Jul 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.

Corn Bulls Thinking Market Could be Ahead of Itself....

Jul 30, 2014

As we have continued to see corn prices trend lower, the question many are asking is have we reached a bottom yet, and that has the bulls excited.  Not for sure if that is the case but we have seen another bank, Goldman Sachs, begin to think the end is near on the corn price descent or at least stabilize.  I would have to agree that the market has a fairly high yield number priced into the market at this point, that may be inching up to the mid 170's bpa.  With the recent dry spell, although coupled with season cool temps, there is enough uncertainty out there that could have many questioning these yield numbers.  I know it seems like the deck is stacked against us, but as I mentioned yesterday, the amount of fund buying power on the sidelines, is unprecedented for the grains.  With a any bullish, or not as bearish, slant on this corn crop and you could see a knee jerk reaction that could whipsaw these prices higher.  The trade appears to be able to digest a yield number up to a 176bpa yield estimate, without too much negative repercussions but anything higher and the wheels could come off.  With that being said, we could still see some price stabilization, as most of the bears question the downside that is still left in the market.  As we have heard over the past weeks, the downside still could slip drastically lower to that $3.10 area, that many tech guys have mentioned, and even further if the crop continues to get better, as many in the trade think.  If we drift to these levels, I still feel like this is in an area we start to see demand pick up.  I think at these price levels guys should be patient and continue to focus on the production side to insure higher yields.  From a marketing perspective, the "basis" is my biggest concern at the moment. Make sure that you have your "basis" information on the radar screen, and if there an opportunity to lock in at an attractive level, pull the trigger.      CLICK HERE for my daily report.... 

Is China's Corn Crop Seeing Some Setbacks? Yes, Chinese production may be pulling back a bit. I'm hearing talk that extremely dry conditions in some minor corn production areas could ultimately cause the Chinese crop totals to be reduced by 6-7 MMTs from their current estimate. The problem is this won't be much different than last years record crop, so don't get overly excited just yet.

Soybean Prices Struggle as Crop Grows....

Jul 29, 2014
We continue to see the bean market backpedal despite many still questioning the record USDA projected yields.  The overnight markets showed some follow through from Monday's rally, but quickly sold off as the trade discounted any weather premium that its tried to build into this market. The old-crop balance sheet tightness provided additional short term bullish sentiment in the market yesterday, but was it too little too late?  Will the US have early beans that will be harvested in the southern growing states?  From what we are hearing, the beans will be harvested early but where will they end up?   The beans appear to be all about weather right now, being to wet early, not enough moisture now, planted late, susceptible to an early frost or freeze and short term cooler temps, with no moisture, on the bullish side.  On the flip side, the bears continue to remind us that, with 85 million acres projected to be planted, if this is not a record crop it will be one of the biggest ever. Most have estimated yields to be between 44 bushels per acre, on the low side, to 48 bushels per acre on the high side.  Say we end up with harvested acres around 84.5 million acres, with these mentioned yields, your looking at a production in the neighborhood of 3.718 million bushels to 4.056 million bushels.  Anyway you slice it, we are talking a big bean crop, with a large carry, that will push these prices lower, unless demand spikes dramatically.   With the new crop beans trading near $11, do we you take more risk off the board, to insure a profitable sale?  I still see the old crop beans providing some support to prices, potentially trying to fill the gap in the chart in the $11.30 range, which would see the new crop trading in the $10.50 to $11.50 range through the month of August. CLICK HERE for my daily report..   

Nearby Bean Balance Sheet, Keeps Bulls in the Game....

Jul 28, 2014

Soybean bulls keep trying to revive the glory days by stoking the potential flames associated with the old-crop balance sheet.  Anyway you want to slice it this story is still not 100% dead, but there is only 30-45 days left before the story is "officially" over.   In other words, as bearish as the new-crop balance sheet may appear longer-term, there are still some traders in the marketplace very uncertain about nearby availability of supply.  In other words, it wouldn't surprise me anytime between now and the end of August to see a $0.30 to $0.50 cent rally, maybe even a $0.50 cent to $1.00 rally if we can catch some type of bullish weather story from down South to go along with the old-crop supply shortage headlines.  All we need is talk of a delayed harvest or flooding conditions down South and the front-end of the soybean market takes back off to higher ground.  Remember, the trade is desperately counting on the early new-crop bushels to immediately solve the current supply shortage concerns.  Understand, I am by no means bullish the soy market longer-term (just too many US and South American acres in the ground), but I do believe we might get an opportunity to make some additional new-crop sales between $11.00 and $11.30 vs. NOV14 if we catch the final tail winds that the old-crop bulls are trying to stir up. Pay close attention and keep one finger on the trigger.  I'm afraid our opportunities to reduce more long-term risk may be fleeting at best between now and harvest.  To say the August weather is going to be extremely important to the soybean market would be an obvious and gross understatement...sorry to keep pointing out the obvious!Keep your eye on the USDA's latest crop condition ratings, most suspect soybeans to stay at our near the 73% "Good-to-Excellent" rating reported last week, the highest in the past 20-years.                                 CLICK HERE for my daily report...      

Geopolitical News Lifts Wheat Prices....

Jul 25, 2014

Wheat bulls are trying got stoke the flames in regard to ongoing conflicts in the Black Sea region. There were some rumors out this morning that Ukraine could lose 500,000 or more tons of grain due to war in country's eastern areas.  The US late on Thursday accused Russia of firing artillery across the border into eastern Ukraine, and of planning to send new missile launchers and heavy weapons to separatist groups.  From what I can see early this morning the market isn't overly excited about the headlines. In fact the story of "Little Red Ridding Hood" comes to mind... I think the bulls have "cried wolf" one to many times.  In the end we simply see Black Sea wheat prices moving lower and their exports making it tougher on US suppliers ability to compete.  Closer to home the bears are quick to point out the Wheat Quality Council's spring wheat tour of North Dakota, showed a final yield estimate of 48.6 bushels per acre, the highest in 22 years of the event.  We are also hearing reports that South Dakota is looking at extremely strong yields and very high quality spring wheat as well.  From my perspective, the only real hope from the bullish side of the fence is that the Spring crop is late-developing, where as a cool and wet weather could create some problems later on, especially if the market starts to eventually question complications that could arise from an early frost...unfortunately that's still a ways off.                            CLICK HERE for my daily report...

Unexpected Soybean Demand Supports Prices....

Jul 24, 2014

Soybean bulls desperately trying to stoke any old-crop flames that still exist by talking about strong Chinese demand (lack of cancelations) and the thought that US crushers will NOT have as early of access to new-crop supplies as some had once anticipated. In simple terms, the bears were thinking the Chinese would eventually make some old-crop cancellations. That would have freed up some additional surplus for domestic meal demand. The bears were also thinking US crushers had enough inventory and soybean supplies on hand to hold out until new-crop supplies arrived.  The problem is a good portion of the crop in the South is now running a bit behind, as indicated by the USDAs weekly "blooming" numbers that showed MS, TN, KY and LA all a bit behind their respective 5-year average. Wetter conditions to the South might also eventually delay the harvest of early-soybeans. There is also some fear in the marketplace that the farmers aren't going to be as eager to sell directly out of the field this year with prices having fallen to such low levels. As I have noted the past couple of weeks many ag banks across the country are starting report an increase in producers looking to extend lines of credit in order to hold and store more bushels for longer periods of time. In other words the trade is wondering if the crushers to the north are going to end up having a tougher time than originally imagined sourcing enough new-crop soybeans in time to supply end-users with meal???  I should also point out the fact the trade is closely watching the I-States (Iowa, Illinois and Indiana) as they account for about 30% of our harvested soybean acres. Not only is moisture important during the next 45-days, but so will be cooler than normal temps across the largest producing soybean states. Remember when I said a few days back the trade wasn't concerned or worried about "demand"...well now all of a sudden they are starting to scratch their head a bit?  The "death march" lower has, at least temporarily, been placed on hold, I'm assuming until more is known about demand and the true availability of new-crop beans. Producers who need to reduce more risk should look very closely at an opportunity above $11.00 per bushel.         CLICK HERE for my daily report....

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