Pro Farmer newsletter.

' /> From the Editor | Top Producer Magazine

 
Jul 23, 2014
Home| Tools| Blogs| Discussions| Sign UpLogin


From the Editor

RSS By: Brian Grete, Pro Farmer

Pro Farmer Editor Brian Grete takes time to talk with Pro Farmer Members about some of the key issues in each week's Pro Farmer newsletter.

Redesigned ProFarmer.com Coming Next Week!

Apr 25, 2014

Hello Pro Farmer Members!

We're extremely excited to announce we've redesigned www.profarmer.com and added many new features to enhance our coverage of market and ag policy news that influences your farming operation. Your new website is scheduled to launch next week. To help make this transition go as smoothly as possible, we're transferring your usernames and passwords from the current site to the new platform. News page 4 of this week's Pro Farmer newsletter outlines some of the new features of the site. But the best way to learn about the new site will be to spend time navigating through it and familiarizing yourself with its many features.

If you haven't accessed the Pro Farmer website in the past but have an email associated with your account, you can click on "forgot password" under the "Log In" tab on the top right of the website. We'll then email you your login information. If you don't have an email associated with your account or if you experience problems, call the Pro Farmer office for assistance. I encourage everyone to visit the new Pro Farmer website to take advantage of this key Member benefit.

 

As for news... This is a time of year when news flow can be very heavy. Traders are focused on demand developments, weather, geo-political events and countless other happenings around the world. This is also a very busy time for you in the field, making it hard to keep up-to-date on the multitude of daily happenings. One of the many benefits of being a Pro Farmer Member is that we gather the news/events and present what's important to the markets and your farming operation in a concise and easy-to-read format via the weekly newsletter, daily electronic services and our website. We do the "heavy lifting" for you.

 

I know many of you are getting anxious to get fieldwork done. In some cases, some of you haven't turned a wheel yet. Unfortunately, the weather outlook isn't overly promising. The National Weather Service is calling below-normal temps across the eastern two-thirds of the country through May 8 (the latest update period as of Thursday afternoon). Above-normal precip is also expected across the eastern Corn Belt through this date. If this forecast is realized, corn planting will very likely remain below the five-year average pace into mid-May -- when the "optimal" window for corn planting starts to close. Last year proved corn planted after (even well after) mid-May can still produce favorable yields. But the later plantings push past the May 10-15 timeframe, the more important weather becomes at an after pollination. It also requires some extra time on the end of the growing season.

The other factor that comes into play with delayed plantings is acreage. Most thought March corn planting intentions were low. The deeper corn plantings extend into May, however, the less likely it becomes corn plantings will push above March intentions. But with that said, some central Corn Belt producers have already or are openly considering ramping up corn plantings. One of the many things the corn market must figure out over the coming weeks is how many corn acres will be seeded.

Be safe!

That's it for now...

... have a great weekend!

Follow me on Twitter at @BGrete

To join Pro Farmer, click here!

$15 Old-Crop Soybeans

Apr 17, 2014

Hello Pro Farmer Members!

 

Old-crop soybean futures surged above $15 last week as NOPA March crush was record-large for the month and came in nearly 8 million bu. higher than traders expected. The strong crush pace suggests USDA’s 5-million-bu. downward revision to its crush forecast in the April Supply & Demand Report was in the wrong direction. But I'd be surprised if USDA quickly reverses course and upwardly revises its crush forecast in May. Why? Because domestic feed demand is expected to decline as porcine epidemic diarrhea virus (PEDV) further cuts hog supplies. Plus, the crush pace typically slows dramatically during summer, especially in tight supply years.

Even if USDA keeps its crush (and soybean export) -- forecasts unchanged next month, the message the demand side of the market is sending to traders is clear -- current prices aren't high enough to slow use. That shouldn't come as much of a surprise, actually. While $15 old-crop soybean futures are historically strong, the soybean market has shown very little response on the demand side to really high prices in the past. The runup to the all-time high of $17.89 during the summer of 2012 only slowed total soybean use in the 2012-13 marketing year by 56 million bu. (1.8%) from 2011-12. With old-crop futures around $2.80 below the all-time high, we shouldn't expect to see much of a slowdown at current price levels.

On the export front, China is in the news again. An official from China's top soybean buyer told Reuters Chinese firms are likely to default on another 1.2 MMT of soybean shipments from the U.S. and Brazil. This is on top of the roughly 500,000 MT of soybean shipments Chinese buyers have already defaulted on. Declining feed demand combined with poor crush margins are backing up soybean supplies at ports, limiting Chinese importers’ ability to get letters of credit and curbing their need for soybeans.

Massive washouts of U.S. soybean purchases are unlikely, however. As of April 10, there were only 5.2 million bu. of outstanding old-crop soybean sales to China on the books, with another 33.65 million bu. of outstanding old-crop sales to "unknown," some of which likely are to China. Chinese buyers may default on some U.S. soybean purchases, but not enough to have a significant impact on the old-crop balance sheet.

Clearly, the soybean market must find a price that slows use and rations tight old-crop supplies. The question is whether that happens in futures or the cash market -- or both.

What happens over the coming months will have some impact on the 2014-15 marketing year. Brazil produced another record soybean crop this year and those beans eventually need to find a home. Chinese defaults now mean delayed Brazilian soybean shipments, which also suggests Brazil very likely will still be shipping 2013-14 crop soybeans when our new-crop supplies are available. The one constant the soybean market has been able to count on is very strong U.S. soybean export demand through the first quarter of the new marketing year and into the second quarter -- sometimes longer. If Brazil "steals" some of the strong post-harvest demand, it could influence the demand side of the 2014-15 balance sheet. And don't forget, record supplies are very likely in 2014-15.

 

Happy Easter!

That's it for now...

... have a great weekend!

Follow me on Twitter at @BGrete

To join Pro Farmer, click here!

Introducing Your New Sr. Market Analyst -- Rich Posson

Apr 11, 2014

Hello Pro Farmer Members!

 

When Chip stepped aside as Pro Farmer editor to start his Market Rally radio program and I became editor, it left us in need of a new senior market analyst. We don’t hire new employees at Pro Farmer very often, especially at senior-level positions. We pride ourselves in having very few editorial staffing changes. That continuity and consistency is a trademark of Pro Farmer.

Chip and I knew we couldn’t hire just anyone for this position; we had to find the "right" person. This person is responsible for the marketing advice for you, our Members. After an extensive search that garnered interest from many highly qualified candidates, we found that "right" person. I’m extremely excited to introduce Rich Posson as your new senior market analyst.

The addition of Rich to our experienced and talented staff strengthens our risk-management team. Rich brings a broad skill set to Pro Farmer that will allow us to make sure you will continue to be equipped with the knowledge to make the right risk-management decisions to ensure the longevity of your farming operation.

Rich Posson — his own words

rich casual croppedI grew up on a grain, beef cattle, dairy and forage farm in upstate New York. Following college, I returned to the farm and was in charge of doubling the size of our dairy operation, which then caused a doubling of crop land. In addition, my brother and I purchased two smaller farms. It was during those farm management years that I learned the value of risk management and analysis as a road map to assist with bottom-line strategy.

In the 1990s, I left the farm businesses and became a registered commodity trading advisor. Shortly thereafter, I became a certified technical analyst.

From 1996 to 2012, I operated a futures brokerage business that focused on risk-management consulting, including assisting producers with hedging their production. During those years, I also assisted producers with forward contracting production, locking in basis and making cash marketing decisions through market research and analysis.

During my 30 years in agriculture, I have learned that markets, climate and the economy are cyclical. A cycle is a repetitive pattern of lows and highs — good times and struggles in the economy. Agriculture also has cyclical patterns of poor crops and favorable growing seasons. In short, cycles suggest seasons or trends of fluctuation that might be akin to what was often written in more than one religious or historical document as a season of feast or famine.

My preferred form of cycle studies is "time cycle" analysis. That is, it’s more about the time for a change of season or a change of trend than it is about a price level. I have learned there are several types of cycles in terms of duration and amount of price change, just as there are multiple types of market participants.

Model-based research suggests that as consumers and producers we conduct business in daily, weekly, quarterly and semi-annual periods. This creates corresponding fluctuation of supply and demand, plus a correlation to price fluctuation.

Although I have a fascination with time cycles and I have had some success with this form of analysis, I also believe strongly in using a checks and balances system that includes standard fundamentals, technicals (charts) and economic forms of analysis. I seek a more detailed story. I seek conditions for and against the cycle stance.

A history of success

Some successes during my career were the correct forecast for corn to rally to a record high and for it to do so by 2008. History shows corn waited to my "deadline" year and then exploded to a record high. Another correct long-term forecast was the minor crop problem in 2010 was a clue that a crop and climate cycle of complications was underway. This reached fruition with the 2012 drought. An annual corn report I wrote ahead of the 2012 growing season suggested that if a drought occurred a strong bull market would push futures to $8.40. Corn futures posted an all-time high of $8.43 3/4 that year.

While it’s gratifying to discuss my successes, no analyst, trader or farmer is right all of the time. My key to market analysis has been to find something that works and to have the discipline to work with the trend of performance.

My goal has always been to provide useful insight to assist a business with decisions that relate to and strengthen the bottom line. That will remain my goal at Pro Farmer. I’m extremely excited to be your senior market analyst and carry on the rich tradition Pro Farmer has created for more than four decades.

Get to know Rich personally

Rich will be attending Pro Farmer seminars and events on a regular basis, so many of you will get to meet him face-to-face. Don’t hesitate to call or email Rich any time you have risk-management or market-related questions. Rich can be reached via email at rposson@profarmer.com or by calling the Pro Farmer office phone number.

 

That's it for now...

... have a great weekend!

Follow me on Twitter at @BGrete

To join Pro Farmer, click here!

Combined Corn/Bean Planting Intentions Make Sense

Apr 04, 2014

Hello Pro Farmer Members!

Immediately after USDA released March 1 planting intentions, some analysts complained the corn and soybean planting estimates were "light" at a combined 173.184 million acres. While down 1.224 million acres from 2013 planting intentions, the numbers make sense to me. After all, corn and bean plantings fell within the ranges Pro Farmer has been using since last fall. The only real head-scratcher was sorghum acreage, which USDA estimated at 6.68 million acres, down 1.38 million from last year. Given ongoing drought in major sorghum production areas, an increase in milo plantings compared to March intentions seems likely.

Where did the "lost" corn and bean acres go? Producers plan to plant a combined 2.853 million acres more to cotton, peanuts, rice, canola, spring wheat, durum and dry beans. The "lost" corn/bean acreage combined with the 1.713 million acres of CRP ground that is eligible to be in production this year totals 2.937 million acres -- only 84,000 acres more than the combined acreage increase for those seven crops.

The biggest beef some analysts have with USDA’s combined corn and soybean acreage is in Iowa and Minnesota, which had a combined 1.63 million prevent-plant acres last year. In Iowa, producers intend to plant an additional 700,000 acres to corn and soybeans compared to year-ago, which accounts for nearly all of last year’s prevent-plant acres in the state. It’s hard to argue USDA’s March planting intentions are egregiously too low in that state.

In Minnesota, combined corn and soybean acres are expected to be up 700,000 from last year, roughly 200,000 acres less than the number of 2013 prevent-plant acres. When looking at all of Minnesota’s crops, the acreage decline from year-ago jumps to around 257,000 acres. So, USDA could be light on acreage there. But even if all of the missing 257,000 acres are seeded to something this year, it won't all be to corn or beans. But those two crops would likely catch the bulk of those acres.

North Dakota is another state that had major prevent-plant acres last year -- 2.812 million. Combined corn, soybean and spring wheat planting intentions are up 2.7 million acres there, so USDA’s numbers are believable in that state.

While I can't argue too much with USDA's March planting intentions, I realize they are indeed intentions, which makes them subject to change. My feeling at this time is that corn acres will be up from March intentions, while soybean acres may dip a bit from intended levels. Of course with that said, portions of the Midwest just experienced wintry/blizzard-like conditions and cold soil temps are a concern across the Corn Belt. That argues against more corn acres and fewer soybean acres, unless March intentions were skewed.

As for the weather, I know plenty of producers are more than a little concerned given an array of worries from conditions being too cold to too dry. It’s late enough to say we won’t get an early start to the growing season. It’s also too early for traders to push the panic button yet, especially after last year. But another couple weeks of current conditions may get their fingers closer to that button.

That's it for now...

... have a great weekend!

Follow me on Twitter at @BGrete

To join Pro Farmer, click here!

The Wait Is Almost Over

Mar 28, 2014

Hello Pro Farmer Members!

Every year, USDA's Prospective Plantings and Quarterly Grain Stocks Reports at the end of March are highly anticipated, and this year has been no exception. Monday, USDA will release what's very likely to be trend-setting data. Both of the reports have the ability to sharply move markets.

Prospective Plantings: While the acreage battle wasn't as great as in years past, there's still great anticipation toward planting intentions. Most of the pre-report estimates have corn plantings between 92 million and 93 million acres, with soybean plantings expected to be between 81 million to 82 million acres. That obviously would be a big decline in corn acres and a big increase in soybean plantings from last year. A figure outside of these ranges would be market-moving. But take the numbers Monday for what they are -- intentions as of March 1. Intentions can, and likely will, change based on spring weather and price movement. Keep in mind, there was less anhydrous applied last fall than normal so there should be more "swing" acres this spring. That means actual plantings could shift even more than normal from the March intentions USDA releases Monday. As a result, traders will use the March planting intentions as a baseline from which to add or subtract acres as we move through spring.

Another thing to keep in mind is that everyone remembers what happened last year -- including farmers. Because corn yields came in stronger-than-expected for most (much stronger for some) last year despite record-late plantings, producers may be more apt to stick with corn deeper into spring than they would have in the past.

Quarterly Grain Stocks: Corn has been the attention-grabber with this report. Traders have consistently missed USDA's number by hundreds of millions of bushels for several years -- both too high and too low. It's to the point where no one has much confidence in predicting what USDA's numbers will say. That hasn't stopped analysts from guessing, however. The average pre-report trade guess for March 1 corn stocks is around 7.1 billion bu., but the range of guesses in a Reuters survey is 6.861 billion bu. to 7.54 billion bushels. Someone is going to be really surprised on Monday. Throwing complexity into the quarterly grain stocks guessing game this year is uncertainty toward impacts on feed use from porcine epidemic diarrhea virus (PEDV). However, the real threat to domestic corn-for-feed use is in the future, meaning the fireworks may not come until the June or September quarterly corn stocks are released.

The average guess on March 1 soybean stocks is 989 million bushels. The average guess for March 1 wheat stocks is 1.042 billion bushels.

Keep in mind, USDA has a history of "evening out" use over the first two quarters of the marketing year for corn and beans. Coming off record first-quarter corn and soybean use, there is some risk analysts may be shooting too high on implied second-quarter use despite the evidence of strong export and domestic demand.

USDA's reports will undoubtedly move markets Monday. And it's likely they will set the price tone through spring. Be aware of this... and be prepared by making sure your risk levels are adequately covered ahead of the reports.

That's it for now...

... have a great weekend!

Follow me on Twitter at @BGrete

To join Pro Farmer, click here!

Log In or Sign Up to comment

COMMENTS

Receive the latest news, information and commentary customized for you. Sign up to receive Top Producer's eNewsletter 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