Sep 20, 2014
Home| Tools| Events| Blogs| Discussions| Sign UpLogin


March 2013 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.

What is Happening with Argentine Farmers...and How it Could Ultimately Affect U.S. Crop Prices

Mar 28, 2013

Argentine farmers are holding back supplies of soybeans and the trade seems to becoming a little more concerned as farmers have only sold a fraction of the bushels they had booked by last year at this time. The problem is while prices have dropped over 20% from the recent highs, inflation in Argentina is clipping along at pace in excess of 30%. Point is producers are reluctant to sell at the recent discounts because the money they bank will hardly cover "break-evens" after factoring in the soaring inflation and the 35% export tariff. Also keep in mind tighter currency controls over the past 18 months have led to a widening gap in the official exchange rate. From what I am now hearing, farm leaders in Argentina have had enough and are going to meet in mid-April to discuss the possibility of launching a joint protest to halt ALL sales. Don't think for a minute they are not serious. Back in 2008 they staged a four-month protest when the government tried to implement increases in the export tariff. I suspect this battle could get extremely heated considering political leaders in Argentine are already putting pressure on the farmers to make more sales as they desperately need the revenue to keep the government afloat. In fact there are rumors flying around the Argentine farming community that the government recently sent tax inspectors from county to county to inspect inventories and to intimidate farmers into selling. Point is despite more export potential from South America there are still many wrinkles in the sheets. Delays in Argentina shipments could further increase US soybean and meal exports, at least for the time being.

 

Playing the game ahead of the USDA Quarterly Stocks Report

Mar 27, 2013

 The USDA "Quarterly Stocks Report" will obviously garner most ALL attention this week amongst grain and soy traders. The problem is I don't know one trader that isn't looking for a "bullish" number. In fact many of the "bears" have moved to the sideline in anticipation of the bullish event and seem ready to pounce on any type of major rally. Remember, last year we traded down prior to the report and received a pleasant bullish surprise. This year we have traded up into the report (the past couple of weeks) and may be setting ourselves up for a little disappointment. There is no question we are going to see some extremely tight bullish numbers by the USDA, I am just wondering if the trade doesn't already have that factored in. One thing I can assure you is that there will be extreme volatility off the release of this data. I suspect the waters to be insanely fast, furious and testing of the outer limits. Therefor if you have some price targets in mind (for either old-crop or new-crop) I would suggest entering them ahead of time rather than trying to catch a speeding bullet. For me it is not going to be so much how the board reacts this week, but how the "cash markets" respond a little further down the road when supplies really start to dry up??? If your a spec player be careful following the herd right now. Everybody and their brother seems to want get short off the rally, I am just not sold as of yet on this being the right move. Producers should continue to "HOLD" any small remaining supplies. 

 

Should I Be Buying On-Farm Diesel???

Mar 26, 2013

The crude oil market has rebounded higher the past couple of days as the problematic situation in Cyprus looks to be resolved. What many people don't realize is that Cyprus was the home of many large oil traders. "Mercuria Energy" and the "Gunvor Group," are actually two of the world’s top five energy traders, and they were  incorporated in Cyprus. Their exposure to the banking sector of Cyprus  had many energy traders on edge. With the so called resolution there seems to be a sigh of relief and the market has pushed higher.  Producers who need to buy more "On-Farm Diesel" should look for a pull back in the next couple of weeks as your window of opportunity. As most of you know we made some very timely fuel purchases back around Thanksgiving and the market has not returned to those levels since. If your tight on supplies keep your eyes open and look to price a little more between now and mid-April.

 

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

 

Will the USDA further reduce Corn exports?

Mar 26, 2013
Corn exports continue to disappoint, and I am starting to think the USDA will soon be making some additional cuts to their current estimate (don't be surprised if they are not substantial). Look at this way, we have only sold 586 million bushels up to this point vs. 1.28 billion last year. Keep in mind there is also close to 200 million bushel "unshipped" at this point. In addition I am also hearing that many South American producers are trying to sell corn as quickly as possible to avoid the major inverse or discount in price from the JUL13 to DEC13 contract. This could obviously push more South American corn to the ports.  The question however is how long will it take for supplies to get out of the country. 
 

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 Bull Spreading "MAY13 vs JUL13" Corn?

Mar 25, 2013

 Q. Kevin, with what seems to be very limited US corn supplies what are your thoughts on jumping into the MAY13 vs JUL13 bull spread?

 
A. I think you need to remain patient. I know a lot of guys who have been trying to jump in it at around $0.15 cents, but I think you might be able to hold out for something more like $0.11 or $0.12 cents. Especially with the recent bump in farmer selling, some recent weakness in the basis and the upcoming fund-roll. Like I said several days back, I like the thought of bull spreading the beans more than the corn. I am just afraid the USDA is going to be able to find a solution much easier for corn than they will for beans. i.e. more SWR feeding, fewer exports, more imports, etc...  Where as the Chinese soybean story doesn't seem to be dead just yet. Now there is talk circulating that the Chinese government is going to auction off another 1.0 MMT's plus of domestic beans to help supply local crushers. Point is China is canceling shipments because the demand for protein is now  not 3-months form now. This mentality could shift demand near-term back to the US. Something the bean and meal balance sheets can't take much more of.  
 

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

Old crop corn left? Take profits now!

Mar 25, 2013

 I had a few producers call in and ask my thoughts about selling $8.00 corn. The basis has actually moved high enough in some areas producers say they are being offered close to $8.30 per bushel. As I told each of them on the phone this morning, anytime you can book sales above $8.00 I think you should be taking advantage of the situation. I actually have one client, who with these sales, will have ended up averaging over $8.00 per bushel this year on his crop...unbelievable! 

There where also some questions about "re-owning" after making these sales. I just don't see any reason at this juncture, especially with such good cash sales being booked. . No need to jump back in at this level and risk the premium.  

I also want to make sure those of you holding old-crop bushels understand the window of opportunity is narrowing for banking these types of profits. Remember the markets are always the strongest when the most fear is in the air. Right now end-users are worried that they might not have enough supply. What happens when some type of solution to this problem becomes more of a reality.

Be smart, don't be greedy!

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


Preview of the Quarterly Stocks and Prospective Plantings Reports

Mar 22, 2013

 Crop production and supply estimates are starting to be released by several sources ahead of next weeks highly anticipated USDA "Quarterly Stocks Report." Below are the highlights along with my guesses regarding the upcoming USDA report:

US March Prospective Plant

 
My Guess
February
2012 Final
Corn
97.5
96.5
97.155
Soybeans
78.2
77.5
77.198
All Wheat
56.2
56.0
55.736

 

US March 1 Inventories


 
My Guess
March 1, 2012
Dec. 1, 2012
Corn
5.050
6.023
8.030
Soybeans
1.0
1.374
1.966
Wheat
1.17
1.199
1.660
 


Farm Futures Magazine is projecting record US soybean acreage and the most corn acres planted since 1936. 
  • U.S. soybean acreage is seen at 79.09 million acres, up 2.5% on the year with as much as a 10% increase in parts of the Western Cornbelt.
  • Corn acreage is estimated at 97.43 million acres, slightly more than 2012 with year to year increases in the Eastern Cornbelt and Southern US.
  • All winter wheat acreage is estimated at 42.15 million acres, up 2% from last year. Soft red at 9.51 million acres, a 17.2% rise; Hard red at 29.1 million, a 2.5% decline; White winter at 3.54 million acres, 5.8% more than in 2012. 
  • All spring wheat is estimated at 11.91 million, down 3.1%; Durum at 2.06 million acres, 2.8% below last year. 
  • All wheat acreage is projected at 56.12 million acres, a 0.7% year to year increase.
  • The numbers above are dependent on spring weather and 18% of the farmers surveyed said they could shift 50% or more of their acres.
International Grains Council (ICG) updating global forecasts. 
  • World corn production to climb by 9% in the 2013-14 crop year, with the US harvest projected to rise as much as 30% . 
  • Global corn stocks may increase by 19% from a 16-year low, as output rises faster than consumption.
  • Argentina’s corn estimate cut by 1 million tons to 26 million, USDA currently at 26.5 million. On the flip side they raised production estimates for Turkey, Thailand and India. 
  • US exports were cut by 1.5 million tons (now 22 million), while they raised Brazil’s export shipments by 1.0 million tons (now 27 million). 
  • World wheat production will rise by 4% to 682 million. This is similar to there previous forecast. Basically production is forecast to be 29 million tons more than last year. But still less than the record crop in 11/12 of 697 million tons. 
  • Global wheat use should increase and leave "little room" to rebuild stocks, with inventories forecast to climb by just 3-5 million metric tons in 2013-14.
  • World wheat carryover stocks are seen at 177 million tons at the end of 2012-13, compared with a February outlook for inventories of 176 million tons.
  • World Soybean production in 2012-13 will be just 266 million tons, 3 million tons less than forecast in February.
  • Global rice harvest may move higher to 468 million tons, compared with last month’s prediction of 466 million tons. 

 

 

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


 

 

Ethanol showing signs of life!

Mar 21, 2013

 Ethanol production for the week worked its way higher by about 3.5 million gallons, moving from 797,000 to 809,000 barrels produced per day. We are still down about 9% compared to last year at this time. The good news is that ethanol "stocks" fell by more than 220,000 barrels this week and are now down more than 18% compared to the supplies we were sitting on last year at this time. In actual "days-of-use" ethanol stocks fell back from about 22 days down to 21 days. Moral of the story, supplies are definitely getting tighter and I suspect this trend will continue for several weeks. I also heard that many ethanol plants have reduced their nearby bids while at the same time improving their Jun-July bids. To many players in the trade this simply means they are felling more comfortable with the summer margins. Ethanol demand is stabilizing and may in-fact surprise us some to the upside. Some plants in the midwest are now reporting the highest profitability margins since late 2011.

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


Are You Selling Old Crop Corn???

Mar 11, 2013

    

Corn bulls were pleasantly surprised to see the USDA bump their feed usage estimates higher by 100 million bushels. The 2.2% jump in feed demand this month follows the USDA's 300 million bushel increase back in January. The bottom-line is theres simply a limited supply of hay and grass available in the marketplace. In fact it wouldn't surprise to eventually see the USDA push their estimate even higher in the months ahead. The current 4.55 billion bushels could still be some 100-200 million bushels light. To offset the 100 million bushel gain in feed demand, as expected, the USDA cut exports by 75 million bushels and raised imports by 25 million. Both of which I would have to agree with. Unfortunately I am thinking they could still cut exports even a little more (possible down to 800 million) and eventually push imports a little higher. Obviously the USDA dance-steps remain the same at "2-steps forward...2-steps back." Old crop supplies will continue to remain extremely tight, while new-crop supplies (without a major US weather glitch) could become extremely burdensome. Producers with old-crop bushels, in my opinion, should continue to hold. Producers with more new-crop bushels to price (not yet sold a bushel or still less than 40% priced) have to understand that with between 96.5 and 98.5 million corn acres going in the ground, a national average yield north of 150 bushels per acre, and all of a sudden we are swimming in a 2.0 to 3.0 billion bushel carry. This type of burdensome "supply," along with our current setbacks in "demand" would be detrimental to price... sub-$4.50 corn could be a definite reality. No one obviously  knows how the weather is ultimately going to play out, we already have planting delays in the South and several areas that are still extremely dry in the western corn belt. Therefor accurately predicting price direction is still a long-shot at best.  The moral of the story however is that you have to prepare for the perfect "price storm." I can't tell you if the storm is going to hit us directly between the eye's this year or maybe next..its still a ways out, but it is looking more and more like it could do some very extreme damage to price. Make sure you are prepared and have your operation in a position where you can comfortably ride out a 12-18 month severe "price storm."       
 
 
I hate to sound like a broken record, but even after the recent USDA data the lyrics remain the same..."Tight old-crop balance sheets for both corn and soybeans make time-spreads a much more attractive play than flat-price." Improving rainfall and snow coverage is easing concerns regarding the US drought and therefore keeping a lid on US new-crop prices. As each week passes the ability for old-crop tightness to help keep new-crop prices supported may get tougher and tougher. Producers should make every effort to max out "Revenue Protection" this year, and lock in remaining 15-30% of your uncovered bushels that may remain at risk or not protected by insurance. If the "weather" here in the US doesn't prove to be a major concern this season...prices ARE going lower! Demand simply isn't robust enough at this juncture to overcome the glut of new global supply coming online.
 

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

 

Details On Proposed Bill To Reduce Crop Insurance Subsidies

Mar 07, 2013

  

Senator Jeff Flake, Arizona Republican, said yesterday, "The crop insurance program has turned into a huge taxpayer-funded boon for some of the biggest, multi-national insurance companies and multi-millionaire farmers. In a time of record deficits and an incomprehensible $16.5 trillion in debt, this program can no longer be justified in its current form." In response Senator Flake is introducing legislation that will save taxpayers $40.1 Billion by "REDUCING" Federal Crop Insurance Premium Subsidies! It was introduced in Washington yesterday as the "Crop Insurance Subsidy Reduction Act" (S. 446) in order to significantly reduce the amount of taxpayer dollars used to subsidize crop insurance. S. 446 returns federal crop insurance premium subsidies to their pre- Agriculture Risk Protection Act (ARPA) levels. Basically the new proposal being presented in Congress want to increase the farmer’s share of the premium from 38% to 62% of the premium. I should also note Republican Representative John Duncan of Tennessee, has introduced a similar consumer tax savings bill. To say they are gunning for this program is an "understatement." My argument is, sure the government paid out billions to pay for crop insurance claims, but with 80% of the nations farmers participating and paying big premiums, how much would we have had to pay out as a nation "IF" there was no insurance? You can't tell me billions in "disaster aid" would not have been paid out following one of hottest, driest summers ever on record! It was a national disaster or huge proportions. Hurricane Katrina cost the county billions and billions, and there was no "hurricane insurance" being paid into the government by the people of New Orleans who running around in the streets looting businesses following the disaster... Still the government paid out billions! My guess is as the politicians in Washington attempt to "fix" another problem, they will only create one that is much more dangerous, i.e. "gun control," "distribution of wealth," "social security," medicare," "medicaid," etc... Before long we they will be trying to discourage US farming, like we did with US energy production years back. Then we will be held captive to foreign crop production, like we have been held captive to foreign oil. Hope this isn't how it goes down, but as you know they generally take aim at those standing atop the financial hill. As those in the Ag industry make more money I suspect the powers that be in Washington will continue to look for ways to pull back their reins.
 

 

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

Log In or Sign Up to comment

COMMENTS

Receive the latest news, information and commentary customized for you. Sign up to receive Dairy Today's eUpdate today!

 
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions