Aug 21, 2014
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January 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.

Corn Prices Supported in two Key Areas….

Jan 31, 2014

Corn exports surge to an impressive 1.8370 million metric tons for the week, more than doubling most trade estimates.  Right now, US prices are simply hard to compete with. Even Ukraine is at a premium to US Gulf corn prices, some suggesting by as much as $10. Unfortunately, if prices manage to creep up too much higher, export volumes may not follow. Keep in mind we are also seeing a nice surge in ethanol exports.  Reports were circulating yesterday that China purchased some 84,000 barrels of US ethanol during the month of November. One of their biggest purchases since 2010. Obviously the US discount is the driving force behind renewed corn demand.  Below however is a pic showing the explosive growth in overall corn demand.  Yes production is higher, but demand is doing a great job trying to keep up. In fact global corn consumption is expected to rise by an unusually strong 7% y/y, on demand from feed and industrial.  However, as you can see from the graphic below, as long as the little blue-line (production), stays considerably above the little purple-line (consumption), rallies will remain limited. While US corn remains the cheapest in the world, I believe demand will stay strong (both exports and ethanol moving higher), but I am afraid supplies are just too burdensome at the moment to get any big money players real excited about being bullish. Moral of the story, we may see a few fleeting glimpses of grandeur here and there, but I am afraid we still haven't seen the bottom of the barrel in regard to price!                         Click Here for my daily email.

The "Unknowns" Effecting Corn Prices…..

Jan 28, 2014

Corn market continues to suffer from a lack of "real" news and speculation over the "unknowns." Bulls are getting a little boost from the weather which is limiting grain movement to US ports, helping to support cash prices. There is also talk of drier conditions in Brazil posing a threat, but since they’re just starting their second-crop planting, it’s hard to imagine that will hold much weight. Thoughts are Argentine corn has suffered some damage from excessive heat earlier in the month, but as of yet, no one is "officially" lowering their production estimates. Corn bears definitely seem to have the upper-hand with several of the most important "unanswered" questions still looming. It will probably be March before China makes a decision on GMO corn imports and or until the trade has a better understanding in regard to the USDA's feed/residual estimate.  Keep in mind the EPA has yet to hand down a decision on the RFS mandate, which many doubt will be bullish. While many are arguing that even if they don’t raise the blend requirement, ethanol production will barely be affected, my guess is until there is a final number to work from, fears over decreased demand on that front will persist.  Bottom-line, there are still too many "unknowns" in the marketplace that could play out even more "negative" to warrant a significant rally. Producers should continue to expect the market to trade in a sideways channel between $4.05 and $4.55 for the next few weeks. Click Here for my daily report... 

Will Patience Pay Off for Old-Crop Corn?

Jan 24, 2014

Corn "demand" continues to remain strong... Good export sales this morning and strong ethanol numbers yesterday. As many suspected, once the weather calmed down ethanol production rebounded. Weekly production jumped sharply from 868,000 to 905,000. Keep in mind last year at this time production was just 792,000.  I am afraid we may see similar "yo-yo" type data in the weeks ahead as ethanol plants and refiners battle the wintery elements. I am still hearing reports of strong margins and very strong export interest, so net-net I am looking for continued strong corn demand from the ethanol industry and the USDA to possibly move their demand estimate higher. Keep in mind the reason ethanol stocks have built the past few weeks is because US milage and drive time has been drastically reduced due to extreme weather and harsh road conditions.  Even though "demand" is picking up I am afraid without a "supply" side story we will be left trapped in our current range.  I suspect this theme could continue through the USDA's Feb "Ag Outlook" and into the March USDA report. Producers should be patient and look to move bushels at the higher end of the range ($4.50 area in old-crop) rather than the lower end of the range ($4.10 area). Spec will need to continue looking for strategies that play a similar game.  Click Here for my daily report....

USDA weekly export sales reported this morning were above expectations for both corn and soybeans, wheat exports were inline with most guesses. 

 

Two Bullish Points for Corn Today...

Jan 23, 2014

Increasing Feed Usage? Rising meat prices could give corn bulls a little reason for optimism, at least in the short term. With cattle and hogs at such high price levels, producers of course want to pack on as many pounds as possible, and corn is the obvious feed of choice at the moment. A little more positive demand news is that Japan booked an additional 105,664 metric tons of US corn for the 2014/15 crop year. It’s interesting to note that Japanese corn usage in animal feed has been on a steady rise - about 2% right now over last year. Granted, that’s not going to fill the giant gaping demand hole China has recently left, but it’s not bad news either. Unfortunately, for producers, depressed prices are what really increase demand. On the flip-side, increased demand is one of the main things we need to keep us from eventually spiraling into the sub-$3 range.  Click here for my daily report...

If You've Been Waiting For That 5% Bounce... MAR14 corn futures are still 5% higher than the low of $4.06 ¼ made back on Jan 10th prior to the USDA's report. Most traders seem to be thinking the US farmer is still holding close to 50% of the US corn crop on the farm. The question is, once the weather breaks will we start to see a few more bushels being sold?  I strongly suggest keeping your hedges in place and writing your cash price targets down on paper.  I think we need to be realistic in regard to what percentage of a rebound we are expecting to see.  Remember, a lot of US farmers are sitting on large quantities of corn and are ALL wanting to be sellers at higher prices. On a short-term perspective the first wave of technical resistance is thought to be around $4.35-$4.36 in the MAR14 contract with the next wave between $4.50 and $4.60.  Click here for all my grain comments...      

Beans Overcome Bearish Headlines...

Jan 22, 2014

Soybeans have fallen under a wave of bearish headlines as the front month gives back over $0.35 cents to start the week. Technical traders will be keeping their eye on the 200-Day Moving Average which is now close to $12.76. If we see the front end of the trade close below this level, the $12.50 area will start to come into focus and if that level is breached the lights at the party might be off for some time... or at least until negative headlines start being released regarding Brazilian logistical problems or another round of South American weather hiccups.  Below are a few of the more talked about bearish headlines that have hit the soybean market...Click here for my daily report

 

  • Argentine Weather: Argentine rains could be a "yield saver" as 3-4 weeks of extremely dry and hot weather have had some analyst starting to backpedal on their production estimates. Thoughts are this could be extremely timely rainfall.
  • Bird Flu: The World health Organization is announcing another 23 people in China have been infected with the H7N9 strain of bird flu in recent days, adding to at least 24 new cases last week and confirming a fresh surge in the virus. With many people in China traveling the next few weeks for the upcoming Chinese New Year celebration there is fear that the bird flu viruses might spread more rapidly.  Certainly worth monitoring.
  • Chinese Policy Change: Chinese leaders made it official over the weekend that they will no longer be supporting their current soybean stockpiling program. In turn they will shift towards a more direct payment type program for the farmers. The shift had been widely anticipated after several years of stockpiling failed to encourage an increase in cotton and soybean planting by farmers while also pushing domestic prices well above international markets, prompting more imports. The fear is this move will now allow Chinese domestic soybean prices to actually push low enough to compete with international prices, thus giving crushers less of a reason to import soybeans from the US. However, I am also hearing.....Click here for my daily report....
  • Chines Crush Margins Narrowing: Talks inside China are that crush margins are backpedaling as the country approaches their Lunar New Year holiday.  We have seen demand taper back in the past few years heading into this event and it could obviously play out again this time around. 
  • Possible Cancelations??? There are rumors circulating that 2-4 cargoes of US beans have been switched to Brazilian origin for Feb shipment. Is this the first domino to tumble???Click here for my daily report...Thank You

Flat Price Corn: Where do We Find Traction?

Jan 21, 2014

Flat-Price Corn… It's All About "Demand" - The "supply" side of the story continues to keep the same bearish tone, "our ending stocks are more than double that of last year," and possibly moving even higher in the days and weeks ahead. Meaning, in my opinion, we are NOT going to get any type of of major supply side rally between now and planting season. Yes, you could argue a reduction in Argentine corn, but we won't know the final verdict on the Brazilian second-crop corn until Spring so South America remains somewhat in limbo. Net-net, the only real bullish horsepower will have to come from the "demand" side of the equation. The problem is, I am not so certain corn used for ethanol can push a whole lot higher, and with cattle and hog herd numbers less than impressive a major jump in fee usage seems out of the questions.  That leaves us with "exports."  Could we eventually push exports north of 1.7 billion? Sure, but I am thinking it would be on lower prices not higher prices.  Could China step in and start to make purchases in an attempt to rebuild their domestic supply pipeline? Sure, but I suspect that happens on lower prices not higher prices.  Bottom-line, in a bull market you either have a "supply" story or a "demand" story that fuels the fire.  In the best of all worlds, like the past few... you had BOTH. You had a  major "supply" story in the fact the worlds top corn producer  (US) had horrific growing conditions.  You also had a major "demand" story, in the fact, corn was becoming an energy source and ethanol was chewing through an extra 500 to 1 billion bushels of supply each year.   Now all of a sudden the "supply" story is gone as the US bounces back by producing a NEW record corn crop and global ending stocks move to higher levels.  Demand has to now become our driving force.  In my opinion, with about half the horsepower, a lot less torque and not near the excitement of a "supply" side story, "demand" will have a very tough time getting much traction or find the power to push us back up the hill.                                       Click here for my daily report...

Can Exports Push the Corn Market Higher?

Jan 17, 2014

Corn traders continue to talk about an old-crop market that appears to be "range bound." Range Bound: a term used by traders to identify a market that appears to be trading between two identifiable channels. For corn, specifically the MAR14contract, major support at the low end of the price range seems to be somewhere between $4.00 and $4.20.  On the flip side major resistance seems to be up in the $4.40 to $4.60 area.  Yes, there are several dynamics and structural items in the corn trade that need to be monitored in the next 30-days, but at this juncture none appear poised to rock the market in one direction or the other. Hence, why many in the trade are starting to talk more about consolidation, narrower trading ranges and less volume in the days ahead.  The way it looks now, we might not see or hear any major structural import changes from China in regard to US corn "cancelations" for several more weeks, or at least until the Chinese government has finished buying all of their domestic supplies and have a better handle on their current needs. Lets also keep in mind it probably won't be until March, at the earliest, that some type of change or adjustment will be made to the nearby US "supply and demand" balance sheet. Sure, we have the USDA "2014 Ag Outlook" towards the end of Feb, but the new-crop data seem well anticipated and telegraphed, so I don't see a lot of real "surprises" until possible the March USDA report. The bears will continue to argue bogus "feed/residual" numbers and the bulls will argue increasing overall demand.  Net-net, a "tug-of-war", in regard to price looks to be the theme.  With no major weather headline to provide the suspense we may see very little overall price movement prior to planting.  Click here for my daily report...  

US Export Sales Remain Strong:  Despite the Chinese cancellations export sales remain strong as Japan, South Korea and others have all stepped up.  Keep in mind export commitments are running close to 125% ahead of last year. They have also now reached almost 80% of the USDA's annual export estimate with a ton of time remaining in the marketing year. Generally, at this stage of the game, we only have about 50-55% of the USDA's export sales committed for. Thoughts continue to be that US corn exports may need to be rated higher, even as we take into account the Chinese cancelations.  Click here for my daily report....

Meal Demand..South American Weather to Support Beans?

Jan 15, 2014

Soy traders will be eager to see the latest December NOPA crush numbers which are scheduled to be  released today at around 11:00am CST.  Most of the trade seems to be looking for a number just under 164 million bushels, up a little over 2% from the Nov crush estimates.  The trade is also anticipating another round of large export sales in Thursday weekly USDA data.  The Chinese continue to keep the hammer down in regards to US purchases. Moral of the story, the front-end of the trade remains extremely tight and possibly very explosive to the upside if Brazil can't quickly take some of the pressure off US exporters.  The back-end of the trade remains very uncertain and fearful of record South American production weighing more heavily on the market in the weeks ahead.  Just remember, lots of large traders believe a Brazilian bean crop north of 90 MMTs, coupled with record US plantings and a US carry north of 300 million in 2014 could eventually drive soy prices down to...Click here for my Daily Report...

Is The Brazilian Soybean Crop Getting Bigger? Brazil’s private consultant Agroconsult says its boosting its soybean production forecast to 91.6 million metric tons form 90.7 million in December. That is substantially higher than the USDA’s forecast last week of 89 million metric tons and CONABS 90.3 million estimate. Agroconsult also released estimates....Click for my Daily Report....   

Keeping A Close Eye On Chinese Meal Demand:  There is talk circulating that Chinese feed demand for hogs is tapering back as pork prices come under more pressure. There is also talk that Bird-Flu complications are push poultry feedings down some 10-20%. Lets also not forget....Click here for my Daily Report....

How Much Upside is Left in the Bean Market?

Jan 14, 2014

Soy bulls continue to consider tight US supplies, strong export inspections and now an extended forecast for parts of South America that is trending a bit drier.  Technically, bulls are excited as well, as the MAR14 contract has now moved back above its 200-Day Moving Average.  Net-net, as long as the word "cancelation" isn't spoken by the Chinese, I suspect the trade could continue to work itself higher, at least near term. My final price targets just north of $13.50 are still in place and I remain hopeful that we can still see a 4th quarter, late game comeback, especially if meal and the bull-spreads can lead the marching band.  Just keep in mind the Chinese Lunar New Year comes 10 days earlier than last year and will begin on January 31.  Last years data shows that the cancellations started 10 days prior to the holiday, and continued through the following week, with net reductions of 109,200MT and 119,500MT, respectively for two weeks.  If the same type of scenario plays out we could see the "cancellation" word hit the headlines at the beginning of next week.  At the same time, we could see the the South American harvest hit full-stride and soybean crop estimates coming in much larger than the 89 million metric tons currently projected by the USDA. Talk in the trade is that the 90 million metric tons could be conservative and a number north of 92 million metric tons could eventually come to fruition. Bottom-line, the bean market feels like there is still some room left to the upside, but once we run out of momentum it could get ugly in a hurry. Just remember, being the last one out of the room could be a costly venture. Don't get too greedy! Click here for my daily report....

Will Bullish Headlines Persist in the Corn Market?

Jan 13, 2014

Corn Data Surprises The Trade… Total Production Number, Yield, Ending Stocks and Quarterly Stocks ALL lower than the trade was anticipating.  Would I call it a game changer? No. From my perspective it was NOT a hard overhand right but rather a clean left jab by the bulls. It will be interesting now to see how the funds respond to the shift in data. Is it longer-term bullish? I don't believe so. I just look at it as being a little "less bearish" than before.  In fact some arguments are already being made that if corn prices stay supported into planting the data will only encourage more corn acres at planting and ultimately be even more negative to price down the road. My fear is we just won't be able to find the bullish headlines needed in order to keep the big bulls fed longer-term. Not only are we burdened with trying to find a way to replace the Chinese export "cancelations," but also keep in mind the USDA just raised their Chinese corn crop estimate from 211 to 217 MMTs and lowered their Chinese corn import estimate from 7 MMTs down to 5 MMTs (not what we needed). Corn used for ethanol production was raised to levels that are justified (5.0 billion) but now (in my opinion) give us very little room for additional upside growth. The feed and residual numbers scan be highly debated.  Bottom-line, I believe it's going to be much tougher than many are thinking to build any type of sustained bullish campaign without a MAJOR weather story of some sort in 2014. With that being the case I see no alternative but to keep our current hedges in place, hope that the market can continue to work itself a little higher (DEC14 north of $4.75) so we can reduce even more of our downside exposure.  As for old-crop bushels I continue to urge producers to lock in their basis as I am afraid a flat price rally accompanied by heavy producer selling could cause the bids to drop.  Remember, as Gavin Mcguire at Rueters pointed out, "The on-farm corn stocks might have gotten all the attention, but the off-farm total is the highest since pre-1980." Spec shorts should remain patient and let the market digest the changes. I would NOT be adding to short positions on the rally at this point. I believe there is still some work to be done to the upside, especially considering the nearby shift in the "technicals." Click here for my daily report...

Additional Thoughts From USDA Report: Below are few additional thoughts that are circulating based on the recent USDA data.  

 

  • Lower Yield: Most were obviously thinking the yield was going to move higher, not lower.  The 158.8 yield was due to lower than expected yields  from areas of IA, MN and SD.  There were also a few ares in the western corn-belt that yielded numbers less than anticipated. Despite the USDA raising harvested acres by 436,000 total corn production fell by about 64 million bushels. 
  • Quarterly Stocks: Another big surprise was "Quarterly Stocks" which came in 300 to 500 million bushels BELOW what many had anticipated.  Keep in mind this is still some 2.4 billion bushels above a year ago. Obviously the smaller than expected crop is partly to blame, Click here for all my comments...
  • South American Production: The USDA elected to lower Argentine corn production from 26 MMTs down to 25 MMTs. In the same stroke they elected to leave Brazil's production "unchanged" at 70 MMTs. Form my perspective there are still some problem areas in southwest Argentina (hot and dry) and various areas across the country that simply did not get planted. Therefore I am thinking Argentine corn production could ultimately work its way lower by another 1-2 MMTs, especially considering the heat and and dry conditions some areas in Argentina are experiencing during the critical corn pollination period.  On the flip side however.... Click here for my daily report...   

Quick Thoughts Ahead of the USDA report...

Jan 10, 2014

Quick Thoughts Ahead of the USDA Report: Many producers seem to be panicking as new-crop prices continue to tumble!  From my perspective many have been apprehensive to pull the trigger on 2014 sales or hedges, especially since the "do nothing" approach has paid so handsomely the past few years...

We like to believe "HOPE" is a strategy… it's just often not a very good one!

Below are my answers to a few of the more popular last minute questions that many readers have been asking.  Hope this gives you some additional insight: 

Which Market Is Making You The Most Nervous? Old-crop soybeans! I truly believe there is a bullish story in the mix, but if the analyst who are predicting a jump in stocks to around 200 million vs. the USDA's current estimate of 141 million are correct, and the funds who are teetering on the edge of throwing in the towel on their long positions decide to actually fold their hand, then its lights out for the front-end of the trade.  There is some talk out there that the USDA will NOT raise their exports, and could actually cut their domestic crush numbers and push the yield high enough to build a much more comfortable cushion in stocks.  I am not necessarily on the same page with this theory because I believe the USDA will in fact be raising exports to some extent and I do not see an excessive jump in production. But I do respect the analyst who believe we are heading much higher, so I am a little nervous. Net-net, Click here for all my daily comments.....

What About Corn?  There really isn't any reason or story pending that would prompt any big money to get all bulled up in regard to corn. Sure, you could see some type of short-covering rally or occasional blip on the radar screen. But with no real weather story in South America and talk that the Brazilian crop could be getting larger it is hard to envision an extended rally in the next 60-days, especially considering the fact we have to digest three USDA reports. Lets also not forget the US farmer loves to grow corn.  I am not going to argue the fact producers in several areas aren't going to plant more soybeans, because Click here for my daily report... 

Will Beans Backpedal before the USDA Report?

Jan 09, 2014

Soybeans backpedals to their lowest levels since mid-Nov on fears that Chinese demand may be slowing into the Lunar New Year holiday and that more ample rainfall has moved over a large portion of South America.  Technical bulls are hoping the MAR14 contract can stay above support at the $12.56 level or a downward push to $12.33 could quickly ensue.  We need to realize this break is happening with no major Chinese soy cancellations as of yet and the USDA announcing even more sales (115,000 metric tons announced yesterday to China and a sale of 350,000 metric tons the day before).  As for the new-crop NOV14 contract, producers are hoping the market can simply hold its head above the $11.00 area, which looks to be extremely difficult from my perspective. Keep in mind, in just 10-short trading sessions, since positing an $11.74 intraday high on Dec. 23rd, the new-crop NOV14 bean contract has fallen off a cliff.  You can't accuse anyone or say there hasn't been ample warning that soy prices could all of a sudden drastically tumble. We have known for months, that IF the the weather cooperated, South America was going to harvest a mammoth new record crop. With that domino now tumbling (as record yields are being reported in early harvested fields of Mato Grosso) the trade is now left wondering if the US is going to follow suit with record bean acres and potentially back-to-back record crops from the worlds top producers? We maintain our current position and are keeping both old and new-crop floors in place.  Click here to get my daily report...Thank You

Headlines Before the USDA Report....

Jan 08, 2014

Most of the trade and producers are focused on the USDA monthly report, on Friday, which has been volatile over the past few years. There are some alternative headlines that are being digested but have little affect on the trade ahead of the large data dump: 

 

  • China Starting To Once Again Accept More US DDGs: Chinese insider are reporting more broad based acceptance of US DDGs. Reports circulating last week showed that only about 20-25% of imported DDGs were passing through inspections. Now that rate is believed to be closer to 40-50%, and should....Click here for all my comments....  
  • US Grains Council Uncertain About Chinese Imports: According to UGC, China may be unable to meet its initial expectation of importing 7 MMTs of corn from the US this year. Obviously the GrainsCouncil is backpedaling now that China has rocked the boat with the "cancelations." From what I am hearing a delegation from the U.S. Grains Council (USGC) is in China...Click here for my daily report...
  • Ethanol Exports Continue To Impress: US ethanol insiders believing US ethanol exports could more than double this year to over 1 Billion! Margins remain impressively strong and without a major free fall in crude oil prices US ethanol production should continue to impress.  There maybe some setback along the way, but for the most part US ethanol production looks strong. 
  • New Farm Bill Getting Closer: Hearing from Washington insiders that we are getting extremely close to reaching an agreement on a new Farm Bill.  Talk is  that cuts to the SNAP program have been agreed upon but there are still some sticking points in regard to 'milk" and "cotton"... 
  • Farm Futures Magazine Survey: Is estimating 2014 US corn planting intentions at 92.23 million acres. This seems reasonable to me, but may actually end up bing a shade conservative.  I know a lot of folks are talking about fewer corn acres, but I am not sure we make much more of a reduction. In the end...Click here for my daily report...
  • Weather: As the cold weather fades here in the US and rain continues to fall in many parts of Argentina the weather bulls are less excited than they were last week. There are some longer-term dry areas here in the US that we will continue to monitor and may start to gather more attention as we move into the Spring of 2014. 
  • CONAB Production Estimates Out Tomorrow: Don't forget CONAB will be out with their latest round of Brazilian production estimates early tomorrow morning.  Click here for my daily report... 

Corn Rally Eyes USDA Report....

Jan 07, 2014
Corn trade catches a small tailwind after posting its most recent low this past Friday, I simply question it's sustainability. Many seasoned veterans, including myself, are not only worried about how much larger the US corn crop will be after Friday's USDA report, but also how big of a cut the USDA will make to the corn "feed and residual" number. Yes, feed, ethanol and export demand are ALL better than last year, but I am afraid it won't be enough to offset the record production of over 14 billion bushels! If this isn't enough to make you nervous how about the fact in 5 of the past 7 years the corn market has moved it's LIMIT following the USDA's Jan report.
Bottom-line, with the amount and importance of the data coming our way Friday afternoon I suspect more short-covering and more players moving to the sideline ahead of the report. Despite the upside movement associated with swimmers jumping out of the pool, producers should continue to keep hedges in place. Friday afternoon could be a wild one! Click here for my daily report.... 

 

"Big Ticket Items" to Effect Grains....

Jan 06, 2014

Grain & Soy traders will be monitoring several "Big Ticket Items" this week. Below are the ones atop the leader board: 

 

  • Weather - Even though the South American weather story has fizzled out, many perma-bulls are still keeping a close eye on dry areas in parts of Argentina and small areas in Brazil. The focus might now shift from southern Brazil, where more ample rainfall has been registered, to areas in northeastern Brazil. There is also some attention being given to parts of the US, particularly the Midwest, where one of the coldest air mass in the past 20-years (since Jan of 1994) moves across....Click here for all my comments.... 
  • Chinese Cancelations of Corn & DDGs - Not only are we talking about the impact it is having on corn and DDG shipments from the US but also the impact it is having on domestic meal demand. Reports circulating that DDGs in parts of Iowa have dropped by more than $60 in the past two weeks. Trade also talking about how 1 million metric tons or more of US DDGs may be headed back to the US via ocean freight as....Click here for my daily comments... 
  • USDA's year end crop report for corn and beans along with wheat seeding numbers will be released this Friday at 11:00am CST. Most in the trade looking for the corn and soybean yields to increase. While the bulls are hoping the supply side gains can...Click here for all my comments...
  • South American Yields at least in early-harvested beans (90-100 day maturities) in Brazil are coming in better than expected (45-50 bpa). The full-season beans in many of the large producing areas will....Click here for my daily report....
  • Fund Rebalancing - Continued talk that the funds will need to rebalance positions here in early-Jan. and by holding a large percentage of the open interest on the short-side there is talk we could see a "short-covering" rally.  Keep in mind however overall open interest in corn....Click here for all my comments...
  • Bird Flu headlines starting to regain some attention in Asia. Officials in Taiwan say authorities are monitoring hundreds of people who may have had contact with a mainland Chinese tourist infected with the H7N9 strain of bird flu. They have confirmed....Click here for all my comments...
  • US Farmer Storage - Updated on-farm storage data comes out next week, but based on quarterly USDA numbers, farms in December stored more.....Click here for my daily report...
  • Egypt making one of their biggest purchases in some time at 535,000 tons ...unfortunately none of the wheat is coming from the US. From what I heard...Click here for my daily report.... 

Top 5 Reason for the Recent Soybean Break...

Jan 03, 2014

Soybean bulls continue to talk "liquidation" as the front-end of the market has given back over $0.75 cents in the past seven trading days. In fact new-crop NOV14 beans have now dropped to their lowest level in some 2-years!  This mornings export sales data was above expectations and should help give the trade a little bounce. There is nothing really NEW to discuss, below are my "Top-5 Reasons for the recent Break" … 

 

  1. South American weather has once again improved and for the most part remains a non-event.  
  2. The fear of Chinese soy cancelations is in the air.  
  3. Brazil is already harvesting early-soybeans and will soon be at full-throtle in less than 3-weeks. Early reports are that most areas are seeing terrific results and Brazil should be on track to post another record soybean harvest (possible north of 90 MMTs vs 82 MMTs last year). 
  4. Technical selling may also be causing some recent pressure. Remember, unlike corn and wheat the funds have been big buyers and holders of long poisons in the front-end of the bean market. As price break through major support at the 40, 50 and 100-day moving averages.....Click here for all my comments......  
  5. Cheaper DDG prices are prompting some end-users to make the switch away from meal and over to DDGs.  When the headlines read that China was not only canceling corn cargoes but also DDGs, prices quickly broke to the downside. Theory is the cheaper costs for DDGs may cause less domestic demand for meal and hence more available supply.  Keep in mind meal has been the driving force of this entire rally, if it loses its luster the bean market is in trouble.                                           Click here to get my daily grain report......
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