Apr 19, 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 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. 

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