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November 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.

How Bullish Soybeans Am I?

Nov 28, 2012

 

Soybean bulls have been excited about rumors of Chinese crush margins turning positive, renewed Asian soymeal demand and prospect that the Bio-Diesel Blender’s Credit will be approved in the near future (retroactive). There is also excitement about the recent wave of US soybean oil sales, which most now believe are beyond the entire year's USDA estimate in just the first two-months of the marketing year. Most sources reporting US oil supplies now much more competitive to Argentina and Brazil than they were at the beginning of the month. If you recall, just a few weeks ago,  US supplies were running about $15-$20 a ton higher than our South American competitors. Now all of a sudden we are hair cheaper for Nov-Dec shipments. To say the least we have definitely gotten more competitive. Several analyst actually believe soybean prices are still too low as traders are not taking into account the weather risk that is still lingering over the South American crop. Technical traders are also talking about the strong technical close yesterday, closing back above the recent high close set on Nov 12th at $14.48^6, somewhat squelching the theory of lower-highs and lower-lows. On the flip side the bears continue to question China's soybean imports, and if demand will be able to keep pace with the lofty estimates many have thrown out there. Remember, the USDA is currently estimating China will import 63.0 million metric tons, while several respected analyst now believe that number is closer to 60.0 million metric tons. Personally I am still looking for JAN13 soybeans to stay trapped in a trading range between $13.25 and $15.25, that is unless crop conditions in South America really begin to deteriorate. Then you have to believe the upper end of the range could be tested.
 
Looking into my so called "crystal-ball," I would have to suspect prices could continue to rally near-term, but if the weather becomes less of an issue in South America, prices will abruptly turn lower into the early new-year on fears of a huge South American crop and record US acreage being planted in 2013. After the  market digest these possibilities, we should start to bottom out. My guess is we will turn the page in March, April, May and turn bullish once again on South American logistical issues, tight supplies here in the US, and uncertainty over US weather moving forward. If, and this is the big "IF," there is no major weather related hiccup (another 100 year drought or record setting heat), then it wouldn't surprise me to see soy prices will ultimately end up sub-$12 by the end of 2013's harvest. Obviously there would be many "ups" and "downs" and "what ifs" along the way. I just think producers should have some type of strategy or game plan in place to help protect themselves in case this plays out.      
 
 

For the rest of the story including more insight into what traders believe are influencing market prices currently, sign-up here to receive a RISK-FREE 30-Day trial of my daily Grain and Livestock commentary. So many advisors want to tell you exactly how to market your crop, I want to teach you to better understand the markets and how you should respond.  If you are looking to be educated and not just told what to do, simply click here and get started!

Van Trump Report

 

Should You Be "Re-owning" at These Prices?

Nov 26, 2012

    It seem as if

 the trade is desperately trying to determine the risk that could be associated with South American weather (For more details on this, sign up for a trial of the report).There is also some fear that Chinese soybean demand is slowing to some degree. Let's also not forget about more evidence and talk of Chinese importers are looking to start sourcing corn from countries other than the US (i.e. Argentina and Ukraine). Soy bulls will be quick to dispute any type of negative news, and will point to the recent spike in soy oil sales as further evidence that the current USDA demand estimates are overly conservative and fail to paint a clear and accurate picture of just how tight supplies will eventually become. Even though this sounds compelling and certainly has some "sizzle" I would not suggest jumping on the bullish bandwagon just yet.  Producers who need to get caught up on sales should continue to pull the trigger into any and all rallies. I would also NOT suggest re-owning any sales at this juncture, simply believing lower prices and better opportunities to "re-own" will present themselves in the weeks ahead. The South American weather story will need to develop further before I buy into thoughts of either soybeans or corn breaking out of their current trading range. Bottom-line, corn seems to have the best fundamental story and should provide the most stability. Bean demand out of China, and the potential for a massive South American crop could still provide some additional setbacks down the road in soy. Despite a short-term increase in US wheat sales, we still remain well behind the pace needed to meet current USDA estimates. I am also worried that since wheat has priced itself out of feed rations s of late growth in demand could soon be overstated causing some bullish liquidation down the road. Despite some early week excitement spec's might want to think twice before chasing these markets higher. Some brighter hope in the "outside" markets and thoughts of increasing US grain exports should provide some early support, but I question if the excitement can provide a rosy feeling for an extended period of time. In fact it wouldn't surprise me to see many of the larger traders using the rallies to exit more length.   
 
 

For the rest of the story including more insight into what traders believe are influencing market prices currently, sign-up here to receive a RISK-FREE 30-Day trial of my daily Grain and Livestock commentary. So many advisors want to tell you exactly how to market your crop, I want to teach you to better understand the markets and how you should respond.  If you are looking to be educated and not just told what to do, simply click here and get started!

Van Trump Report

 

Is Chinese Soy Demand Being Underestimated?

Nov 21, 2012

 It seems the bears are quick to argue that Chinese demand may not be nearly as strong as some have lead on. If you recall many bulls in the trade have been talking about Chinese soybean imports possibly pushing to 65 million metric tons or even higher. From what I can tell, those number are starting to be throttled back and several in the trade are now thinking 60 million metric tons could be more probable. All I can say is just be carful underestimating Chinese demand. I remember last year at this time we were hearing very similar rhetoric, about how Chinese soy demand was leveling off and possibly even tapering back, only to see another huge jump in overall Chinese demand. I am not saying the bears couldn't be right this time around, but betting on a setback in Chinese soy demand has been a losing proposition for the past several years. With tight supplies, no real weather story as of yet, South American logistical concerns and the Chinese "unknowns," it wouldn't surprise me to see JAN13 soybeans trade within a range of $13.00-$15.00 until expiration. My hunch is the 2012 "bull-market" has officially ended, but we may make another push to higher ground on South American weather concerns or logistical issues. The question is where will prices be when the market is all set-up and ready to make that next bull run??? My gut tells me we will be lower rather than higher, so make sure you are positioned properly.  On the flip side, soybean bulls were happy to see "Oil World" reducing their soy production estimates for both Argentina and Brazil. From what I hear they cut their latest Argentina estimate by 2 million metric tons, from 56.0 to 54.0 million. Keep in mind this is still significantly higher than the 40.5 million metric tons harvested last year. As for Brazil, they cut their estimates from 82.0 million metric tons last month down to 81.0. Just like Argentina, even though it is lower than last month, it is still significantly higher than the 66.8 million metric tons they produced last year. Moral of the story, this "virtual" pool of "new-crop" soybeans that the trade keeps dreaming about might actually be getting a little smaller as opposed to a little larger.  Rather than trying to digest 150 million metric tons (plus) of South American soybean supplies, maybe we are looking at production in the mid to upper 140's. Which would obviously be more palatable.

As for today, producers should be taking advantage of the rallies by catching up on both new-crop and old-crop sales, reducing risk while prices are still at profitable levels. I am still NOT re-owning any previous sales and believe you should continue to keep your hedges in place. Spec's in both wheat and soy should continue to play the game from the sideline. Bull spreading corn continues to look like a good play (CH vs CN), also spreading new-crop corn against the deferred wheat contracts continues to pay. I highly advise against getting sucked into a major bull story right now, there are simply too many outside market headwinds and too many what "if's" in regard to demand. Be smart risk-managers and know when to raise your bets and when to reduce your exposure. If your a "bull" I just don't see these being the cards you want to double down against.   

For the rest of this story and more insight into understanding your marketing tendencies, sign-up here to receive a RISK-FREE 30-Day trialof my daily Grain and Livestock commentary. So many advisors want to tell you exactly how to market your crop, I want to teach you to better understand the markets and how you should respond.  If you are looking to be educated and not just told what to do, simply click here and get started!

Van Trump Report

 

A Few Thoughts on Corn Demand

Nov 19, 2012

 

Corn bulls were happy to hear that the EPA on Friday denied the request to waive the Renewable Fuels Standard (RFS) minimum requirements for ethanol (blending 13.2 billion gallons of ethanol into gasoline). The problem is "export sales" continue to be a major concern. Not only are current sales running at a fraction of our normal pace, but there has recently been a couple of "cancelations" that are cause for concern as well, especially the 1.2 million bushels that were recently canceled by Mexico. There is also some concern on the feed side of the equation as Friday's "Cattle-On-Feed" report showed cattle "placements" at just 87%, the lowest number reported since 1996. November 1st "on-feed" were down 5% from last year for the largest year-to-year decline in cattle feeding since July of 2009. This report suggests tight beef supplies at least through early 2013. As I reported the past several sessions, with poultry numbers down and fewer cattle moving to the feedlots we might see "feed" usage estimates slipping back as well. Ethanol production here in the US continues to struggle as well, and many will tell you it is being hampered by Brazilian exports (made from sugar) that continue to hit US shores. Several sources recently reporting ethanol imports for last month were averaging well above 55,000 barrels per day, almost triple the amount recorded last year during the same time period. Interesting to note that in the past 9 months, India is thought to have imported close to $200 million worth of Brazilian sugar, double what was registered during same period of 2011. My thoughts are if Brazilian sugar prices start to creep higher on tighter supplies ethanol imports from Brazil into the US might start to slow. Ultimately that could help boost our domestic production and push corn usage a little higher. This might be wishful thinking, but there is a possibility. 
 
As for today, I am hopeful that US housing data will show continued strength and the "outside" markets will provide some support in the grain and soy markets. Despite being higher this morning I still find it unlike that many of the larger players are wanting to add and hold more length into this Thanksgiving holiday, even though there is generally a tendency for the  Ag markets to work higher historically during this shortened week. The main concerns still reside: South American weather is currently a "non" event; US corn exports are anemic; the wheat market continues to wait on Egypt's next tender (but we are still miles behind in exports); wheat has also priced itself out of most feed-rations giving us cause for additional "demand" concerns; Chinese soybean "demand" is also being questioned, last week we heard news that China was canceling some of their US soybean purchases and now this week we are hearing that China has temporarily halted their weekly soybean sales in order to start building more state surplus. Net-net global "demand" across the grain and soy sectors remain in question. Until more supply side destruction is feared or some type of renewed buying interest or surge in demand is announced I believe the markets will continue to make lower highs and lower lows. The markets have seen steep setbacks the past several sessions so a small bounce may be in order. Personally though I would NOT be chasing any rally higher. I do not believe the downside move is over. Producers should continue to...
 

For the rest of this story and more insight into understanding your marketing tendencies, sign-up here to receive a RISK-FREE 30-Day trial of my daily Grain and Livestock commentary. So many advisors want to tell you exactly how to market your crop, I want to teach you to better understand the markets and how you should respond.  If you are looking to be educated and not just told what to do, simply click here and get started!

Van Trump Report

30-60 Day Outlook for Corn Prices

Nov 13, 2012

  

Corn bulls are obviously concerned about the recent increase in US corn production (about 19 million bushels), plus the significant break in the bean prices, not to mention the "technical" picture becoming a little more worrisome as the late September chart lows of $7.05 may soon be tested. There is also some talk and rumors circulating that Ukraine may start exporting corn to China by year-end as part of a $3 billion loan agreement the two countries inked earlier this year (no specifics have been released, and the numbers don't pencil as of yet, but we should take note they are at least taking steps in that direction). From my perspective, however, it is not all doom and gloom for US corn prices. Argentine weather continues to be a concern and I have to believe more corn acres will eventually be switched to soy production. From what I am hearing out of Argentina, most tend to believe producers are anywhere from 2-4 weeks behind with their corn planting. As a whole, I am hearing Argentina is somewhere between 45-55% planted. Normally we would expect them to be around 60-65% planted at this time. Brazil is also running behind schedule, with most in the trade thinking they are about 60-65% planted, rather than the more traditional pace of 70-75% planted at this time. With this in mind, I have to believe the USDA will eventually have to peel back their 28.0MMT corn production estimate for Argentina (maybe even substantially), as well as possibly reducing the 70.0MMT Brazilian corn estimate. Let's also keep in mind US corn prices are rapidly becoming more and more competitive to South American prices. There are also logistical constraints that may soon be promoting some recent South American corn buyers to return back to US suppliers sooner rather than later. I am not saying we are there as of yet, but corn seems to have a few more bullish stories working for it than either wheat or soybeans right now. Producers with "unsold" bushels should continue to keep hedges in place and patiently wait for higher prices. Those exclusively using "cash marketing" should be much more aggressive sellers on any and all rallies, especially with many in the trade starting to talk about a 2.0 billion bushel carry next year.    
 
I suspect we will start to see a little more end-user interest and global buying of US corn. I also believe there could be another wave of Chinese soy buying on the big price break, especially with their crush margins rebounding substantially in the past several days. The problem is I suspect the bounce will be short lived as many large traders still caught long will simply use the short-term bounce as an opportunity to unload more length. For about the 100th time during the past several weeks... DO NOT CHASE THIS MARKET HIGHER!!! It could bounce for a day, two days, a week, two weeks, I am not sure, but I have to believe we are going to see lower highs and lower lows during the next 30-60 days.  
 

For the rest of this story and more insight into understanding your marketing tendencies, sign-up here to receive a RISK-FREE 30-Day trial of my daily Grain and Livestock commentary. So many advisors want to tell you exactly how to market your crop, I want to teach you to better understand the markets and how you should respond.  If you are looking to be educated and not just told what to do, simply click here and get started!

Van Trump Report


 

What Producers Must Know About This Bearish Market

Nov 12, 2012

 

 


Bearish thoughts continue to creep into my head.  I know many of you will want to argue my position but let's take a look at a few of the cards now in the deck which may influence the trade over the next several weeks. Don't get me wrong, there are still some major bullish cards out there, but each and every day it seems some new bearish cards are being added. Below are some important developments and the way I currently see the deck being stacked: 
 
Funds continue to remain excessively long and prices are still extremely high. Net-net this could be bearish as year-end liquidation on their part could cause further pricing setbacks. Possibly bearish for corn, soybeans and wheat.
 
  • Rumors of China canceling some recent soybean shipments, and talk of their overall demand slowing aggressively or at least until the South American production comes back online. Market extremely front-end loaded with China looking as if they are 80% of our export business. Talk circulating that prices in China are falling and crush margins are setting back, many thinking China could go hand-to-mouth until more South American supplies hit the marketplace. Near-term Bearish soybeans
  • Improving weather conditions in Brazil. Good rainfall now in several areas that were thought to be extremely dry. Talk of Brazil's soybean production possibly topping 80MMT's. Also talk of soybean production in Argentina moving higher on poor planting conditions for corn. Bottom-line some corn acres in Argentina could be moving to soybean acres. Bearish soybeans / Bullish corn
  • USDA improving US soybean yields to 39.5 bushels per acre. The biggest increase ever in a Nov USDA report. If we can now grow close to 40 bushel per acre soybeans with last years weather conditions, just tell me what we are going to grow in above average conditions??? Obviously bearish Soybeans, as production estimates work higher. 
  • Talk here in the US of record soybean acres going in the ground in 2013. Many respected sources talking about 80 million acres plus. Especially once all of the double-crop beans are accounted for. Bearish soybeans 
  • Weather is a far cry from normal. Just this weekend new record temps were being reported all across the Midwest. This is absolutely the  MOST important bullish card in the deck for corn, soybeans and wheat. don't know when, but you have to assume at some point in time it returns to normal. 
  • US Fiscal Cliff rapidly approaching and both fund traders and money managers are nervous. Money-flow could be in jeopardy. Bearish corn, soybeans, wheat 

 

This is just a portion of the full-list, if you would like to see all of the variables that I believe are influencing tha grains, get signed up for the Free-Trial of my newsletter here:  The Van Trump Report

***If you are looking at today's price action and getting worried about what you should do about making your cash sales, I would recommend that you don't just take it a day at a time.  You need to have a plan in place so that you can take the emotions out of your decision making and be able to pull the trigger when the market tells you to.  If you would like some help with that, or would like to follow our cash sales recommendations, get started with us today. Our Trial subscribers have access to the full report and can see where we have made cash sales.   

Should You Be Selling After Today's USDA Report?

Nov 09, 2012

  

USDA's November crop report has been been released and as expected soybean production is raised substantially higher. USDA pushed the US soybean yield higher by 1.5 bushels per acre. In addition, also as I expected, they nudged the corn yield and production numbers higher as well. What I didn't see coming was the world ending stock number for wheat jumping higher. They also lowered US wheat exports. A move some had thought could happen simply because we are so far behind, others seem shocked by the news. Below are the specifics and highlights:  

  • US corn production estimates raised slightly higher. EU and Mexico production lowered just slightly. Corn exports and ethanol usage left "unchanged." 
  • US soybean production raised substantially, but most offset by higher usage. US soy yield raised by 1.5 bushels per acre. US soy exports raised by 80 million bushels to 1.345 billion, domestic Crush numbers also raised. No changes to the South American soy production. 
  • Wheat world ending stocks jump higher and catch the trade by surprise. Australian wheat production lowered form 23MMT's down to 21MMT's,  but the EU was surprisingly raised slightly higher and Argentina, Russia, Ukraine and Kazakhstan ALL left unchanged.

 

To get the full list of the USDA numbers that you need to know about, we posted them here:  http://farmdirection.com/wp-content/uploads/2012/11/VAN-TRUMP-REPORT-11-09-12.pdf

As for today, there seems to be a lot of talk from well respected analysts and traders about extremely "bearish" possibilities in the months ahead. Talk of corn in the $4.00 range and soybeans in the $10.00 range is now being thrown around the trade. I am not going to say this couldn't happen, because as we all have learned anything is possible. Just look back to how hard prices fell last year, only to be saved by more extremely "rare" weather related setbacks. The problem I have in getting bearish longer-term is the fact the "outside" macro market winds are going to be blowing at our backs (weaker US dollar) for another 4-years. Theoretically the "funds" should be friendly to the commodity markets, barring any major "new" unforeseen regulator hurdles that can't be jumped. Most of all, the investment world loves the bullish Ag story and understands the slightest hiccup could cause massive shortages, political unrest, riots, etc... I should also mention the weather is far-far from "normal." I know conventional wisdom would make one believe the weather is going to return to normal, and that record production is around the next corner and that prices are extremely "over priced." Just keep in mind the world has drastically changed, what you once viewed as normal or conventional is no longer the case. The Republicans keep trying to win an election by using conventional and traditional wisdom (doesn't seem to be working)...times have changed! Adapt or Die should be the motto. Like politics the markets are much different now as well.

 

***Remember, Informa will issue its 2013 acreage outlook today at 10:30am CST. US production implications for the 2013 crop year will be included in report. Watch for our weekend report to get our thoughts on the data.  

 

For the rest of this story and more insight into understanding your marketing tendencies, sign-up here to receive a RISK-FREE 30-Day trial of my daily Grain and Livestock commentary. So many advisors want to tell you exactly how to market your crop, I want to teach you to better understand the markets and how you should respond.  If you are looking to be educated and not just told what to do, simply click here and get started!

Van Trump Report


 

Ethanol's Issues and What That Could Mean for Corn Prices

Nov 08, 2012
Corn demand continues to be questioned by the bears, but the bulls are pointing to the fact US corn is quickly becoming more competitive on a global scale. I am hearing reports that US corn is now thought to be only $20 per metric ton higher than South American corn. I am not saying we are going to see a huge jump in US export business near-term at these prices, but you have to believe from January forward the US export business could really star tot heat up. Surprisingly ethanol production was once again slightly higher, reported at 827,000 barrels for the week ending November 2nd. Even better news was the fact ethanol stocks were actually down more than 5% compared to last week. The issue still remains that we are sitting on 10% more ethanol supply than we were last year and production is close to 10% lower at this stage. Obviously corn demand being used for ethanol is down substantially compared to last year. From my perspective we are right on track to use the 4.5 billion bushels of corn the USDA has estimated for ethanol production, just as long as we don't see more closures or reductions in the run rates we should be able maintain. There is still some talk however that corn used for ethanol estimates could be 200 to 300 million too high before it is all said and done. To keep corn prices supported we are not only going to need US corn "exports" to pick up but we are also going to need ethanol production to stay around these levels. I would like to believe this is a guarantee, but I am afraid the ethanol part of this equation might be a tougher task than some analyst in our industry are reporting. Keep in mind many US plants are loosing over $0.30 cents per gallon by producing ethanol. The industry as a whole is headed for the first decline in 16 years, and several companies have been forced to close their doors or reduce their run-rates. I know the production numbers are hanging in there I am just a little worried about how much longer they can last in this environment.
 
As for today, poor export sales in corn and wheat may keep a lid on any major rally, but with the US cash markets remaining strong, I doubt we will see any major sell-off. I believe basis will continue to remain firm well into early 2013 or at least until confirmation of South American production is announced.
 
***UPDATE***USDA export sales reported this morning showed corn sales within trade expectation, wheat sales were below trade expectations and soybean sales were WAY below trade estimates for the first time in a long time. Below are the specifics: 
 
  • Corn export sales reported at 209,400. The trade was looking for a number between 150,000 and 250,000. Last week sales were reported at 167,900.
  • Soybean export sales reported at 191,900.  The trade was looking for a number between 600,000 and 800,000. Last week sales were reported at 760,600.
  • Wheat export sales reported at 220,900. The trade was looking for a number between 300,000 and 500,000. Last week sales were reported at 362,800.

 

For the rest of this story and more insight into understanding your marketing tendencies, sign-up here to receive a RISK-FREE 30-Day trial of my daily Grain and Livestock commentary. So many advisors want to tell you exactly how to market your crop, I want to teach you to better understand the markets and how you should respond.  If you are looking to be educated and not just told what to do, simply click here and get started!

Van Trump Report

If you would like to talk with us here in the office, you can call (816) 322-5300

 

 

Now That the Election Is Behind Us...

Nov 07, 2012

Obama remains President! As I mentioned the past several weeks, it looked like very few changes in American politics would come from this election. Bottom-line, Obama keeps the White House, Democrats keep control of the Senate and Republicans keep control of the House. Essentially all the major principals in Washington keep their jobs – Obama, Boehner, and Reid. We do now have record number of women serving in the US Senate (congrats). Do you realize the last time a Republican was elected President of the US without a Nixon or Bush on the ticket was Hoover back in 1929...WOW!!! Lets just hope the markets care more about "clarity" rather than the actual players involved in the game. Just as some "uncertainties" regarding the US elections are put behind us, more uncertainties regarding the US Fiscal Cliff, Greece, Spain, the Chinese economy, the US Debt Ceiling, Iran and Bernanke's possible replacement all lie ahead. 

 
Just food for thought, if Bernanke chooses not to serve beyond his current term which ends in January 2014, the Obama victory means someone more like Janet Yellen, who Obama nominated to succeed Donald Kohn as vice-chairman of the Federal Reserve System back in 2010, could be the favored replacement. Keep in mind most considered Yellen just as dovish as Bernanke, if not more. 

What will US businesses decided to do with their cash. As we have come to learn, many analyst believe US corporations now have over $1.7 trillion in cash on their balance sheets waiting to be spent. The problem is many of these businesses are deeply concerned about the US "fiscal cliff", the increasing rate of US debt and the possible US budget crisis. An Obama victory, without some type resolution by January 1st, could mean automatic spending cuts and big tax increases that could push the US quickly back into recession. Meaning US businesses could now be very concerned that consumer spending may quickly dry up. Therefore US businesses may simply choose to sit on their cash rather than expanding their operations, not wanting to get caught up in the setbacks that could occur.    
 
As we all have come to learn in life no solutions are perfect, but in my opinion no challenges are insurmountable, especially for the United States of America...still the most powerful nation on earth.  I remain incredibly bullish on America, lets just hope somehow we can get this train back on the right track!!!
 
As for today, traders will be adjusting to US election results and trying to determine just exactly what it means moving forward. You have to believe longer-term the election provides us with bullish tailwinds in the commodity markets on thoughts of a US dollar that will remain fairly weak over the next four-years. However there is some concern about "money-flow" as large US trades now face more regulations and increasing taxes. In the Ag's more specifically, we now have continued talk of corn and soy production estimates being reduced in Argentina despite South American weather forecasts improving.  There seems to be some debate moving forward about Chinese soy demand in light of falling crush margins, along with thoughts of the US soy crop getting larger this Friday. US wheat is now all of a sudden the cheapest in the world, and US corn is slowing starting to look like it will gain some export interest as we turn the calendar into 2013. From my perspective there are still simply too many balls in the air for any clear direction to be taken. With this in mind I suspect we stay range bound, with wheat seeing the least downside (at least for the interim). Spec's should remain conservatively bullish, while producers should be using any type of rally to get caught up on 2013 (new crop) sales. Wheat producers should be looking hard at a few more new crop sales in DEC13 up above $9.00.         
 

For the rest of this story and more insight into understanding your marketing tendencies, sign-up here to receive a RISK-FREE 30-Day trial of my daily Grain and Livestock commentary. So many advisors want to tell you exactly how to market your crop, I want to teach you to better understand the markets and how you should respond.  If you are looking to be educated and not just told what to do, simply click here and get started!

Van Trump Report


What Producers Need to Know About Argentine Production

Nov 06, 2012

 

Argentine crop production continues to be in focus as excessive rains prompted analysts to make cuts in the yield and quality of the Argentine wheat crop (USDA currently estimating Argentine wheat crop at 11.5 million metric tons, many insiders thinking it is closer to 10.0 million metric tons, compared to 15.0 million metric tons produced last year). There have also been a wide array of numbers being thrown around that have been reducing the total production estimates for both corn and soybeans as well. Yes, the rain has been falling, but I am starting to hear more talk that producers are actually getting a much larger portion of their crops in the ground than what has been reported as of late. Obviously, many of the lower lying areas are still not seeing any activity, but I am starting to hear more and more reports about the planters rolling in areas that where previously in question. Bottom-line, the sun coming out over the last two weeks in northern Buenos Aires, Santa Fe, Entre Rios and Cordoba provinces has helped firm the topsoils enough to allow producers to get back to work and planting to slowly progress. Regardless of improving conditions in a few select areas I highly doubt we will see the Argentine producers reach the lofty USDA estimates of 55 million metric tons of soybeans and 28 million metric tons of corn. Keep in mind that last year Argentina only produced 41 million metric tons of soy and 21 million metric tons of corn. Something else we need to watch is the fact Standard & Poor's rating agency has just reduced Argentina's economic outlook to negative (B-). As we sit here today, there is no real significance, but if their economy or government starts to more rapidly deteriorate we could potentially see export flow from Argentina adversely effected. Moral of the story, I know it is early, but the worlds 3rd largest soybean exporter and 2nd largest corn exporter might not have the record year everyone had originally anticipated. 
 
*Celeres estimating Brazil's soybean production will be around 79.02 million tons. This is currently below the USDA's most recent estimate of 81.0MMT's. Don't forget CONAB will throw their latest Brazilian estimates in the hat on Thursday, the trade will be eagerly awaiting those numbers.  
 
ALSO don't forget, USDA's November crop report is scheduled to be released this Friday (Nov 9th) and will be the next major hurdle facing grain and soy traders. The consensus seems to be that US soybean production as well as the carry is heading higher. Corn seems to be somewhat mixed (with most thinking the yield could move a shade lower and stocks a shade higher). Traders seem to believe global wheat production could be moving lower. I will pass along more specifics estimates and guesses later this week as the report gets closer.  Sign-up below for more in-depth coverage before and after Friday's report and what you as producers can do to minimize risk and capitalize on the market moves.

 

For the rest of this story and more insight into understanding your marketing tendencies, sign-up here to receive a RISK-FREE 30-Day trial of my daily Grain and Livestock commentary. So many advisors want to tell you exactly how to market your crop, I want to teach you to better understand the markets and how you should respond.  If you are looking to be educated and not just told what to do, simply click here and get started!

Van Trump Report


 
 

 

What the Election Outcome Could Mean To the Grain Markets

Nov 05, 2012

 

Predicting the outcome of the US election, is everyones question, and has been asked by many readers. If you are wanting to take a look at all of the polls, both on a national and state level Click Here.  Its obviously not about my personal opinion, but rather what the market is thinking, and more importantly what will happen once a winner is announced.  If you don't believe the stock market will initially rally "MORE"  on a Romney victory, then you are completely disregarding what the markets are telling us. The stock market and money-managers across the board are very concerned about the proposed increasing "dividends tax" and "capital gains tax" that will come along with an Obama victory. If you think these taxes will encourage more money flow to come into the US stock market than the pro-business minded Romney, you are simply dead wrong. The "market" also believes an Obama victory will mean a weaker US dollar in comparison to a Romney victory. Most money-managers believe Romney has a better chance at reducing our overall debt by making more direct cuts to the budget. In return, a Romney win is promoting traders to believe the US dollar will strengthen potentially causing money to flow OUT of commodities and back into equities. On the flip side, an Obama win could cause the US dollar to weaken, allowing other nations to import more US supplies at a cheaper rate, and in return prompt investors to put more money at risk in the commodity markets. Understand what I am saying here...this is the overall feel from the "markets" and the "what if's" and "how it could all play out" from those managing a large portion of the investment dollars in play. These are not my own personal opinions about who will win or lose, but rather how the trade is playing it all out. As far as what most seem to be expecting in regards to an actual winner, I would call it a complete coin toss. Below are what most of the political analyst I have talked to seem to be expecting or thinking could happen:
 
  • Not Much Change: Obama retains the presidency. Possibly in some crazy outcome very similar to that of the Bush vs Gore fiasco in Florida, where we didn't know who would be president of the US for several weeks. The Republicans maintain a majority in the "House" and the Democrats maintain a majority in the Senate. Maybe the Republicans win an extra seat or two in the Senate, but probably lose a few seats in the House. Net-net not much of a big change, market participants make very few major adjustments.  
  • Republican surprises: The stock market would probably explode higher "IF" Romney were to win the election AND the Republicans somehow were able to win 5 or 6 seats in the Senate to win a majority there as well. This would obviously give the GOP's a clean sweep and control of the White House along with both the House and the Senate. US dollar would more than likely rally and commodity prices would setback as the funds reduce exposure.
  • Democratic Surprises: Obama keeps the White House AND the Democrats expand their hold on the Senate and somehow pull off a major upset by winning a majority in the House, ultimately giving the Democrats a clean sweep. US dollar more than likely falls under pressure, gold and silver prices rally along with other commodity markets.
  • Wild Card: John Boehner's job as Speaker of the House. If someone further to the "right" steps in and the Senate stays controlled by the Democrats any type of compromise could become more of a long shot. US stock market falls under pressure and funds take risk off across the board as more uncertainties loom. 
 
Summary, this political race is extremely tight. There are so many variables and "what if's" no one is certain about the outcome. It may take a couple of days for all of the dust to settle and smoke to clear, but once the outcomes are announced I suspect traders will once again start to place their wagers... All I can say is be careful between now and the first few weeks following the announcement of the election results. You have to believe the bigger money will be flopping around in the waters and possibly changing their directions. More times than not this type of reaction can cause the little boats to have the hell beaten out of them. Best advice...stay out of the waters or remain extremely close to the shores unless you have a boat that can withstand the beating. 
 

For the rest of this story and more insight into understanding your marketing tendencies, sign-up here to receive a RISK-FREE 30-Day trial of my daily Grain and Livestock commentary. So many advisors want to tell you exactly how to market your crop, I want to teach you to better understand the markets and how you should respond.  If you are looking to be educated and not just told what to do, simply click here and get started!

Van Trump Report


What the Macros Are Telling Us This Morning

Nov 02, 2012

 US monthly employment numbers will be the driving force this morning as it gives us our final look at the US employment picture prior to Americans going to the polls on Tuesday and casting their votes. The trade is looking for the controversial report to show "payrolls" increased in October by 125,000. You need to also keep your eye on the "revisions," as there was some talk circulating that an entire state failed to report some of their numbers last month, conveniently ahead of the presidential debate. Some actually speculating that after the election is behind us, the employment numbers will have to digest some possibly extreme revisions. As I am sure you are aware, most political analysts seem to be in agreement that this election is going to go down to the wire. This obviously sets the stage for what looks to be an extremely volatile week in the "outside" macro markets. "IF" a new leader is elected there is speculation, the US dollar could strengthen, the US stock market could push higher and in return equity could flow out of the commodity markets and push more aggressively into US stocks. An Obama victory could therefore cause just the opposite type reaction, disappointment from the US stock market, thoughts of increasing debt and a therefore a weaker US dollar. I have to imagine the investment world will be holding its breath until after the final US presidential election results are announced. Keep in mind, the "China National Congress" starts that Thursday (Nov 8th). Even though most of the new leaders are already known, any type of surprise could certainly prompt money-managers around the globe to recalculate just how quickly any type of new stimulus or economic reform measures might be introduced. Moral of the story, any time you have leadership changes amongst the two most powerful economies in the world during the same week, investors are going to be extremely nervous. On a more minor note, and later in the week, we will also hear the latest interest rate decisions from the Bank of England (BOE) and the European Central Bank (ECB).

FC Stone numbers were released after the close yesterday showing a slight bump in US corn yield to 124 bushels an acre, up from their previous estimate at 123.9.  Soybean yields were estimated at 39.1 bushels an acre vs. the last estimate at 38.2 bushels.  Basically "neutral" corn and just slightly "negative" soybeans....Don't forget, weekly export sales data should be released this morning around 7:30am CST. Most traders are thinking corn exports will come in between 100,000 - 350,000; wheat should be somewhere between 350,000 - 550,000; soybean exports should be between 500,000 - 700,000 metric tons. Also Informa is scheduled to release their latest round of estimates today at 10:30am CST. 

For the rest of this story and more insight into understanding your marketing tendencies, sign-up here to receive a RISK-FREE 30-Day trial of my daily Grain and Livestock commentary. So many advisors want to tell you exactly how to market your crop, I want to teach you to better understand the markets and how you should respond.  If you are looking to be educated and not just told what to do, simply click here and get started!

Van Trump Report


Crop Production Esitmates Out Later Today

Nov 01, 2012

 

USDA reported "winter wheat" conditions much worse than expected, with just 40% rated "Good-to-Excellent." There was 46% of the crop rated "Good-to-Excellent" last year at this time. The USDA also reporting 15% of the US crop rated "Poor-to-Very Poor" vs. 13% last year. A whopping 61% of South Dakota's winter wheat crop is rated "Poor-to-Very Poor" while just 5% of the crop was rated "Good" and 0% rated "Excellent." Winter wheat planting is now 3% ahead of schedule at 88% complete, the only problem is "emergence" is reported at just 63% or some 4% behind our average. Some additional USDA numbers are included below:
 
  • South Dakota wheat just 23% emerged vs. 5-year average of 88% emerged.
  • Nebraska showing 49% of their wheat crop in "Poor-to-Very Poor" condition. Just 9% of their crop in "Good-to-Excellent" condition. 
  • Oregon & South Dakota showing 0% of their wheat crop in "Excellent" condition: CO & NE 1%; IL, KS & OK 2%; MT 3%; TX 4%. 
  • Corn reported as 91% harvested with the Eastern Belt lagging the Western belt. 5-year average 60%
  • SD 100% harvested; MO & TN 99%; MN 98%; KS 97%; TX,KY & NC 96%; IA 95%; IL, NE & ND 94%; IN 81%; CO 80%; WI 77%; OH & PA 64%; MI 57% 
  • Soybean harvest is 87% complete 
  • MN, WI, SD & ND 100% harvested: NE & MS 98%; IA & LA 97%; IL & MI 87%; AR 84%; IN 81%; OH 795; KS 74%; KY 70%; TN 66%; MO 62%; NC 17%
  • Cotton harvest advances to 50% complete, which compares to 47% on average and 56% vs. last year.
  • Rice reported at 94% harvested, now just 2% ahead of the 5-year average.

 

FC Stone is scheduled to throw out their latest round of estimates after the close today. During their last attempt they estimated the US corn crop at 10.824 billion and the yield at 123.9 bushels per acre. For soybeans they estimated the US crop at 2.849 billion on a yield of 38.2 bushels per acre. Let's also keep in mind Informa should be throwing their latest estimates in the hat as well. Last month Informa estimated corn at 11.194 billion bushels on a yield of 127 bushels per acre. The USDA estimated the US corn crop lower than both Informa and FC Stone at 10.706 billion bushels on a yield of 122 bushels per acre.
 
*USDA Export sales data is delayed until Friday! 
 

For the rest of this story and more insight into understanding your marketing tendencies, sign-up here to receive a RISK-FREE 30-Day trial of my daily Grain and Livestock commentary. So many advisors want to tell you exactly how to market your crop, I want to teach you to better understand the markets and how you should respond.  If you are looking to be educated and not just told what to do, simply click here and get started!

Van Trump Report


 
 
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