and this has contributed to the recent run up in price, but in the end I am thinking a world with no real alternative to higher protein is going to be forced to pay higher prices. As I have been saying all along...be patient with this bean market, it is not ALL about the weather. Shrinking production from here can certainly help stoke the flames, but I have to believe this bull fire may last for an extended period of time. Something to consider is that Iowa now has 30% of their soybean crop rated P/VP vs. just 28% rated GD/EX.  What I am trying to say is that enough damage has already been done to the US soybean crop (fewer double crop acres than anticipated and possibly fewer harvested acres) not to mention the worst soybean crop condition ratings in the past 20 ears, some obvious yield reductions, fields abandoned, etc... There is no question now that we are going to see record tight global supplies in the months ahead. The South American soybean crop reductions set the stage for this months ago. The poor US growing conditions are simply putting more icing on the cake!  
 
The question from my desk is not really if we are going to see $18 to $20 soybeans, but rather what type of path we going to take getting there. I can't stress enough NOT getting yourself "over-leveraged." This market is going to see some extremely volatile swings, $1 to $3 moves in ether direction can not be ruled out. Keep in mind, the funds are at record length and prices are at all time highs, we are truly in uncharted waters. No one knows how the "intra" and "inter" market spreads are going to react and there is no historical data to provide us with a road map. My best advise is to keep your trading and marketing plan extremely simple. This is not the environment to be messing around with complicated strategies like elaborate ratio spreads or exotic option positions. There is nothing in the world worse than being right about one of the largest bull moves in our lifetime and being in the wrong strategy. I am in one right now myself, as I tried to get cute by going long the March Soybeans against Short March Corn a couple of weeks ago.  There is a historical tendency  for March beans to gain on March corn, and I was thinking with any type of production setback or planting delays in South America March beans could really explode. To say the least this trade is killing me right now. The money flow has been "bull-spreading" the heck out soybeans, buying the front months and selling the deferred contracts (i.e. long NOV vs short MAR or long JAN vs short MAR). I have had to reduce my positions and lick my wounds, but I will continue to hold in small doses through expiration as I believe eventually soy has to fight for acres and will ultimately gain on corn. Luckily I still remain long the front at price below $13.50, so the profits and diversification have helped offset some of the losses. Until the weather, or should I say yields start to stabilize these markets are going to show very little focus towards "demand." They will also remain extremely unpredictable. In honor of one of my favorite acronyms "KISS," I leave you with the following: "Keep It Simple...Stupid" Trade extremely small, and by all means do NOT get out over the tips of your skis. This means do not try and go any faster than necessary. Travel at a speed you can comfortably control, especially knowing there are going to be extreme downhill runs on the route. Do not put on more positions than you can comfortably afford to feed, the margin call gods will eventually destroy you.
 

We are making some moves in response to what the market is showing us. You can sign-up here to receive a FREE trial of my Daily Grain and Livestock commentary in which you will see where I stand on cash sales and some strategies on how you can take advantage of "Money-Flow" and the Outside Markets.  Just click here -  Van Trump Report  


More Rumors & Fears In Regards To Russia Eventually Banning Grain Exports

Jul 19, 2012

 

We have heard countless rhetoric out of Russia that they will NOT be banning grain exports any time soon. As their production totals continue to fall you have to wonder however just how long they will be able to continue in this regard? There is now talk circulating their total grain production could fall to 80 million metric tons (much lower than last years 94.2 million), while their domestic demand is now north of 72 million metric tons. This has many questioning just how much grain Russia will even end up being able to export. Some are saying we may not see an actual ban, but Russia may instead hike the export taxes like they did back in 2008 in order to slow exports. Several analyst are saying nothing may happen at all until this winter when supplies start to get much tighter. I just want to let US wheat producers know that there is a chance the Russians may eventually be forced to slow down or halt their wheat exports. If this were to happen prices may shoot even higher, just depending on when it occurs and the crop conditions amongst other world suppliers. The USDA has already cut their Russian wheat export estimates down to 12 million metric tons. From my perspective if this number continues to slide I have to believe global wheat prices should continue to work higher, especially if you consider Russia is one of the world biggest "low-cost" providers. We believe US producers should continue to hold-off on marketing any additional wheat bushels at this juncture.
 
Additional thoughts on wheat...
 
Monsoon rains in India continue to come up short. I hate to sound like a broken record but the Monsoon rains that start in the southern parts of India in early June and generally advance quickly to the northern regions continues to disappoint. From what I hear the entire country is still more than 20% below normal rainfall and many areas are still 50% below normal moisture levels. This is not only a concern for wheat, but it could also become a big problem for sugar... India is the world's second largest producer of sugar, rice...India is the world's second largest producer of rice behind only China, cotton...once again the world second largest producer. Do you realize India produces about 20 million more metric tons of wheat than what we produce here in the US and or in Russia. They produce at least 50 million tons more than either Canada or Australia. The point I am trying to drive home is that "WEATHER" in India is extremely important when trying to determine global supplies and overall price direction. They are certainly not having the problems we are having, but there is some fear if El Nino actually takes hold during the next 30 days it could further limit the monsoon rains in India.
 

We are making some moves in response to what the market is showing us. You can sign-up here to receive a FREE trial of my Daily Grain and Livestock commentary in which you will see where I stand on cash sales and some strategies on how you can take advantage of "Money-Flow" and the Outside Markets.  Just click here -  Van Trump Report  


Crop Conditions Cut and a Few Thoughts on Soybeans

Jul 16, 2012

    

US crop production estimates continue to slide as the USDA announced another round of major cuts to corn and soybean conditions. As I mentioned yesterday the trade seems to be thinking US corn production could end up below 11.0 billion bushels as corn yield estimates potentially fall below 130 bushels per acre. I am telling you now with extreme daytime and nighttime temps continuing to be forecast across the corn belt yields are taking a massive hit each and every day. There are reports circulating that corn in fields that have had adequate rainfall are still seeing a 1-3 bushel reduction each day in yields as temps continue to push the upper limits. In fields that have seen inadequate rainfall totals the corn maybe loosing 3-6 bushels of yield per day because of the extreme temps! Below are a few highlights from today's USDA numbers.
 
  • Corn "Poor-to-Very Poor" conditions jumped to 38%. Kentucky now showing 77% of their crop rated P/VP; MO 72%; IN 71%; TN 55%; IL 56%; MI 56%; KS 51%; OH 47%; WI 43%; IA 27%; NE 27%; SD 27%
  • Corn "Good-to-Excellent" condition dropped to just 31%, down big from last weeks estimate of 40%. Last year 66% of the US corn crop was rated GD/EX. Illinois now with just 11% of their crop rated GD/EX; NE 43%; SD 37%; IA 36%; WI 30%; OH 19%; MI 18%; KS 15%; IN 8%; MO 7%; KY 6%
  • Corn "silking" was reported at 71%, which is twice the 5-year average of 36%. I should also note that 12% of US corn crop in dough stage compared to the 5-year average of just 4%.
  • Soybean "Good-to-Excellent" conditions drop another 6% now down to 34% rated GD/EX. Last year we were at 64% rated GD/EX at this time. Missouri now just with 10% of their soybeans rated GD/EX; SD 41%; IA 38%; NE 34%; WI 30%; OH 22%; IL 17%; IN 11%; 
  • Spring wheat conditions down slightly in comparison to last week. 65% of the crop now rated in GD/EX condition compared to 66% last week and 63% last year. South Dakota starting to see the biggest setbacks. 

 

Soybeans continue to be a major concern, as the market will soon start talking about the plants aborting pods.  Soybean bulls are also pointing out the fact not only is the yield a concern but so are "harvested acres." There is some talk in the trade that soybean harvested acres could be cut by 300,000 to 700,000 in the blink of an eye. There is also some talk that planted acres could be too high as well with many producers simply unable or unwilling to risk throwing the beans in the ground considering the hot, dry conditions. I still see an impossible soybean balance sheet situation moving forward and believe the current USDA numbers simply do not recognize the global "demand" situation. The USDA obviously believes the higher prices will drastically curtail the demand, but my question is how high will prices have to go before we see this happen $18..$20..$22...or possibly even higher??? Who knows right now. What I can tell you is that not only will China be exclusively importing soybeans form the US in a couple of months but so will South America. Tell me then how the balance sheets will look and if "demand" has tapered off. The soybean situation is serious and becoming more serious by the day, August rains or no August rains we are going to eventually run out of supply. How we get to these higher prices still remains a mystery, but it wouldn't surprise me to see some profit taking in the next few weeks, followed by another round of rallies in the late summer to early fall time period. Remember, this soybean rally is going to end up being a "demand" driven market. I have learned through the years "demand" driven markets almost always give you a chance to get back in on the breaks so be patient and do NOT chase the rallies.  Producers can entertain buying puts with the thought of trading them rather than holding them. Simply meaning to buy your puts for protection just in case of a major break, but be willing to liquidate them and bank the profits before prices turn back around and move to higher ground.  

How High Can Soybean Prices Go?

Jul 12, 2012

    

Soybean bulls acted disappointed by the USDA's move to lower export estimates, I urge you to be careful if you are thinking this way. My take is the USDA has drawn a line in the sand basically proclaiming that 130 million is as low as the USDA is going to allow the ending stock number to drop. It will be the markets job to ration demand from this point forward, hence there simply won't there simply won't end up being enough soybeans around to export the amount they had previously estimated. I am telling you now before it is all said and done we will be importing soybeans from South America, more than likely by the April-May time period. My guess is Brazil will be importing soybeans from the US on a larger scale by the Sept-Oct time frame. I am already hearing stories about Brazil importing several cargoes of beans from Argentina, so in my opinion it's only a matter of time until substantial exports to Brazil start to show up on the radar screen. I am not exactly sure how we get there but $18-$20 new crop soybean price sound very realistic. I am also thinking 2013 soybean prices could eventually push to $15.00, so be patient pricing any more bushels at this stage of the game, I think there is still significant room to the upside.
 
 
As for today, big export sales data released this morning helped support corn. Soybeans also had good export sales numbers that continue to paint a picture of tighter supplies. There still remain many unanswered questions. Yes, the USDA made aggressive cuts in "yield," but... 
 
  • How much lower will "harvested" acres fall? My guess is by another 1-3 million
  • How much lower will corn "demand" fall? Several moving parts, but if need be, you have to believe the USDA could slash another 400 to 500 million. 
  • What about China? The USDA cut their Chinese corn import estimate from 7 million tons down to 5 million tons. I am not sure this is accurate, Chinese corn continues to trade at record highs and the country continues to buy corn. Something just doesn't add up here. Where there is some there is generally fire
  • How about grain production in Russia? The USDA made another massive cut down to 49 million tons.  Remember last month they went from 56 million down to 53 million, now they cut another 4 million. I am not so sure we have found the bottom, and I have to believe a lack of supply will really hurt Russian exports down the road. Kazakhstan production is also a big question?  
  • What about Ukraine production? The USDA currently estimates Ukraine corn production at 24 million tons while the trade is thinking it is closer to 20 million. Moral of the story, there may not be nearly as much cheap Ukraine corn to go around as some are thinking. 
  • The USDA is counting on a huge corn crop coming out of South America next year, but they are also counting on a huge soybean crop. In my opinion something has to give, and if South America runs into even the slightest production problems...watch out!
  • The USDA is saying the world can essentially wait for South American soybeans to become available next year by lowering US 12/13 soy exports. I question this. With no global substitute for higher protein supplies, price increases may not be able to ration demand, therefore we maybe looking at a runaway train.

 

We are making some moves in response to what the market is showing us. You can sign-up here to receive a FREE trial of my Daily Grain and Livestock commentary in which you will see where I stand on cash sales and some strategies on how you can take advantage of "Money-Flow" and the Outside Markets.  Just click here -  Van Trump Report  


 
 

How Aggressively Will the USDA Cut Yields?

Jul 10, 2012

    

USDA will be releasing their updated World and US supply and demand data tomorrow morning 7:30am CST. My hunch is the USDA will lower corn exports by 25 to 50 million bushels. I also think they may lower there estimate for corn used for ethanol by 25 to 50 million bushels. As always "feed usage" remains a complete wild card, but from my perspective, I think the USDA needs to raise their 11/12 feed usage estimates by 25 to 75 million bushels. Don't know if that will happen or not, but my guess is the 11/12 carryout will fall just a hair or stay right around the current 850 million bushel mark. As for the 12/13 corn numbers, there is no question production totals are going to come down, the question is by how much. With the USDA not using farmer surveys until the August report and sticking with the June planted and harvested acreage estimates for these numbers, I am doubtful that the USDA will paint as bleak of a picture as the market is now trading. Will yields drop? Certainly, but I doubt to the levels the trade is currently using. My guess is the USDA will cut aggressively (for them) from their 166 estimate down to about the 152-156 level. The problem is the trade is thinking a 142-148 yield is now more accurate. The trade is also now thinking one million to four million fewer acres will actually be harvested. The bottom-line, US corn production numbers for 12/13 will definitely fall from last months estimates of 14.79 billion bushels, but I am doubtful the USDA will push production down to 13.0 billion bushels, a number many in the trade are currently starting to eyeball. Let's also not forget the USDA will more than likely massage the "demand" side of the balance sheet by cutting exports, feed usage and possibly even corn used for ethanol. Net-net the "new crop" balance sheet could still end up with a carryout well above 1.2 billion bushels. Keep in mind, many corn bulls who are now in the marketplace are penciling the 12/13 US corn carryout at around 600-800 million, not 1.2 billion plus. My point is even though Santa may deliver a few summer time presents under the tree, it may not be what many traders were hoping for. A slight disappointment could produce a little short-term knee-jerk type reaction to the downside. I would suspect this to be only temporary as the market will immediately start to refocus on production failures and extremely dry soil moisture levels. An eventual move in DEC12 corn beyond $8.00 can not be ruled out of the equation, especially if the second-half of July turns back towards the hot and dry conditions we experienced during the past couple of weeks.
 
Soybeans seem to be a no-brainer, but the question many bulls are asking is, "Will the USDA really show how bad the situation has become..." Not only are yields and harvested acres in question, but demand is rising faster than the USDA had recently anticipated. There is a chance the crush here at home could move higher. You definitely have to believe exports are pushing higher. With demand moving higher and production moving lower there is only one way for the balance sheets to go...my guess is tighter in both 11/12 and 12/13.
 
As a producer, make certain you are comfortable with your current "sales," if you need to get caught up then do so. If you feel you maybe "over-sold" then make the necessary adjustments! My suggest is to be somewhere around 60% sold. This is 60% of your CURRENT estimated yield, not 60% of your original estimated yield. Remember, we have some producers who are reporting their crops look as if they will harvest more than they originally planned, while others are reporting a complete disaster. You have to be your own best advisor, no one knows your farm, your ground or your operation like you do. Take the information that is available and design a plan that is tailored to fit your specific needs. As I always say, "No one operation is the same, so there is no one cookie-cutter marketing program that is right for everyone." You have to make the necessary adjustments based on your available cash-flow, production changes, storage capacity and risk tolerance.
 

IF you would to know where we are making our cash sales, you need to read my daily newsletter. You can sign-up here to receive a FREE trial of my Daily Grain and Livestock commentary in which you will see where I stand on cash sales and some strategies on how you can take advantage of "Money-Flow" and the Outside Markets.  Just click here -  Van Trump Report  


 

How Much More Weather Premium Can We Add?

Jul 09, 2012

    

Weather continues to play the leading-roll for the Ag markets. Extreme heat over the weekend along with limited rainfall has traders adding more "weather" premium this morning. Forecasters continue to talk about a break from the extreme heat along with rainfall slated for several of the Southern states, but many believe that at least half of the Midwest will remain extremely dry with very little if any rain hitting the ground during the next few weeks. Then by mid-month we will turn back up the furnace and temps will push back to the extremes .At this stage of the game we not only need cooler extended temps but we also need the moisture, one without the other is simply NOT the solution!
 
Corn traders are now looking at how cheap corn out of Brazil has become and wondering if the US will eventually end up importing corn from South America? What a crazy thought, importing corn from South America as US producers are harvesting our crop here at home. Don't think for a minute this is too far out of the realm of possibilities, cheap prices in Brazil could certainly justify the move. Anyway you want to slice it, I am afraid US corn "exports" are going to be in big trouble in the weeks ahead, just keep in mind though, you have to have the corn before you can export the corn. Right now traders are not only questioning how much "old-crop" supplies are still around, but seem to be also questioning our upcoming "production." Not only have we lost the top-end because of the extreme "heat" but you have to believe we are now losing a ton of potential because of the extremely "dry" conditions. From my perspective the trade seems to be trying to determine if we have lost 5% or 20% of our US corn yield. On the conservative-side a 5% reduction gives us a 157 type yield, on the extreme-side a 20% reduction gives us closer to a 132 type yield. The problem is the conservative scenario gives us ample supplies while the more extreme yield losses would be cause for more serious price rationing. Personally I don't feel that the crop is into the 130's as of yet, but there is certainly the possibility of us ending up with a national yield number in the 140's before it is all said and done. Especially considering the severity of the top and sub-soil moisture levels.   
 
Crop tour reports are indicating the US corn crop South of Memphis should provide us with ample "early" supplies of corn to offset the lack of "old crop" supplies. From what I am hearing the corn to the South pollinated early enough that it should come in with some good yields. There may still be some Aflatoxin issues, but I think the yield numbers coming out of the fields will be fairly good. The early bushels from producers north of Memphis up into St Louis and Southern Illinois are looking at an entirely different scenario with much more substantial yield losses. Several analyst now thinking 80% of the corn will be through pollination by the end of this week. As we turn the corner I suspect the market will now start to focus more on the lack of moisture than exclusively focusing on heat. With limited rainfall in the forecasts kernel depth and fill will certainly become a major concern.    
 
As for today, the disaster year of 1988 is becoming more of a reality as the recent rounds of forecasts have us staring down the barrel at one of our driest July's ever, while following the warmest 12 months in our nations history! Moral of the story,  hot, dry conditions could continue across the Midwest ultimately pushing US corn and soybean balance sheets to the extreme. Throw on top massive flooding in parts of Russia and lack of rainfall in India and we have the makings for even higher prices. With headlines like "national crop disaster" and "corn belt catastrophy" being thrown around by the press, there is more talk than ever regarding corn yields slipping into the 130's. Let's also not forget that many analysts are now predicting the US will in fact "Run Out of Soybeans" by the middle of this Spring. With these types of fears running wild, producers should continue to "hold" at current levels in anticipation of even higher prices. However, specs who are long may want to consider banking some profits prior to the release of Wednesday's USDA report, looking to re-establish on a setback! Look for the "extended" forecasts and the bullish"crop condition" reports from earlier today to dictate price direction.      
 

We are making some moves in response to what the market is showing us. You can sign-up here to receive a FREE trial of my Daily Grain and Livestock commentary in which you will see where I stand on cash sales and some strategies on how you can take advantage of "Money-Flow" and the Outside Markets.  Just click here -  Van Trump Report  


Q & A: Should I Be Making Cash Sales Yet?

Jul 05, 2012

    

 

Q. Kevin, What is your advice on making cash sales from here on out? My crop looks "ok," not devastated, but the top-end is probably gone. My guess is, I am about 30% sold at an average of about $6.00 right now. I have great storage and can easily store my remaining unsold production. I also have a chance to lock in some nitrogen for 2013 and was wondering your thoughts.   

A. Locking in prices for 2013 on a percentage of your inputs is highly advisable, especially with corn prices trending higher. All I suggest is that if you lock in your inputs, you turn right around and lock in a percentage of 2013 sales as well. There is nothing worse than locking in your inputs at the higher end of the range and then watching corn prices fall apart as you move closer to harvest. If you are locking in inputs you may want to consider the inverted SEP13 contract as a target for sales. With prices approaching $6.20 per bushel, I am certain you can lock in a very good profit. Those who are comfortable using options on the board can consider buying SEP13 corn puts and selling out-of-the-money calls to help finance the positions. Remember, these can be costly to hold so I would only suggest small doses at this juncture. As for your remaining 2012 production, take 30% out of the equation and move it to the sideline, especially since you have good storage. This should keep us somewhat safe in the event something unforeseen happens to your crop. I am assuming you have insurance that will cover you up to 70-80% of your estimated production in case of a catastrophe into harvest. The remaining 40% that you have "unpriced" will be what we target during the next several weeks. My suggestion is to divide this 40% out into 6-8 equal increments. From here I would start building a timetable and price targets for pricing these bushels. Basically you have 6-8 bullets in the gun and you will want to take your shots between now and harvest (at the latest). I am NOT saying the top is here, but if I were in your position I might fire off a few rounds before the USDA report on July 11th. In my opinion, there is no need for re-wonership after making these sales because you still have 30% of your estimated production unpriced. As we work closer to harvest you will also need to consider building a floor under the 30% you are holding back. Buying puts or building some type of bear-put spread would make the most sense at this time. From what I have seen, you can buy MAR13 $6.50 puts for about $0.50 cents which insures you $6.00 corn with unlimited upside, not a bad play. If you are wanting to reduce your expenses and raise your floor you can consider buying the MAR13 $6.50 put and selling the $7.50 call for about $0.20 cents. This gives you a floor at $6.30 and HTA type sales at $7.30, if we should continue to push higher. Hope this give you some ideas.

We are making some moves in response to what the market is showing us. You can sign-up here to receive a FREE trial of my Daily Grain and Livestock commentary in which you will see where I stand on cash sales and some strategies on how you can take advantage of "Money-Flow" and the Outside Markets.  Just click here -  Van Trump Report  


 

 

Are We Seeing the Top in the Corn Market?

Jul 02, 2012

   

Weather continues to remain the major focus here in the Ag markets, as more than 1,000 plus record high-temps were broken over the weekend all across the US. Also some extremely high winds (in excess of +80mph) in many parts of IN, OH, PA, etc...that may have done some substantial wind-damage to many eastern US fields. Rainfall was limited to about 25% of the Midwest, with amounts ranging for the most part form between 0.10 to 1.00 inch. As far as the weather models moving forward, there really wasn't any major changes made over the weekend, if anything it maybe a little drier than when we last traded on Friday. Most sources are forecasting more extreme-heat for the next 10-days, with a possible cool-down at the tail end of the forecast. The GFS model doesn't seem to show the heat returning any time soon after this wave works its way across the Midwest, but as far as the corn crop is concerned the cool down may be a couple of weeks too late in getting here. The European model  seems to show the ridge building back up again out in the Plains and some more extended heat even beyond this wave. Net-net still some disagreement on the longer-term outlook, but "HEAT" is a major concern as rising night time temps stress the crops even further. On the global front conditions may actually be improving a hair. We are hearing about more rains falling in the Northern Chinese Plains, primarily working from the South to the North. There is also some rain relieving drought stress in key parts of Russia and Ukraine, not much but some. The monsoon rains in India continue to lag behind normal levels but there are some showers now falling. All-in-all I would have to say the "global" weather conditions have slightly improved while the US continues to bake.   
 
Corn "bulls" would like to "technically" see the July contracts close above the $6.73^4 level placing the next upside target somewhere around $7.05. With June 1 Stocks now estimated at just 3.149 billion, the tightest since 2004, and new crop yield estimates quickly falling, one could certainly make an argument for higher prices, especially in the near-term. With the USDA adding another 500,000 plus corn acres to the equation, you have to assume this bumped the total yield bout 1 bushel per acre. On the flip side however extreme heat and lack of moisture has cut anywhere form 10-20 bushels off the top-end of the yield estimate.  Moral of the story the crop is definitely getting smaller. The question is "WHEN" will the market post the "highs" and how long can we stay there.  If you compare the trade to 1988, like so many analyst are doing right now, you need to realize the Dec corn posted its high on July 5th, and Nov soybeans posted their high on June 23rd. My point is with "demand" in question we may end up posting our high before the July 11th USDA report. One thing that could keep the market moving higher is "harvested acres." There are some bulls arguing that harvested acres are too high right now, I would agree to some extent, but also I think the USDA has made some early adjustments and is on the right track. Certainly the "harvested" acreage numbers could be pushed lower as more prodders beginning making insurance claims and declaring the crop a total loss. This will certainly be something we need to carefully watch for in the coming reports. Another thing that could extend the rally is some additional help from the "outside" markets. Despite "demand" being so heavily questioned, "IF" we can sustain a "risk-on" type theme in the commodity markets the bull-run may actually last a little longer than anticipated. Your takeaway should be, to sustain a longer-term rally we are going to need to see: Additional yield reductions due to  record setting heat and extremely dry conditions; "Harvested acres" will need to continue dropping; The "outside" markets will need to be conducive for allowing the "funds" to build more length. Basically we need the problems in Europe to subside for a short-period of time, which in turn may put some pressure on the US dollar.  If the US dollar doesn't continue to weaken, I doubt we will see it will see the funds adding a ton of length.
 
The reality of a corn yield less than 150 bushels per acre and a bean yield less than 40 is becoming much more of a reality. BEcause of this I continue to preach ONLY playing the grain and soy markets from the long side, as I believe this "weather" trend is set to continue. While we may see some occasional breaks in the short-term on a few wetter and cooler changes made to the forecasts, I am doubtful the breaks will be sustained for very long, or should I say at least until more specifics are known about the crop. The trade feels as if it may have missed the South American weather market by discounting the problems early on. With this fresh in the minds of many traders, I am doubtful they will make that mistake twice in the same year.  Therefor I expect most breaks to be fairly well supported, until "ACTUAL" yields start to be reported out of the fields. The weather right now is just too extreme, you have to believe that some type of fairly significant crop damage has been done. Producers should be looking to make more sales between now and the July 11th USDA report.
 

We are making some moves in response to what the market is showing us. You can sign-up here to receive a FREE trial of my Daily Grain and Livestock commentary in which you will see where I stand on cash sales and some strategies on how you can take advantage of "Money-Flow" and the Outside Markets.  Just click here -  Van Trump Report  


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