The Aftermath: Pro Farmer Tour and Hurricane Irene
Aug 29, 2011
Looks like "Irene" found the big city lights of New York City simply too overwhelming and faded off into the sunset. For all of our sakes, Irene was downgraded to a "tropical storm," and the stock exchanges and all financial exchanges were open as scheduled, airlines are back up and running, transportation is starting to move, and we seem to have avoided another potential "black swan" type event.
The weather will be watched closely during the coming days as well, due to thoughts that the recent tropical storms may quickly alter weather models and current patterns across the midwest. For the most part, outside of hurricane Irene, the weather has been fairly mild this weekend. From what I am hearing, there could be some improvements in several of the key winter wheat planting areas during the next couple of weeks as rains is expected to fall in parts of Colorado, Kansas, Nebraska, Central and Eastern Oklahoma, and Eastern Texas. With this being the case you may want to consider coverage on a portion of your unpriced or unhedged wheat bushels. Certainly there is a chance that we make a push back to $9 in the Chicago wheat contract and beyond $11 in the Minneapolis contract, beyond that I am a little concerned. Therefore, looking at ways to help control your downside will become important as we progress.
With the Pro Farmer crop tour behind us now, the trade is now left to digest thoughts regarding their 147.9 national corn yield, and a 41.8 soybean yield. Regardless of how you feel about the Pro Farmer final estimates, one thing we need to think about, is the simple fact that if the USDA were to use the Pro Farmer numbers for just Iowa and Illinois we end up right around a 146 national corn yield average. Those two states in and of themselves are obviously going to be instrumental as we progress further into harvest, so make sure you start paying close attention to the numbers in these areas.
With continued thoughts that the US corn carryout could actually fall below 500 million bushels on lower yield estimates and fewer harvested acres, the trade seems more than content adding length and pushing "new crop" corn prices towards new all-time highs. The "outsides" appear to be providing us with a little boost this morning, and soybeans seem to be leading the charge. As November soybeans quickly approach $14.50, I urge those of you who are not at least 50-60% sold to think about pulling the trigger. As I have been mentioning, there is certainly the chance we make the run to...
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