Aug 27, 2014
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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.

China..Old Crop Beans add to Market Volatility

Aug 26, 2014

Soybean traders are trying to digest what has become an extremely violent and dangerous front-end of the market.  Yesterday's -$0.60 cent plus plunge from the high to the low certainly opened a few eyes. The new-crop NOV14 contract also fell under pressure and posted a NEW low on the charts at $10.26, which now becomes nearby support. Longer-term, I still believe the market is "technically" looking to test the $10.06 or $10.05 area vs. the NOV14 contract before finding more stable footing.  The harvest in the Delta region appears to be coming along nicely and generating better than expected yields.  I also continue to hear producers further north trying to harvest earlier than normal in an effort to capture some additional premium. There are also more and more reports circulation that beans are turning yellow in some key locations, meaning harvest is just a few short weeks away. All of this simply equates to the old-crop supply story finally starting to unwind itself. The only real bullish news to speak of, which isn't bullish when you consider the entire picture, is the slight reduction by the USDA in their weekly crop condition estimate.  What we have to recognize is the current US soybean crop still stands at a very healthy 70% rated "Good-to-Excellent." As you can see from the chart below, a crop we haven't seen rated this good in a very long time. Also don't forget that condition number is being reported on larger than ever record acreage.            CLICK HERE for my daily report... 

Bank of China Could Cut Credit:  There is some talk and chatter the Bank of China is in the process of cutting the credit rating on a couple of large Chinese importers. Keep your eye on this the next few days.    

Soybean Rated Good-to-Excellent" by State: LA 84% up +2% on the week; MS 79%; IL 78% "unchanged" on the week; MO 76% down -2%; ND & TN 75% up +1%; IA 73% unchanged; OH 73% up +1%; NE 71% up +1%; SD 71%; WI & IN 69% up +2%; MN 66% up +2%; MI 63% down -1%; AR 62% down -1%; KY -58% down -1%; KS 48% down -5% 

Could We See a Short Term Bounce in Corn?

Aug 25, 2014

Corn may get a bit of a short-term bounce on what some believe is a fairly conservative Pro Farmer total crop estimate. Many analyst in the trade have been talking about a yield at or around 172 bpa and a total crop closer to 14.5 billion bushels. These are both well above what Pro Farmer threw out on the table.  There is also more talk by the bulls that a "normal first frost date" could takeout a small percentage of the crop up north. Yes, that's an arguable case, but tell me when was the last time a "freeze" event sparked a major longer-term rally in corn? I'm not saying it isn't possible...I'm just thinking it isn't probable!  Therefore, if you take a major bullish "weather event" out of the equation, I'm afraid there is still additional downside price-risk.  From a "technical" perspective many traders continue to talk about fairly heavy resistance in new-crop corn (DEC14) between $3.80 and $3.90.  From a producers perspective this  might be good area to target for reducing some additional new-crop risk???    Something else to consider is the fact harvest is rolling down south, and form what I continue to hear the overall yields have been very strong.  In other words continue to take advantage of the rallies when they present themselves. Reduce your risk to only those bushels you are comfortable storing and or carrying for the proverbial "long haul." I continue to worry that the bears at-bat could extend further than some producer's credit-line.  Defend, defend, defend remains the battle cry!                  CLICK HERE for my daily report...  

Can Meal Demand & Frost Scare Support Bean Prices?

Aug 22, 2014

Soybeans bounce off the bottom, but more than likely will continue their "downhill slide."  Yes, soymeal remains in heavy demand, and until new-crop bushels are both harvested and delivered, the front month (SEP14) contract is going to remain extremely volatile. The weather forecasters are now thinking the latest tropical storm will miss the Gulf which should ultimately allow the harvest down south (through the Delta) to gain more traction. From where I sit, it's only a matter of time until there is NO old-crop soybean story for the bulls to grasp on to.  This will eventually leave more and more in the trade with nothing to focus on but new-crop production.  As of right now most seem to be on the same page, thinking that we have not only planted record acreage but could soon harvest a record yield. I still keep hearing many of my top soybean sources penciling in a 46 to 48 bushel yield estimate.  I can't stress enough, if this happens to be the case and plays itself out, new-crop soybeans have the potential to trade down to the $8.50 area. Obviously, good finishing weather will be needed to push yields past 46 bushels per acre, but what if the weather cooperates? Are we really sure we fully understand the potential of these new traits and genetics?  I'm telling you now, the past three to four years almost every producer I have spoken with (hundreds and hundreds) underestimated their soybean yields.  As far as that goes, it appears the USDA did the same thing with this past crop.  All I'm saying is with this many beans having been planted and the weather as a whole being extremely cooperative, the surprise could be a blowout type number to the up-side.  Yes, there is still the chance for some type of early freeze or other unforeseen weather event, and I'm sure someone will want to argue the case. Just remember, as each day passes our odds of getting that "one card" becomes less and less. CLICK HERE for my daily report...

Crop Tour Points to Higher Yields?

Aug 21, 2014

Results Pro Farmer Midwest Crop Tour:  Day #3 of the Tour came to an end with scouts giving us a look at Western Iowa and the final Illinois numbers. Both corn yields and soybean pod counts for Illinois and Western Iowa were better than last year and much better than their 3-year average. Today, crop scouts will dive into the remainder Iowa and Minnesota.  Then this evening participants from both the Eastern and Western leg of the tour will come together in Rochester, Minnesota to give us their final overall estimates. Remember, as I mentioned before the tour started, Day #4 (today) could bring a bit of disappointment, especially as the crop scouts work their way further north.  I try no to get caught up in the short-term day-to-day movements of the market, but as the tweets and social media roll across the screen, theres a chance we could see a bit of a short-covering rally.                           CLICK HERE for my daily report...    

Western Iowa (Wednesday) - 3 districts surveyed yesterday the rest of the state today. Corn: District 1 - 177.48 vs 175.6 bpa last year vs. 3-year avg. of 170.72;  District 4 - 180.06 vs. 170 bpa last year vs. 3-year avg. of 162.06;  District 7 - 180.90 vs. 160.12 bpa last year vs. 3-year avg. of 146.77.  Soybean pod counts by district: District 1 - 1091.34 vs. 802.98 last year vs. 3-year avg. of 962.06; District 4 1124.96 vs. 849.79 last year vs. 3-year avg. of 1045.65;  District 7 - 1166.21 vs. 1101.49 last year vs. 3-year avg. of 1091.22. 

Illinois (Wednesday) corn yield reported at 196.96 bpa vs. the 170.48 bpa estimate last year  vs. the 3-year average of 149.36 bpa. Soybeans showed a pod count in a 3’-by-3’ square of 1,299.17 vs. the 3-year average of 1,085.35 and last years estimate of just 1,115.97.

Nebraska (Tuesday) corn yield reported at 163.77 bpa vs. 154.93 bpa last year  vs. 3-year average of 146.81 bpa. Soybeans showed a pod count in a 3’-by-3’ square of 1,103.36 vs 1,138.94 last year vs. the 3-year average of 1,106.62.

Indiana (Tuesday) corn yield reported at 185.03 bpa vs. 167.36 bpa last year vs. 3-year average of 141.24 bpa. Soybeans showed a pod count in a 3’-by-3’ square of 1,220.79 vs. 1,185.14 last year vs. the 3-year average of 1,118.65. 

Ohio (Monday) corn yield estimated at 182.11 bpa vs. 171.64 bpa last year vs. the 3-year average of 146.43 bpa.  Soybean count at 1,342.24 pods in 3’-by-3’ square vs. 1,283.61 last year vs. the 3-year average of 1190.18 pods.

South Dakota (Monday) corn yield reported at 152.71 bpa vs. 161.75 bpa last year vs. 3-year average of 125.70. Soybeans count at 1057.8 in a 3’-by-3’ square vs. 1,016.68 last year vs. the 3-year average is at 902.76.  CLICK HERE for my daily report...

 

Is the Corn Market Ready for a Breakout?

Aug 20, 2014

Corn market remains on hold as traders wait for a better look and more confirmation in regard to the US crop.  Keep in mind, new-crop DEC14 corn has essentially traded sideways for the past month between $3.60 and $3.80 per bushel. From a "technical" perspective you have to imagine a close below the $3.58 bring about more bearish interest and prompts some of the longer-term bulls to throw in the towel.  While a close back above the $3.81 level will bring some new bullish interest and additional short covering. As congested as the market has been as of late, I'm starting to think a breakout in either direction may be enough to push the market for an extended period of time. In other words a close below $3.58 could prompt the market to quickly tumble another $0.50 cents.  From a risk-management perspective this is what we are trying to avoid. On the "demand" side of the equation things still remain strong, in fact corn is now the cheapest it's been in relation to ethanol since 2007. Bottom-line, demand is not the issue right now, the trade is clearly focused on supply, specifically total US production. I'm afraid if the trade can somehow confirm a US corn yield north of 172 (like many analyst are projecting) prices may eventually test the $3.00 level. As producers we have to make certain we are prepared for such a move.                       CLICK  HERE for my daily report....             

China Seeing More Rain: We have all seen the recent headlines regarding one the worst droughts in years for parts of the Northern China Plain's.  The latest forecasts are now calling for 2.0 to 2.5 inches of rain by next week for key areas of Jilin and Liaoning.  Bottom-line, I'm still not seeing a major reason to worry about Chinese production.  They might end their run of 11 straight years with NEW record corn production, but I'm thinking it will still be extremely large. Keep in mind, cash corn in their country is still trading north of $9.50 per bushel.

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