Grain Market Viewpoint

Is it time to start making more cash sales?

Corn bulls are touting yesterday as the single biggest one day gain in the DEC13contract since April. Lower yields and lower acreage was the focus. Lets not forget old-crop supplies are nearing 17-year lows and new-crop supplies are coming in slower than in years past.  Even with that being said, we are hearing reports that roughly 1,000 barges carrying newly harvested southern corn will be traveling north and become available to end-users by mid-September. Some technical bulls are starting to talk about a possible longer-term bullish turn-around, while I am personally reducing more risk and locking in profits on the rally (not a big believer). In case you didn't see it in yesterday's "Special Report," we took another 10% of our risk off the board on the upstroke and now sit with 65% of our estimated 2013 production sold or hedged. I will be looking to build an additional floor at or above the $5.20 area if we can continue to catch some additional tail-winds. Keep in mind we also have 40% of our estimated 2014 production hedged or sold with a floor at or around the $5.50 area. Producers who missed the boat on the 2014 sales or hedges really need to pay attention and make a concerted effort the next couple of weeks to get some risk off the table at profitable levels should the weather rally provide the opportunity.

Pro Farmers 2013 Crop Tour has provided some interesting insight and is confirming everything I have heard from producers in these areas. Below are a few highlights: 

  • Ohio corn yield reported at 171.64 bpa vs. 3-year average of 144.12 bpa  and much higher than last years tour estimate of 110.50 bpa.
  • Ohio soybeans in a 3’x3’ square totaled 1,283.61, while the 3-year average is at 1,162.64. Last year the average pods in the same space totaled 1,033.72 
  • South Dakota corn yield reported at 161.75 bpa vs. 3-year average of 119.65. In 2012, the South Dakota corn yield estimate was just 74.25 bpa.
  • South Dakota soybeans in a 3’x3’ square totaled 1,016.68, while the 3-year average is at 984.62. In 2012, the pod count was 584.93
  • Keep in mind OH ranked 7th in corn production last year right behind #6 SD. 
  • The consensus out west seemed to be that the crop would need all of Sept and the early part of Oct to finish. Out east the crop looks good but will definitely need some moisture in the coming days to avoid reductions.     

Soybean bulls are backpedaling a bit this morning on the higher than expected pod counts and talk of extensive buying of Brazilian beans from late Jan forward. According to the Ag Ministry, Brazil has already recorded a NEW record for soybean exports this year, having exported almost 35 million metric tons, basically 95% of CONAB’s export targets for the country. The kicker is they still have 3-months left in their marketing year. The bulls are wondering if Brazil is close to being sold-out who will fulfill any immediate Chinese orders? Thoughts are with massive supplies still in transit, large quantities sitting at the Chinese ports and a US crop closing in on  harvest there should be no concerns. Be careful here, as we have come to learn in life, everything always sounds really good on "paper." Making it happen can often be a completely different story. Producers who are behind should continue to make catch-up sales. Those who are 60-70% sold or hedged should be looking to reduce a little more risk if we can push into the $13.20 to $13.30 range.  

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Discuss this Blog Entry 3

on Feb 13, 2014

This is good news for farmers. When production is good, farmers will definitely generate good profits. - Roger Stanton

on Mar 24, 2014

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on May 2, 2014

You have raised an important issue..Thanks for sharing..I would like to read more current affairs from this blog..keep posting..
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Kevin Van Trump

Kevin is a leading expert in Agricultural marketing and analysis, he also produces an award-winning and world-recognized daily industry Ag wire called "The Van Trump Report." With over 20...
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