Sep 2, 2014
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Current Marketing Thoughts

RSS By: Kevin Van Trump,

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

Can Beans Move Higher as Yields Increase?

Sep 02, 2014

Soybean traders continue to balance and debate an old-crop ending stocks number that appears to be well "overstated" by the USDA (most sources believe it should be sub-100 million) and a new-crop ending stocks number that appears to be "understated" by the USDA (many sources thinking it could push closer to 600 million). The recent rounds of finishing rain have certainly helped producers and should be enough to basically insure a NEW record crop.  The question is how much higher is the USDA willing to take their production estimate.  Many of the bears are arguing the mid-45 range is simply too conservative for new-crop yield. They believe the national soybean yield should be raised to somewhere between 47-48 bushels per acre. Even though we may see temporary bounces, I'm looking for the soybean market to eventually continue it's downhill spiral.  As I mentioned the past couple of weeks, we might be range bound between $10.00 and $10.60 until more concise and accurate yield data can be verified.  Form there the market attention will shift to South America where yet another record crop is set to be planted. I suspect there will also be talk of record soybean planting again here in the US for 2015. Hence if weather cooperates, the trade will once again start to backpedal in late-2014 and early-2015.  Bottom-line, I believe there is still some additional downside price risk in soy. As you can read below, some respected sources in the industry are thinking just the opposite...Also, on the bullish side is more talk of SDS or white mold showing up across parts of the midwest.  It is not widespread as of now but hearing that small patches, are turning into whole fields, in a matter of days.  Something else to keep our eyes on....  CLICK HERE for my daily report... 

Rabobank Thinks Price Drop Is Limited: Even though the large bank has estimated both corn and soybeans production higher than the USDA, they seem to think there is limited downside price risk.  From what I have heard, Rabobank now has the US soybean crop pegged at 3.985 billion bushels on a yield of 46.5 bushel per acre. The current USDA forecast is for 3.816 billion bushels on a yield of 45.4 bushels per acre. Rabobank also thinks the current USDA corn yield of 167.4 is too conservative and could end up somewhere between 170-175. Interestingly however, they have only reduced slightly their forecast for average soybean futures prices in the 4th quarter of 2014 by -$0.20 a bushel to $10.00.  Even more surprising is the fact they are projecting a post-harvest rebound in prices, thinking we will average $10.60 a bushel in the 1st quarter of 2015 and $10.75 a bushel in the 2nd quarter of 2015. This is a bit opposite of where I'm currently at. Of course if there are weather complications then I understand the Rabobank argument, otherwise I have a tough time digesting these thoughts.  They took a similar approach towards corn, leaving prices unchanged, thinking they will average about $3.50 per bushel through year-end

What We See for Corn and Beans This Week...

Aug 30, 2014

Corn will continue to suffer from its curse of "no new news" outside the fact that the world is about to be swimming in corn. The one thing I keep reminding myself is the fact we have never produced a yield over 160 bushel per acre when we have planted over 90 million acres. But then again, when was the last time we have seen weather like this for such a large portion of the Belt? Technically the $3.58 level is still providing nearby support but many in the trade are worried about longer-term price depreciation deeper into the US harvest. Producers should 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.  CLICK HERE for my daily report...

Soybean bulls will be pointing to strong demand and limited old-crop supplies but how long will this scenario be able to hold up price? First notice day for theSEPT14 contract was yesterday (Friday 8/29) meaning the old-crop story may officially be out of ammunition. I suspect between now and the upcoming Sept 11th USDA report the trade will begin to take on a more "wait-and-see" type approach. In return I'm thinking the new-crop NOV14 contract trades in a narrower range somewhere between $10.00 and $10.60 per bushel. Longer-term I'm still extremely concerned about excessive supplies.  Not only might new-crop ending stocks jump beyond 500 million, but it looks like many US farmers are talking about planting even more soybean acres in 2015. Near-term I continue to look for the $10.05 area to provide some type of "technical" support...longer-term however, I still can't rule out the $8.50 to $9.50 range. Wish I had more positive news, unfortunately there's just very little out there to stop the bleeding. Keep ALL hedges in place!  CLICK HERE for my daily report...

Where Will New Crop Corn Find Support?

Aug 28, 2014

Corn harvest is starting to work its way north as we are now getting reports in the office form producers in parts of Missouri and Illinois. There is some obvious variability from field to field, especially in regard to moisture levels (anywhere from 10% to 30% moisture). But yield however seems to be consistently "better" than anticipated.     Several sources in the trade are now sighting the 2004 record crop year as a possible comparison.  If you recall this was the year the USDA raised their final yield by just over 11 bushels per acre in the reports following their August estimate. This is also the year the low in corn wasn't posted until early-December.  Keep in mind during the record crop year of 2009 we posted our lows in early-September.  From a producers standpoint, many of the folks I've been talking to are wanting to see corn and soybean prices bottom out between now and October.  They really don't seem to care how low they push it, because for many this will allow them to collect a bit more Federal crop insurance. I'm afraid the timing of the lows will depend a lot on the approach taken by the USDA.  If they decide to once again be conservative in raising their yield estimate in the upcoming Sept 11th report, then we may continue slowly bleeding to death.  On the flip side if they took a more drastic approach and pushed the yield up closer to 175 bpa the knee-jerk reaction might be another -$0.50 cent break to the downside, then the pain is essentially over.  I hate to say it, but this might just be one of the few times  many producers will be hoping to see the USDA "over-estimate" yield.  From a "technical" perspective the trade continues to consolidate and the recent low of $3.58 vs. the DEC14 contract still remains nearby support.  CLICK HERE for my daily report.... 

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...  

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