Sep 20, 2014
Home| Tools| Events| Blogs| Discussions| Sign UpLogin

CornCollegeBanner home


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.

Should Corn Hedges be Scaled Back?

Sep 19, 2014

Corn continues to tumble! Great weather forecast ahead, a surging US dollar, record yield reports coming across the wire every five minutes, record test weights and kernel size along with a "technically" devastating chart pattern makes a sustained rally next to impossible. Longer-term the bulls can argue the case of strong demand and reduced global acres, but as we have all learned in life, timing is everything.  Unfortunately those horses aren't going to run for several more races.  Despite the bearish headwinds I continue to be a fan of scaling back our 2014 and 2015 hedge positions on the deeper breaks in price.  Yes, I'm keeping my targeted low of $2.85 in place, but I also realize how difficult it is in today's marketplace to hit our targets.  When we get down to these levels, rather than shooting with a long-range rifle, I prefer using a sawed off shotgun. From my perspective accuracy becomes of little importance, when your simply trying to get out alive and unscathed. Remember, the price of corn has been tumbling lower for the past two-years (high was set in Aug of 2012), I suspect the low is posted within the next 90-days.  In other words the sun is close to setting so shot as many birds as you can in the final few moments. Load up the truck and head for home.  If I recall this is the same logic and terminology I used when prices exceeded $7.50 a bushel a few years back.  I told guys to get as much priced as they could as far out as they were comfortable pricing it. In other words shot as many birds as you can because the hunts was about to end. Like I said, maybe there's another -$0.50 to -$0.75 cents of downside... I just don't need to get that close to find out.  As always, I prefer to shoot early and often:)  CLICK HERE for my daily report...    

 Just How Much Better Are Corn Conditions This Year vs. Last YearAs you can see form the graphics we created below, several top-producing states are seeing HUGE improvements when compared to last year.  In fact the only state where the GD/EX ratings are below last years level is Ohio. Now we know why some analyst are pushing their US yield estimate north of 175 bushel per acre.  In fact I've heard a few 180 numbers thrown around the past few days??? 

     

Bean Acreage vs.Yields:Will the USDA Determine Soon?

Sep 18, 2014

Soybean bulls continue to argue the USDA's current acreage estimate is about 1 million too high.  On the flip side the bears believe the yield is still grossly understated and needs to move somewhere north of 47 bushels per acre.  My bet is both parties are somewhat correct in their thinking, but ending stocks will still end up being an extremely burdensome 500 million bushels plus. Don't forget the bears are also looking for the USDA to update their old-crop estimate (moving their production estimate higher) in the upcoming end-of-Sept "Quarterly Stocks" report. From a "technical" perspective, nearby upside resistance still appears at the $10.00 level, while short-term support is between the $9.65 and $9.70 area.  Longer-term many in the trade are still thinking there is a much better chance to see $8.50 than there is $11.00.         CLICK HERE for my daily report...       

Soybean Visual... Just How Much Better Is It??? I had the office put together a simple visual illustrating the current "Good-to-Excellent" rating compared to those reported last year at this time. As you can see form the image below ALL major production states are better than last year.  Surprising to some Iowa is leading the rally with 74% rated GD/EX this year vs. 33% last year.

Have All the Bearish Cards Been Played in the Corn Market?

Sep 17, 2014
Must Read...Are We Missing Something? I realize this might sound a little nuts, especially in light of all the bearish commentary, but I'm starting to get the feeling we should be lightening the load and start banking the hedge profits we have realized on the short side.  There are a few things I've learned through the years about the markets.  The first is the fact the wheels tend turn the fastest towards the bottom of the hill.  Next is the famous line by Mark Twain, "Whenever you find yourself on the side of the majority, it is time to pause and reflect."  And of course, one of my all-time favorites..."Every loser in Vegas always leaves the casino thinking he could have done just a little bit better." I'm not saying the bottom is in place or that we are even within sniffing distance, I'm simply not that good to predict the exact low.  Our original plan was to protect against a fall in price to the $3.50 level and that's exactly what we've done.  The Chinese announcing a new economic stimulus package on the heels of the EU stimulus announcement a couple of weeks back has me wondering if I'm missing something much bigger...  As I sit here today I personally don't see any major risk or headline that would drive prices dramatically higher for an extended period of time, but then again, GOOD "risk-management" is more about what we DON'T know or see coming our direction than what we do know. In fact that's truly what we are trying to protect against!  With this being said, I believe the greatest "unknown" has now shifted to the upside...not the down. In other words most ALL of the bearish cards are in clear view and on the table. Therefore I'm making the move to start lightening the load and unwinding the hedges.  I suspect the absolute lows come at some point between now and year-end.  In other words the low comes within the next 45-65 trading days.  As I mentioned above, I'm not nearly good enough to pick the exact day for the exact low, so I'm starting my scale-out process now. Those who are keeping an extremely close eye on their short positions might be able to count to "10 Mississippi" before starting the scale-out process, just don't get overly greedy! Keep in mind this does NOT mean I'm going long or have become bullish the market, nor does it mean we are exiting ALL of our short hedges.  I just think its time to start more aggressively banking your profits and moving to the sideline.  CLICK HERE for my daily report...

Will Next Acreage Report be Positive for Grains?

Sep 15, 2014

Corn market continues to tumble as the USDA confirms a tsunami of corn is headed our direction. The USDA's Aug to Sept yield jump of +4.3 bushels may have came as a surprise to many of the bulls, but most ALL of the bears are calling for additional yield increases coming in the Oct and Nov reports. As I sit here this morning, it feels as if we are now trading a yield somewhere between 173 and 175. The problem for the bull is the fact growth in "demand" simply can't keep pace with the continuing growth of the crop. For this reason my targeted low of $2.85 still remains in play, and I suspect we start seeing the sub-$3.00 handles at some point within the next 90-days. From a money-flow perspective, it appears the "managed money" crowd is surprisingly still net long about 80,000 contracts.  I would hate to see what happens to the price of corn if these guys ever decide to get wildly bearish and shift to a large net short position???If your looking for a couple of longer-term bullish headlines to grasp onto, I warn you now they are far and few between. In fact several analyst are now thinking prices will remain sub-$4.00 for an extended period of time (perhaps 2-3 years). I'm not in this camp, but certainly understand their argument and reasons for concern. Lets just keep in mind then Chinese are in a major transitionary phase. My hunch is one morning we wake up to headlines reading they were major buyers of US corn.  I'm also thinking  there is going to be a more drastic reduction in global corn acres than most in the trade are currently anticipating. Not only will South American producers be cutting back corn acres in the coming weeks, but my guess is so will the producers in Ukraine as well as here in the US.   CLICK HERE for my daily report...   

What About Tomorrow's FSA Acreage Data? There continues to be a bit of a "buzz" from the bulls about current USDA acreage for both corn and soybeans being too high.  Be careful here...as this can often be a costly and painful learning experience.  Remember, the FSA had some recent budget cuts and in turn may still be trying to adjust to the overburdening work load with fewer staff.  I'm just afraid at first glance the FSA numbers may appear to show significantly fewer planted acres, but realistically there are simply so many "unknowns" and moving parts associated with data it's extremely tough to predict the accuracy or influence it will have on the USDA numbers.  I don't want to burst anyones bubble, but on the flip side of this argument the bears are saying they actually have satellite imagery data that confirms the current USDA estimates and perhaps even shows the current USDA estimates to be a bit light???    We should know for sure what the USDA is thinking in the upcoming Oct 10th report... Point being, even though the trade my flinch a bit, don't get yourself overly excited about tomorrows FSA numbers!  CLICK HERE for my daily report...

Marketing Rules 101....

Sep 12, 2014

 

Marketing Rules 101 -Marketing a crop is NOT a "team sport," it's entirely up to you to pull the trigger and reduce your own risk. The herd mentality tends to NOT pay big dividends! Continually talking about a USDA conspiracy does NOT pay big dividends! Remember, you build a marketing plan for the "bad years"...not the "good years." Anybody can market $7.00 and $8.00 corn. Please do not simply stick your head in the ground and think the problem is going to take care of itself. You have to "execute." That can mean a lot of different things for each farm operation but not doing anything, in these market climates, can be extreme.  We are reducing risk not only for the 2014 crop but also looking out into the 2015 crop year.  Believe it or not there are still marketing strategies that you can use to protect thing going forward.                  CLICK HERE for my daily report....

Log In or Sign Up to comment

COMMENTS

Hot Links & Cool Tools

    •  
    •  
    •  
    •  
    •  
    •  

facebook twitter youtube View More>>
 
 
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions