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November 2013 Archive for Standard Grain

RSS By: Joe Vaclavik

Joseph Vaclavik is the president at Standard Grain in Chicago. Standard Grain provides futures and options brokerage to farms, feedlots, elevators, processors, end-users and traders. Visit for more information.


Risk in the 2014 Soybean Market?

Nov 25, 2013

Marketing grain is not about predicting prices.  It is about managing and identifying risk.  In regard to the November '14 soybean contract, it is possible to paint an extremely bearish scenario.  Without knowing anything about weather or production potential next summer, one must admit that the following scenarios are possible (not necessarily likely):

1) Another record Brazil/Argentina soybean crop

2) Larger soybean acreage in the US 

3) Demand shift away from US beans and toward South American beans

4) Lower corn and wheat prices


Many farmers here in the United States plan on planting more beans in 2014, mainly because they're more attractive than corn from a margin standpoint in many cases.  While keeping this post short and sweet, I'd like to emphasize the importance of marketing in regard to next year's bean crop.  While I could just as easily paint a bullish scenario for next year, I don't get hurt as a farmer when prices go up...a 2014 bull market in beans would be fantastic.  Hedge strategies should be explored, especially for those farmers who plan on increasing bean acreage in light of the more attractive margins.  

Nov '14 Soybeans, Daily

ZSX14 ~ Daily 11252013 032011pm


Questions or comments?  Email

RISK DISCLAIMER: Trading in futures products entails significant risks of loss which must be understood prior to trading and may not be appropriate for all investors. Please contact your account representative for more information on these risks. Past performance of actual trades or strategies cited herein is not necessarily indicative of future performance.

South American Soybean Production

Nov 04, 2013

 The USDA is projecting another combined record soybean crop from Brazil and Argentina.  A few thoughts:

1) South American weather risk, in regard to the market, is likely to the upside.  Weather now is "good" for the most part.   

2) Expect another round of "harvest pressure" every spring, as South America begins to outpace the US as the largest soybean producer globally.

3) Carry in the soybean market may slowly become a thing of the past; note that the Nov '13 and Jan '14 contracts are the highest-priced futures on the board.  This is likely due to the expecation of a large South American harvest in March/April.  

4) Export demand for US beans is very good now; the US has already sold a record amount of this year's bean crop into the export market.  This demand will likely taper off when South American bean are available to importers like China.



Friday Morning Markets

Nov 01, 2013
          The grain markets are mostly lower this morning following yet another multi-year low close in nearby corn contracts yesterday.  It should also be noted that the December ’14 corn contract posted a new contract low close and is trading below $4.70 per bushel this morning.  The end of October marked the end of the "crop insurance floor" for many corn farmers.  Risk in farm country is now heavily correlated with amount of on-farm storage available; data suggests that farmers have very little of this year’s corn crop priced relative to most years.  Many factors suggest that a large portion of the crop is going into some form of storage, unpriced.  Should a meaningful rally not occur between now and late summer, many farmers may be sitting on 2 years of unpriced or under-priced corn production.  Cost of production will not be decreasing by much, if at all, in 2014.  The final fall insurance averages were $4.39 ($5.65 spring) for corn and $12.86 ($12.87 spring) for soybeans.  It will certainly be interesting to monitor the market’s action ahead of next Friday’s USDA Crop Production / WASDE report.  There are many wildcards including a potential acreage decline due to the extensive prevent plant that occurred this past spring, yield per acre for corn and soybeans, as well as the entire demand side of the balance sheet.  The 2-month lag time between reports could make for some big volatility on and near report day.


The USDA released Export Sales data for the period from October 4 – 24 yesterday.  Corn sales were enormous and well above expectations at 4.55mmt; cumulative corn sales now stand at 66% of USDA projections vs. 46% on average.  Soybean sales were also huge at 4.74mmt; cumulative bean sales stand at a whopping 86% of USDA projections vs. 58% on average.  A record 36% of the US soybean crop has been sold into the export market vs. 23% on average.  The trade is clearly banking on another record South American crop to offset some of the production shortfall and demand increase here in the US.  South American weather risk in the bean market is certainly to the upside.  Wheat sales totaled 1.31mmt and were below expectations; cumulative wheat sales now stand at 68% of USDA projections vs. 57% on average. 

The USDA released its Cattle on Feed report yesterday after the close.  October 1st All Cattle on Feed were seen at 92% of last year, slightly below expectations.  September placements were seen at 101%, on par with expectations.  Marketings were seen at 106% vs. pre-report estimates of 104%.  The report was seen as being most neutral; cattle and feeder cattle futures are trading near unchanged this morning. 

       Informa will release production estimates this morning sometime around 10:30am CST.  FC Stone will also release production estimates sometime this afternoon.  Most expect both firms to ratchet corn and soybean production higher in light of better-than-expected yields in many areas of the country.
       The Buenos Aires Grain Exchanges reported that recent rains could completely restore previously depleted moisture levels, meaning that potential for "big" corn and soybean crops still exists.  Argentina weather has been a concern as of late.  Brazil is in good shape. 
      Oftentimes, a new month equals new money; although it doesn’t seems as if the grain markets are seeing any big cash injection this morning.  The path of least resistance seems to be to the downside, for the moment.    
Questions or comments? Send us an email at or call (312) 462-4438.       
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