Sep 30, 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.

Can Ending Stocks be a Game Changer?

Sep 30, 2014

Soybean traders will be watching the old-crop ending stocks number as most anticipate a slight decline.  There is also some talk and debate that the USDA could increase the size of last years crop by some 50 to 100 million bushels. Even though the initial reaction might produce a bit of a knee-jerk, I highly doubt it has much of a game-changing impact.  The trade is also starting to focus a bit more attention on South American weather. Brazil is somewhat mixed as areas to the South are seeing too much rain while areas to the north are a bit too dry. Moral of the story, US weather concerns have slowly become of less importance as the crop moves out of the fields and into the farmers bins. The trade will now start placing more weight and attention on South American weather.  As a producer we will have to use any additional "weather premium" that the trade may add to help reduce some additional longer-term risk.  For those who still have very little 2014 or 2015 sold, the horse you are now cheering for becomes crop damaging South American weather.  CLICK HERE for my daily report... 

Corn traders will be keeping their eye on today's USDA stocks report. Most sources are looking for the number to come in around 1.181 billion vs. 821 million last year. I personally think it could be a bit higher than what the trade is expecting, so don't be surprised if the data has a slightly bearish tilt. 

 

Short Covering and Profit Taking Give Beans a Boost...

Sep 29, 2014

Soybeans endure one of their worst down weeks of the summer by falling almost $0.50 cents last week.  From a "technical" perspective we are quickly closing in on the early-Feb 2010 low of $9.00 per bushel.  Lets not forget, in March of 2009 we saw a low of $8.43 and in Dec of 2008 we saw a low of $7.76^2. I'm not sure those types of lows are in the cards just yet, but if the weather continues to cooperate here in the US and we see fairly good conditions in South America during the next 60-days a sub-$8.00 price rage wouldn't be all that alarming.  Remember, there are now starting to be reports circulating that China is starting to restrict import licenses on certain varieties of GMO beans.  The Chinese are saying the restrictions are being placed because they are getting blowback about GMO's from the public.  On the other side of the fence there are traders who think the Chinese are making a similar move to what they did in corn with the M1R-162 varieties.  In other words the Chinese are laying the groundwork as they  look for ways to back out or cancel some of the shipments they have booked at much higher prices???  Even there there is a good probability that the USDA shows a slightly tighter old-crop balance sheet than what the trade is anticipating on Tuesday, I'm not so sure we will see a big wave of new bullish interest. The yield reports are simply too good for new-crop production and there are just too many bearish cards stacking up in the deck to make a major bullish bet at this juncture.  Producers should continue to keep hedges in place and keep looking for ways to reduce additional 2015 production risk.                   CLICK HERE for my daily report.... 

Fund Rolls Set To Begin...The "Rogers Roll" will start today and others will soon follow.  Keep in mind there are some large players that will be rolling out of NOV14soybeans and into NOV15 soybeans.  From what I hear the "Goldman Roll" doesn't start until next week.

What About The Soybean Harvest?  I suspect the USDA will show a fairly significant jump from last week's estimate of just 3% harvested.  In other words don't be surprised if you see the soybean harvest jump into the double digits tis afternoon.  Keep in mind however we will more than likely still be some -10% behind last year's pace and closer to -30% behind our harvest pace of 2012.   CLICK HERE for my daily report....

Soybean Bears Continue to Raise the Stakes...

Sep 26, 2014

Soybeans become even a bit more worrisome as "bullish" export news (announced yesterday) produced a major down down. In other words, when a market does not interpret bullish news as bullish, it's generally a clear sign it is "sick." I've been jumping up and down trying got point this out for several weeks so it should come as no big surprise. There are numerous headwinds that I've pointed out in great detail that are causing this market to suffer: Massive record US crop, not only huger record harvested acres but also the potential for a record shattering yield: A massive rebound in both US and Global ending stocks; Thought of even more South American and US acres being planted in the upcoming season; and Renewed strength in the US dollar. To add a little salt to the wounds several US exporters are now complaining they are having trouble with Chinese importers being able to get their "lines-of-credit" or monetary duck's in a row to take delivery of their purchased US soy cargoes. Remember, Chinese buyers have been enduring huge losses on these pre-booked long US soybean cargoes. Also keep in mind, as I pointed out in the opening commentary that Chinese regulators have just uncovered an estimated $10 billion fake cross-border trades (Click HERE for more). To say the least the bulls are a bit more nervous as the bears continue to raise the stakes, seeming to know they are sitting on a winning hand.  Producer MUST continue to keep hedges in place.  CLICK HERE for my daily report..... 

Corn Bulls Continue to Put Up Valiant Effort....

Sep 25, 2014

Corn bulls put up a valiant effort in trying to swim against the tide, but I have to wonder how much longer they can stay afloat when facing such significant waves? From my perspective nothing has changed and there are still 4 Major reasons NOT to be long this market: #1. NEW record US crop that is getting bigger not smaller. Yields continue to push higher and higher.  #2. NEW highs in the US dollar causing a negative shift and tone for all commodities.  #3. Near perfect weather continues in the US, meaning the crop may get the "finishing" conditions it needs to support huge harvest records.  #4. Global yields remain strong and there is very little in the way of any major production hiccups. As I have been saying for the past few sessions, I like the thought of moving from a strong bearish stance to a more bearish/neutral stance. I have been reducing our short-hedge exposure and banking the large profits. Yes, there could still be another $0.50 cents of downside risk, but I see no need to get overly greedy.  In other words (in my opinion) you have three choices: Stay bearish and 100% hedged; become less bearish and aggressively start scaling back your hedges; become completely neutral and move to the side-line. As you may have noticed none of these choices included the words "get bullish."  CLICK HERE for my daily report...  

Will The USDA Adjust Acreage In The Upcoming USDA Report?  Several folks have asked if the USDA will adjust the acreage number in next weeks Sept 30th Quarterly Stocks Report.  NO... The USDA will be trying to give us their best guess of "grain in storage" and "grain in transit."  This will help some better understand the recent adjustments in old-crop ending stocks. Just keep in mind these numbers have been increasingly more difficult for the USDA to estimate so they can be extremely wild, but its doubtful they will prompt a major market move.  As for acreage adjustments, the trade is thinking it will be either the Oct 10th "Supply & Demand" report or the Nov report when the USDA makes their most sizable adjustment.CLICK HERE for my daily report.....   

Weekly Ethanol Production Falls To Lowest In Six-Months - Weekly ethanol output fell by almost-5% last week to 889,000 barrels per day.  I know this still sounds like a large amount, but on paper it's the weakest weekly production number we have sen since March. There is talk the recent decline in ethanol prices has put a fairly significant dent in profit margins at many plants.  Rather than making +$0.40 to +$0.60 cents per gallon, ethanol plants are now talking about profits of just +$0.10 to +$0.20 cents per gallon. I suspect exports will soon start to gain more attention and inflated domestic inventories will fall under some type of pressure. 

What's the Latest Word On DDGs? I continue to hear talk of US DDGs slipping into China on a regular basis, despite what many inside the trade said couldn't happen without a special certificate from the government. I am also hearing more and more talk from domestic feed users here in the US that they are buying DDGs in much heavier doses.  If we see more cattle, hog and poultry guys purchasing larger quantities of DDGs we have to start wondering how it will ultimately effect the soymeal prices?   CLICK HERE for my daily report...

Corn Prices Find Traction But....

Sep 24, 2014

Corn continues to dance to the same old song..."Lower-highs and Lower-lows". The yield reports continue to scream record numbers and more analyst are starting to jump on the 175 plus bushel bandwagon. The bulls keep trying to stop the runaway price wagon from traveling further down the hill by pointing out total corn acres may soon be reduced by as much as 2-3 million.  Unfortunately the overall consensus is that most any and ALL of a reduction in acreage will ultimately be offset by higher yield estimates. The demand side of the equation remains strong as US ethanol exports continue to support the argument of higher adjustments by the USDA. The bears however are quick to argue the current USDA corn export estimate may be a bit too optimistic as US exporters simply become uncompetitive during the next few months. Bottom-line, prices have essentially tumbled straight lower since the DEC14 contract posted it's Spring high of $5.14^6 back on May 9th. The market may appear to be stabilizing, but my hunch is the bears are simply taking a few deep breaths and getting ready to hold their nose before they make a final dive to find the bottom. I am still NOT yet a fan of "re-owning" previous sales.  I do however like the idea of moving from an aggressively short hedge position to a much more moderate and bearish/neutral tilt.  I have never found much luck in flipping immediately from a bear to a bull... Remember, learning and understanding "moderation" is often one of life's elusive secrets.  It's when we get ourself "overly bearish" or "overly bullish" that we most often get stung.  CLICK HERE for my daily report....   

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