Sep 17, 2014
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April 2014 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.

Can Bean Bulls Keep Pace with Corn and Wheat?

Apr 30, 2014

Soybeans have climbed back to near-term highs but in my opinion, at least longer-term, appear to be much less bullish than their cousins corn or wheat. Meaning if I had to be short just one contract or one market, it would have to be new-crop soybeans.  I know I sound like a broken record, and the fact new-crop beans have rallied over $1.50 since the end of January and just posted their highest close in 10-months, makes it even tougher to swallow, but I continue to fear a major setback is around the next corner for new-crop soybeans.  I have explained the reasons why time and time again but here are few of the biggies: 

 

  1. Record US soybean plantingpossibly even more if the corn is delayed in some areas like many are anticipating.  
  2. Improved SAM logistics and another increasingly large crop just harvested.  
  3. Questionable Chinese demand We talk about this every year at this time, but it feels somewhat different as bird flu problems persist as well as major issues in pork production. 
  4. US imports of South American soy on the rise. Many in the trade are now talking about 80 million plus of soybeans being imported along with more than 1 million tons of soymeal. Boats are on the way!                                    CLICK HERE for my daily report.....

Old-crop remains a different story.  In fact I still don't think you can rule out $16.00 soybeans.  Would I be willing to gamble waiting on higher prices if I had old-crop beans left? Absolutely Not! Would I be a buyer of flat-price beans on the board in the front-end of the trade? Absolutely Not! But that doesn't mean prices can't still go another $1.00 higher.  The way these markets now trade, $1.00 in the front-end of the soybean market is nothing. In fact it's going to be the NEW one day price limit starting tomorrow. Be careful, as I suspect someone will want to test the waters sooner rather than later.  My next round of new-crop sales targets are now at $12.54 and then $12.80 respectively. I continue to warn spec's about trying to pick a high in the JUL/NOV spread as it remains extremely dangerous.  CLICK HERE for my daily report....  

What Bullish News is Left for Corn?

Apr 28, 2014

Corn traders were eager to see today's planting progress numbers that came in at 19%. The trade seemed to be looking for number of between 20-25% planted.  You have to assume anything 20% or lower as being viewed as bullish and anything 25% or higher would have been viewed as bearish. The northern areas of the belt continue to be a concern with cool wet conditions persisting. I still have a hard time figuring out why the trade is so nervous and concerned about the current pace, especially in the northern regions, when it's still just April.  I have heard agronomist after agronomist talk about corn in the northern-belt being of little concern or in danger of yield drag as long as it's planted by May 10th or in some cases as late as May 20th. One could argue this year is somewhat unusual in the fact there is such a wide variance amongst producers in similar locations.  Point being, you have some guys in Iowa who are 100% planted while some located not that far away are not only 0% planted but still need to get in fields to put on anhydrous.  As I sit here today, I do not believe you can take the "pace of US corn planting" and put it in your hand as a bullish card...I just don't see it as of yet. Producers should keep current hedges in place and prepare to make another small sale if we can get new-crop DEC14 prices up closer to the $5.25 area.                                                        CLICK HERE for my daily report...

Will This Weekend Paint a Bullish Scenario for Corn?

Apr 25, 2014

Corn continues to trade towards the upper end of it's most recent trading range, but today's mid-day forecast will influence how we close. With demand staying strong, I suspect more longer-term new-crop (DEC14) remains in range between $4.80 and $5.20, at least until more crop certain is revealed. I suspect if the planting pace picks up in the next few weeks (which I believe it will) and more talk starts to circulate about increased acreage (which I believe is the case) then prices could break to the low-end of the range.  On the flip side, further delays in planting, more geopolitical tail-risk and higher wheat prices could propel us to through resistance and bring about a technical breakout to the upside.  I continue to keep our next upside new-crop sales target at $5.24 vs. the DEC14 contract.  I may be a bit too optimistic, but I am going too remain patient for the time being. My opinion is anything could happen in regard to "weather" or Russia this weekend and the most dangerous scenarios would be bullish.   CLICK HERE for my daily report....   

More GMO Corn in Brazil: Recent reports circulating show that Brazilian producers planted GMO corn on a whopping 82% of their total corn acres. Something else I find interesting is the fact 90% of their second-crop (safrinha) was planted using GMO corn.  Not only are we hearing report after report of a great looking second crop corn in Brazil but now we are contending with improved GMO varieties and traits. 

Twitter Fun Fact: Since 1960, the 5 coldest Dec-Mar in major US corn areas had summer weather good enough to set new national corn yield records. (Source: Alexandra Lively @AlexandraLively)  CLICK HERE for my daily report....

Is Corn Planting Progress to Remain Bullish?

Apr 24, 2014

Corn demand remains strong and the trade is wanting more assurance that the US crop is going to get in the ground in a timely fashion. There is talk throughout the trade that US producers in many locations will remain sidelined, some saying for another 5-10 days if the forecasts hold true. From my perspective we have made huge progress this week and conditions across the country as a "whole" are very good. But in the markets as in life..."the squeaky wheel gets the grease." Nobody is talking much about the guys who have already gotten their entire crop planted.  I also don't hear or see much being written about the increase in corn acres. I have talked to a lot of farmers who are seeing fields that were supposedly NOT going to be planted to corn, in fact now being planted to corn.  My contention remains... the overall pace of planting (as a ratio) is only going to improve from here and the total number of corn acres is going higher not lower.  Moral of the story, from a purely fundamental perspective one would have to argue corn prices are due for a setback in the days ahead as the market comes to the conclusion that the crop is going in the ground and that more acres are being planted than originally anticipated...if it were only that easy. Unfortunately, much larger forces (Algo's, Quant's, Hedge & Index Funds, etc...) now influences the trade, trying to predict how they will rotate, maneuver, interpret and view the entire landscape is a much more difficult task.  As a producer I am going to remain 50% sold/priced in new-crop, looking to make another sale vs. the DEC14contract up near $5.25. Remain patient and "listen" to the market...   CLICK HERE for my daily report....   

Planting Progress: Since I am a "visual" type guy, I had the office put together an info graphic of the USDA's planting pace. This is as of this past Sunday but I will be updating it each of the next several weeks so we can more easily see what is taking place. As you can see there are many states in the "red" or behind the average 5-year planting pace, but if you look at the specifics of each state I am thinking we start to more rapidly close the gap. There is already talk floating around that both Iowa and Illinois have made HUGE strides this week, and I still think we could get close to 45% planted by May 4th. 

Corn Prices Show Resilience with Planting Progress...

Apr 23, 2014

Corn continues to baffle many traditional fundamental traders. Just when you think it's acting "sick" and that prices are going to break it shows signs of resilience.  Some traders are blaming it on the unwinding of spreads by the Quant's or Algo's...who have been long soybeans against a little bit of everything, including short corn and short wheat positions. As they exit theses positions they obviously have to sell the soybeans and buyback the corn and wheat to get flat. I should note there was also some talk yesterday that a couple of cargoes of Ukraine corn that was supposed to be delivered to an importer was NOT going to be shipped due to some political concerns. The trade is also talking about the fact the Argentine basis level remains strong and that both Argentine and Ukraine corn remain more expensive than US corn. There is also some conflicting weather forecasts floating around, with a couple of well followed sources calling for cooler and wetter than normal conditions across a large portion of the corn belt. I suspect as long as "demand" stays strong, which appears to be the case, the trade wants to be more  certain about timely planting and overall new-crop production. From my perspective this means new-crop DEC14 prices might simply remain trapped in a range between $4.80 and $5.10.  CLICK HERE for my daily report... 

Planting Progress Pace to go Higher with Weather Improvement...

Apr 22, 2014

Corn planting pace and total number of acres remain the current debate.  I should point out in the record yielding year of 2009 the planting pace was reported at 22% complete compared to just 6% complete this year.  But what you need to consider is that the following week the crop was reported at just 33% planted and after the first week in May just 48% planted. My guess is we end up very close to these numbers this year after the next two weeks are reported.  Outside of weather, total acreage and the pace of planting there is not a lot of NEW news or headlines to discuss this morning.  US corn imports into China remain limited as shipments of Syngenta's MIR 162 continue to be kicked. I should however note that US exports of DDGs in to China remain extremely strong. Producers should keep hedges in place as I believe the next few weeks could bring along lower prices.  I am afraid we first have to digest the bearish news of an increased planting pace and then more total corn acres going in the ground. Once we get past those two obstacles then the trade will be able to start focusing more attention on what could be bullish "weather headlines."          CLICK HERE for my daily report...

Beans Take Breather Before Push Higher?

Apr 21, 2014

Soybeans crush estimates from USDA may be too low, exports might still be too low as well unless we start seeing more Chinese cancellations (which there are more rumors floating around this morning). Bottom-line US demand remains strong and available supplies are in question. The trade continues to ask, how high is high enough to ration demand? In an effort to do it's job the market will continue to push the upper limits to see if and when end-users and importers will cry uncle and throw in the towel. Importing more soybeans from South America is the obvious solution, but I am thinking that task won't be as easy as it appears on paper. Moral of the story, this market might need to take a little breather and catch it's breath before making another final run higher as US supplies tighten, but I still think there is more room to the upside. From a spec perspective this remains a dangerous market.  Producers should have at least 50-60% of their new-crop priced and looking to find ways to secure and limit the remaining downside exposure. Continue to keep your eye on the political problems and labor issues in Argentina, things are starting to heat up a bit.  CLICK HERE for my daily report....  

Corn Bulls to Remain Patient....

Apr 17, 2014

Corn demand remains strong as weekly ethanol production shows a jump of almost 13% when compared to last year at this time.  In fact last weeks production of 939,000 barrels per day is closing in on the all-time record of 963,000 set back in the last week of 2011, when plants were trying to get the final bit of government incentives. The problem is many sources inside the trade, including myself, believe the USDA currently has planted corn acreage too low.  As long as the controversy and calculations of the "missing acres" from last year continues, I suspect the trade will feel like more acres could be added to the equation at any time. Throw in what appears to be a nice window of opportunity for increased planting and you can see why corn is struggling to keep pace. Until we get a more significant "weather" story to go along with a few of the other potential bullish cards in our hand I see no reason to raise our bets. I remain comfortable with around 50% of our estimated production priced.  I am targeting the $5.25 area vs. DEC14 for another small round of sales.  My hunch is this horse just isn't ready to run as of yet...be patient and wait for the Jun/July weather headlines.      CLICK HERE for my daily report....

How Much Higher We Go To Ration Beans?

Apr 16, 2014

Soybean volatility remains extreme! Just tell me the last time you remember ever seeing the market pop $0.30 cents on better than expected NOPA crush data?  That's exactly what happened yesterday when the crush was reported at 153.84 million bushels vs. trade expectations of around 146 million bushels.  This was up just over 8.5% from the previous month, and basically means we used 8-9 million more bushels of soy for crushing than what the trade was anticipating.  The problem is, when you have an ending stock number that is more than likely sub-100 million and needs "rationing" this is NOT the solution.  Let's not forget the USDA, in their latest report, lowered their US crush estimate to 1.685 billion. In return, the job of the market is to immediately raise prices higher in an attempt to better slow down demand.  Eventually prices will move high enough that buyers will no longer be interested or US importers will become even more incentivized to import larger amounts from South America.  At this point, it simply becomes a guessing game as to how high is high enough??? As I mentioned several weeks back, the $16.00 old-crop price tag is not out of the question.  CLICK HERE for my daily report....

Making New-Crop Soy Sales: The NOV14 contract has once again traded back above our latest cash-sale trigger of $12.34, producers who have been waiting or missed the past few opportunities are being given another opportunity. With prices well above insurance guarantees and at profitable levels, reducing risk to some degree seems to be "best-of-practice." For those who already have closer to 60-70% priced/hedged (like I do), I would simply remain patient, as there may still be some additional upside, just depending on US weather headlines. CLICK HERE for my daily report....

What Bullish Cards are Left for Corn?

Apr 15, 2014

Corn traders continue to talk about US weather; the planting pace of US corn; how many corn acres US producers we will ultimately end up planting; and overall demand.   Below are a few thoughts on each and why I believe producers need to be locking in sales or building floors to protect downside exposure: 

 

  • US Weather - There is obviously lots of talk and uncertainties regard US weather. But as I have said many times, nobody can outguess "Mother Nature." This will be an ongoing debate for several more weeks and will include careful analysis of June precipitation, overall July pollination temperatures and ultimately harvest conditions. I currently believe one can easily argue both sides of the fence. Just keep in mind as each week passes the bullish card....  CLICK HERE for my daily report.... 
  • Current Planting Pace - Just remember as with any race...it's not necessarily how you start but rather how you finish. Should I remind everyone that last year during just a 1-week time period 40% plus of the US corn crop was planted. 
  • Total Corn Acres - I know this will not be of popular opinion, but I am still thinking the USDA's current corn planted acreage estimate might be 2-3 million acres too LOW.  The recent rally in price is certainly not discouraging new-crop corn acres. I just believe the USDA currently has "total crop acreage" estimated too low and we will need to make some adjustments higher as we move forward.    CLICK HERE for my daily report......  
  • Demand - The bullish demand cards might be close to being eliminated form the deck.  As we started the marketing year the bullish card count was fairly high considering we had no where to go but up.  Now that everything has played itself out I am starting to worry the deck has run out of "aces."  There is more talk from bears that bushels used for ethanol production could be close to 100 million too high. Rather than 5.0 billion bushels in corn usage perhaps it should be more like 4.90 billion bushels.  There is also heavy debate starting to rage again about the feed usage numbers and if US exports will in fact be able to reach the USDA's rather lofty goals. Understand, I am NOT bearish demand, I am just thinking we may have already turned over all of the bullish cards for this marketing year.                          CLICK HERE for my daily report....
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China/South America Soy Dynamics Keep Markets Guessing....

Apr 14, 2014

Soybean traders remain on extremely opposite ends of the fence. The bears continue to talk about the Chinese, at least for the current moment, becoming "sellers" of soybean rather than massive "buyers". There continues to be talk of massive "cancelations" coming in the days ahead and that Chinese soy imports could actually be lower this summer than they were last summer. The bears are also eager to start announcing the arrival of South American soy imports into the US and cheering for a NEW record number of planted US soybean acres. The bulls however remain focused on the extremely tight US old-crop supply headlines, tomorrows upcoming NOPA crush numbers (which could add even more merit to the tight supply-side story), and talk of labor strikes and political uncertainties in South America.                         CLICK HERE for my daily report....

Why I am NOT Bullish On South American Headlines: Even though there are headlines and constant talk from the bulls about logistical issues and general shipment problems out of South America, Brazil's harvest is running about 10% ahead of schedule for both soybeans and corn, and the movement of the crop to both the ports and out of the country seems to be much smoother than last year.  I am NOT saying things are perfect, but they do certainly seem improved.  The first-crop corn is thought to be about 75% harvested and full-season soybeans about 88% harvested at this juncture. From my perspective I just don't see any reason to be bullish either corn or soybeans based on South American news.  CLICK HERE for my daily report...

Bean Bulls Pause as Market Digests News....

Apr 11, 2014

Soybean market remains in a major state of confusion.  The logical fundamentalist will argue logistics in Brazil are much better than last year and they have a much bigger supply to export as domestic pipelines are more plentiful.  The Argentine basis is falling apart with very little bid.  China is canceling cargoes right and left. Imports here in the US are being aggressively pursued. Yes, US domestic supplies are tight right now, but is that going to be the story the market trades as we move forward??? From my perspective I am thinking the trade is getting closer and closer to flipping the page and forever closing this chapter of the book, but then again I have been saying this for the past $1.00. My hunch is the next chapter starts out with US producer planting a massive NEW record number of soybean acres and the world #1 buyer, China, is backpedaling on purchases.  I am not saying Chinese crush margins will stay in the RED forever, but I am saying it's going to take a bit of time for the Chinese to chew through this recent glut of supply.  Maybe after 90-days the situation changes, but as of right now I am just having a hard time figuring out why and what China is going to do with more soybean imports.  I remain extremely nervous about new-crop soybean sales.  I have 60% sold/hedged and would feel much more comfortable getting myself to 70-75% sold/hedged.  Unfortunately, the weather and planting uncertainties are causing me to pause a bit. And I generally don't like getting to 75% sold until I have a better idea about the crop itself.  With that said I just hope I am not kicking myself later down the road! For now I will remain nervously patient... CLICK HERE for my daily report....

Chinese Soy Problems Continue: Several sources as of late have been reporting that Chinese soybean importers are struggling to get "lines-of-credit." In the wake of the news fear of more Chinese "cancelations" linger. Bottom-line, crushing beans in China means a loss of between -$75 and -$100 per ton these days. Meaning it's tough importers to seek them to the crushers. In return its tougher and tougher fork the importers to make money, hence fewer loans and lines-of-credit are being offered. 

Corn Bulls Focus on US Weather...

Apr 10, 2014

Corn traders are digesting a 125 million bushel jump in the USDAs corn export estimate. This now places exports at 1.750 billion bushels.  I have been saying for the past three months we are going to 1.8 billion bushels in exports and I am sticking to my guns, even though there remains a large number of "unshipped" sales still sitting on the books.  Something that seems hard for the bears to digest is the fact even though we produced a NEW all-time record US corn crop last year (13.925 billion bushels), we still only added just over 500 million bushels to total ending stocks as demand jumps higher by some 2.3 billion bushels. Somewhat of a surprise was the fact the USDA actually raised Brazil's corn production estimate by 2.0 million metric tons from 70.0 to 72.0 million metric tons. It wasn't really a surprise that they raised their estimate higher, but by 2.0 million metric tons seemed a bit aggressive. The bears are excited because this now gives us a world corn stocks number of 158.0 million metric tons vs. last years much tighter level of 134.4 million metric tons.  You can debate the numbers all day long, from here on out its going to be ALL about US weather! If we have any additional bullish weather related headlines, the funds are going to press their bets and prices are going higher.  No weather event...the funds get bored with the trade and prices begging to tumble.  I wish I could give you a better indication of the weather but unfortunately it is still a BIG unknown.  I remain 50% sold/hedged.                                         CLICK HERE for my daily report....

Producers Starting to go for Shorter Varieties: There is a little more talk from producers who are bumping back planting dates and make a jump to shorter variety corn seeds. As of right now most of the pro-active producers are ahead of the curve and making the proper plans so good numbers are still available. If you think you might need to back up the date the planters roll make sure you are talking things over with your seed salesman and making the proper adjustments. Supplies and availability of sorter seed varieties might get a bit tight this year.

Trade Expectations for USDA Report.....

Apr 09, 2014

Going into the USDA report, there are numerous balls in the air that could cause some extreme moves in the grain markets.  This is what we are keeping our eye on.

US Soybean Ending Stocks (old-crop) currently estimated at 145 million bushels and most expecting it to fall by 5 million bushels.  Exports currently estimated at 1.530 billion bushels. With 21 weeks left in the marketing year we have already exported about 1.518 billion bushels. The trade seems to be thinking the USDA will make another 25 to 30 million bushel increase.  Imports currently estimated at 35 million bushels. Trade thinking we could see a 10-15 million bushel increase to 50 million. Ultimately this number could push to levels north of 70 million.   Crush currently estimated at 1.69 billion. Trade thinking we could see a 5-10 million bushel reduction in crush.   CLICK HERE for my daily report.....

South American Soybean Production                                                    

Brazil currently estimated at 88.5 MMTs. Most in the trade seem to be looking for the USDA to reduce their estimate by 500,000 to 1 million metric tons.Argentina currently estimated at 54.0 MMTs. Most in the trade thinking the Argentine croup will remain "unchanged" for the time being. Still only 10-15% harvested.

US Corn Ending Stocks 1.456 billion, trade seems to be in agreement that corn ending stocks will fall by 50 million bushels. I am nervous about this confidence and believe the real concern is if the USDA surprises the trade with a slightly higher ending stocks number. In other words catching everybody leaning over the wrong side of the boat.  Exports currently estimated at 1.625 billion bushels trade thinking we could bump higher by another 25 million bushels.  Ethanol usage currently estimated at 5.0 billion bushel ... trade thinking we could bump higher by 25 million bushels.  Feed/Residual currently estimated at 5.3 billion bushels. Even though the Quarterly Stocks report painted a somewhat bullish picture and has some thinking the USDA could actually raise this estimate, don't think for a moment the USDA couldn't readjust this number lower.  this is still a huge wild-crad in my opinion and certainly one that could go either way.  CLICK HERE for my daily report....

South American Corn Production  Brazil currently estimated at 70.0 MMTs.  Trade not looking for much of a change. Still a lot of unknowns in association with the second-crop.  Argentina currently estimated at 24.0 MMTs.  Not much of an adjustment or change thought to be coming down the pipe. 

US Wheat Ending Stocks currently estimated at 558 million bushels. The trade seems to be thinking as the USDA raises their HRW stocks it will ultimately push total wheat ending stocks higher. Would be surprised to see a 20-30 million bushels jump.           CLICK HERE for my daily report....

Will USDA Bean Stocks be a Record Low?

Apr 07, 2014

Soybeans traders continue to ask, "how high is high enough?" There is no question the trade and the USDA are trying to ration nearby demand, the question is how high will prices have to reach before global and domestic buyers throw in the towel? Keep in mind, export shipments are now at about 97% of USDA's current export forecast and we still have well over half of the marketing year left. With this in mind, you have to believe the USDA will once again tighten ending stocks.  By how much, who knows, especially when you consider the fact we still have close to 4 million metric tons sitting on the books marked as "sold" but still haven't shipped as of yet?  To say most inside the trade seem extremely uncertain would be an understatement. Several seasoned veterans I know are thinking the USDA will remain conservative and won't lower soy ending stocks by any more than 5-10 million bushels. They seem fairly confident in the fact a move from the current 145 million estimate down to the 135 million level would be about the lowest the USDA will be willing to drop old-crop ending stocks. However, there are others in the trade who believe the USDA has simply been biding time to see how many cargoes of US beans China would actually cancel. Since China has opted to cancel more Brazilian cargoes than US cargoes as of late, there is talk the USDA will have no choice but to bite the bullet, shock the trade to some extent and show an ending stocks number closer to 110-120 million. If this were to be the case you would have to believe old-crop prices would jump immediately higher, basically blowing through $15.00 like "Grant took Richmond..." In fact a soy stock number below 120 million would be a huge shock to the trade, and one that could eventually push old-crop prices up closer to $16.00 per bushel.  Obviously this would also pull new-crop prices higher as well.  Moral of the story, it will be very interesting to see how the USDA decides to play this out.  Wednesday could be a wild one! CLICK HERE for my daily report......

What About Chinese Demand? Even though I have heard talk as of late that the Chinese "crush margins" have drastically improved, I am still deeply concerned about the livestock margins and the affect it is having on overall feed demand. Ken Morrison this week brought up a terrific point on Todd Gleason's Will580am "Commodity Week" radio broadcast, "This is the first time in modern history that pork prices in China have actually been cheaper than pork prices here in the US." Take a minute and think about what that means for hog "margins" in China with corn prices over $9.00 per bushel and soybean prices over $18.00 per bushel...Ouch!

Brazilian Soybeans Coming To A Crusher Near You! That's right, one of the first cargoes of Brazilian soybeans landed this weekend near the mouth of the Mighty Mississippi. Talk is the the vessel was loaded out of Brazil's Port of Santo's back about a month ago. The market is obviously banking on the fact imports of South American soybeans and soymeal are going to help meet the demand requirements here in the US. As you can see from the map below, New Orleans isn't real far from South America... Here come the SAM soybeans!       CLICK HERE for my daily report....

Is There More Bullish News for Beans?

Apr 04, 2014

Soybean bulls were excited to see the Senate Committee pass the $1 Blender's Tax Credit. Keep in mind though this only a small victory or should I say small battle won, most still believe the overall war will ultimately be lost once it reaches the House.  There still seems ton some heavy debate in regard to Brazil's soybean crop. I am hearing estimate that range anywhere from 85-89 MMT's and we are closing in on 75% of the crop being harvested.  In fact we will soon be close to 100% harvested in Mato Grosso  (the largest soybean producing state in Brazil) before long. Keep in mind the current USDA forecast still stands at 88.5 MMTs. The Argentine crop is still thought to be somewhere between 53.5 and 54.5 MMTs'. Here in the US, similar to corn, new-crop prices are ultimately going to hinge on the weather and total yield.  The bears and the USDA want to use projected crop data that shows "harvested" bean acres at well over 80 million and a national yield at 45.2 bushels per acre. I personally don't see how you can add 5 million more soybean acres, which is a major jump in the all-time record, and at the same time project a record average yield.  Obviously no one knows for certain, but I think 80 million harvested acres is a bit of a stretch. I just don't see harvested bean acres being much higher than that. And I am certainly NOT sold on a 45 bushel per acre national average yield.  Remember, our highest yield ever came back in 2009 at 44.0 bushels per acre on 76.4 million harvested. Bottom-line, if the average yield is much below last years 43.3 bpa then new-crop prices could slowly keeping working higher. If yields are closer to 45 bushels per acre on average, then the bears are right and new-crop prices are aggressively over priced. Place your bets accordingly!        CLICK HERE for my daily report.....     

How Much Soybeans Will The US Have To Import?  The question I would like to know is how many bushels of South American beans will eventually end up in the US? Will we import 50, 60 or 70 million metric tons of soybeans? FWIW the first half crop-year total is right around 20.2 million bushels, more than double what we had imported last year at this time. My point is, even though the USDA will more than likely be raising US soybean "exports" in the upcoming report (my guess by 25-35 million bushels), they will at the same time be offsetting this additional demand by increasing "imports." 

Is China Back in the Game for Beans?

Apr 03, 2014

Soybeans dynamics are once again starting to shift and CHANGE.  Now all of a sudden we have cash basis bids at the gulf falling under more severe pressure, meal premiums here in the US are backing off, and so is the meal basis in Argentina. Some sources are indicating meal from Argentina now pencils into the US. There is also talk inside the trade that the inverse in European meal is collapsing as well. There is no question US soybean exports are winding down... Shippers simply aren't bidding up for the US soybeans.  Most of the bids are coming from the processors along the river.  On the flip side I am hearing the crush margins in China appear to have bottomed out and are starting get stronger.  Talk from inside the trade is that Chinese meal prices are once again aggressively moving higher.  Meaning Chinese "cancelations" and re-selling of soybean cargoes from Brazil might NOT remain the theme.  In other words, China might be back in the game, despite large quantitates sitting at the ports??? There continues to be many moving parts and and a multitude of dynamics that are impacting the soybean market. I suspect extreme volatility as the market tries to understand and adjust to the changes.  Yesterday's technical action could certainly make one believe the top is in place, but just remember, we digested a similar pattern back in early-March only to see the market rally almost another $1.00. Moral of the story, from a producers perspective I would NOT be holding old crop beans at this juncture. The "risk-to-reward" seems overly skewed to the downside. Maybe you have another $1.00 of upside potential, but I am thinking you could have $1.50 to $2.00 plus of downside risk.  New-crop soybeans are a different story, since you have many more potential bullish cards still in the deck. Just remember, you also have many bearish cards in the deck as well. We are going to remain patient and look to reduce more new-crop risk on another $0.40 cent rally.  CLICK HERE for my daily report....

Soybean Bulls Eye $15, Is This the Last Push Higher?

Apr 02, 2014

Soybeans bulls continue to rally behind the leadership of the meal market. Most are estimating the Brazil's soybean crop at about 70% harvested, with the Mato Grosso soy harvest closer to 90% complete.  Second crop soybean planting in Brazil is still being heavily debated, and depending on how big this second-crop actually is will ultimately determine Brazil's total soybean production.  I was somewhat surprised to see Informa come in and lower their Brazilian production estimate by 2 MMTs down to 86.75 million.  In any regard, I am hearing the Brazilian crop is somewhere between 86-89 million metric tons. As for Chinese demand, I continue to hear talk of poor crush margins, plentiful supplies and the need for more "cancelations." In fact, yesterday, several sources inside the trade were reporting that the Chinese have canceled another 60,000 metric tons of Brazilian beans. The problem is the "Bears" don't have the spotlight and nobody seems overly focused on the cancelation of Brazilian beans. As usual the trade is more keenly focused on the US market.  Where insanely tight old-crop supplies, and the possibility of weather complications are much more sexy stories. The bean bulls appear to still be in charge and $15.00 old-crop prices look to be their next target! CLICK HERE for my daily report....

First New-Crop Soybean Sale In Over 6-Months: FWIW, yesterday we made our first new-crop soybean sale since last last summer vs. the NOV14 contract. It feels like our patience certainly paid off, and I thought it was time to reward the recent rally with a cash sale. We now have 55% of our estimated production either sold or hedged. 

Market Follow Through Takes Beans to New Highs....

Apr 01, 2014

Soybeans, in my opinion, remain a two-headed monster! The USDA just released planted acreage at 81.5 million, obviously a NEW record. the data essentially shows every single production state was either increasing or leaving soybean acres unchanged except for MO and OK where there was slight decline.  I hate to sound pessimistic, but simple math shows you this type of planted acreage should equate to about 80.6 to 80.7 million harvested acres. If you use a national yield average of between 44 and 45 bushels per acre, we could quickly see ending stocks push north of 300 million bushels. Meaning current price levels for new-crop soybeans would be too high and a drastic reduction of price could certainly be in the cards.  I might be the odd man out on this, but I actually believe one saving grace might be the fact US soybean acres move lower NOT higher.  I just think with the rally in corn prices, many of the guys that were going to make the switch to more beans are going to go ahead and roll the corn again. I also believe the delay in the wheat crop might make it tougher to get as many second-crop soybean acres in the ground. We continue to sit at 50% sold/hedged and are waiting for new-crop prices to rally back up above $12.00 before making any additional sales. Producers have to recognizing the potential for the bullish troops to quickly retreat to there rears.  On the flip side, the old-crop remains impressive with the MAY14 contract posting new highs, and our most recent projection of $15.00 plus old-crop soybeans more of a reality. Keep in mind, US soybean stockpiles were reported at 992 million bushels, which was 1% below last year's level at this juncture. There might be some debate or questions raised against the fact "disappearance" for the quarter totaled 1.16 billion bushels, up 20%  from a year earlier.                                     CLICK HERE for my daily report.....

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