What type of market are we facing? Is the main feature of this market the butt-kicking drought that started the current crop year, or is it the tight stocks that will end it? The answer might help me do a better job in pricing....More
A magazine editor once told me that she could take some of my educational articles that I wrote 30 years ago, rerun them today and other than changing the prices, no one would know the difference. She’s correct. Markets change and prices change – but people don’t. The human psychology element of marketing is the same now as it was 30 years ago....More
A larger percentage of the U.S. corn grain acreage was harvested in August this year than is typically the case. The availability of large, new-crop corn supplies during the last month of the previous marketing year makes it more difficult to anticipate the magnitude of old- crop stocks on Sept. 1, according to University of Illinois Agricultural Economist Darrel Good....More
Harsh droughts are not fun. And, relative to expected yields, the 2012 corn crop will go down in history as one of the five worst in the last 100 years. Drought-damaged crops and early harvests go hand in hand. Maybe this is for the better – finish harvest quickly and put this year of disappointment in the rearview mirror....More
This year has all the signs of producing a corn crop that could fall short of trend-line yields by 20% or more. I call this a butt-kicking drought.
Our last butt-kicking drought occurred in 1988. Yields were about 25% below trend. The drought of 1983 was nearly as severe. Beyond these years, we have to go back to the Dust Bowl. In 1934 and 1936, corn yields fell 30% short of trend....More
Recent Farmdoc Daily articles explained how prices in short-crop years often peak early and decline throughout the remainder of the marketing year here, and then showed how farmers who insured using Revenue Protection (RP) insurance can use futures to protect insurance payments against a pre-harvest peak in crop prices here....More
The 2012 drought has been a game-changer in almost every aspect of farm and ranch management, including production, financial and marketing, says Darrell Mark, adjunct professor of economics at South Dakota State University, during his Aug. 6 weekly Cattle & Corn Comments on the iGrow Radio Network. "With the widespread and severe nature of the drought, yield losses, while expected to be large, remain uncertain, thereby creating significant market volatility," Mark says....More
Huge market rallies in late June saw December 2012 corn jump from $5.05/bu. to $6.44 within two weeks. They swelled 40¢ on June 25 – hello limit-up – on the back of Corn Belt drought fears. They blew through $6.20 on June 26 and $6.40 on the 27th. And by mid-July, the price-surging weather market shot Dec corn to $7.80....More
Actually, I’m not going to answer that. No one knows for sure. But I will give you reason to at least be concerned that the ag economy is making a bubble and that these grain prices are not going to last. As the drought hit, the fundamentals of the corn and soybean market changed dramatically, and this was one surge in prices that we did not need for the long-term benefit of grain producers’ profits....More
July 25, 2012, the House Agriculture Committee held a public hearing to examine the collapse of Peregrine Financial Group, Inc., the LIBOR manipulation and receive an update on MF Global and Dodd-Frank implementation. PFGBest filed for bankruptcy shortly after regulators froze their operations through emergency enforcement actions. More than $200 million in customer funds are missing....More
Farmfest 2012 will feature an exciting line-up of feature forums, as well as a U.S. Senate and Congressional Candidates Forum. The forums will be held August 7, 8 and 9, in the forum tent on the Farmfest site, which is located at the Gilfillan Estate, 7 miles southeast of Redwood Falls, Minn. The schedule for 2012 has a heavy emphasis on national and state agricultural policy issues, and on issues affecting rural Minnesota....More
Drought conditions could hit Indiana farmers in the pocketbook in more ways than one, Purdue Extension Agricultural Economist Christ Hurt says. Not only could water-starved corn and soybean crops produce smaller yields and cut into farmers' revenues, but they also could force some growers who signed future delivery contracts with grain buyers to buy back some bushels they are unable to supply, Hurt says....More
The wide soybean price swings reflect ever-changing supply-and-demand expectations, according to Darrel Good, a University of Illinois agricultural economist. "November 2012 soybean futures reached a high of $14 in September 2011, declined to about $11.20 in December 2011, rebounded to almost $14 in early April and again in early May 2012, and traded to a low of $12.45 in the current trading session," Good says....More
USDA reports frequently move markets and last week’s first supply/demand for the 2012 grain and oilseed crops was no exception. The day of the report, July corn closed down 20¢/bu. and cotton down 4¢/lb., while July beans closed 25¢/bu. higher and wheat 1¢ higher. Despite the immediate market reaction to the numbers, some aspects of the reports are debatable. Here are a few numbers Brock analysts expect to change....More
The USDA’s projections of U.S. and world corn and feed grain supply-and-demand conditions presented in the May World Agricultural Supply and Demand Estimates (WASDE) report set the benchmark by which the corn market will judge unfolding events. According to Darrel Good, a University of Illinois agricultural economist, those events are continually unfolding, with some of the more important ones to be revealed this summer....More
Are the fundamentals surrounding soybeans causing prices to surpass expectations? At least one Corn Belt grain marketing specialist thinks so. And it could be a signal for you to sell more beans this spring. Price volatility can take the life out of a market in a flash....More
Last month I explored the hedging practices of merchandisers, exporters and processors, and how it is more than avoiding risk. These are basis traders who employ the purest form of hedging - placing long and short hedges regardless of price expectations or market opinion....More
HTAs can be a marketing tool that offers the benefits of hedging without threat of a margin call. But many think first of the hedge-to-arrive fiascoes in the mid-1990s. They are among a range of forward contracts offered by grain elevators, ethanol plants and other grain buyers, says Melvin Brees, University of Missouri Food and Agricultural Policy Research Institute (FAPRI) economist....More
CSD Columnist Ed Usset spoke at Commodity Classic in Nashville, TN, this year. His presentation focused on taking advantage of a pre-harvest marketing plan, and improving that plan. If you weren't able to attend, check out the slides and info he presented during his hour-long session.
CSD columnist Ed Usset spoke at Commodity Classic in Nashville, TN, this year. His presentation focused on taking advantage of a pre-harvest marketing plan. If you weren't able to attend, check out the slides and info he presented during his hour-long session.
National Ag Week is being celebrated March 4-10 all across the U.S., and Thursday, March 8, has been designated as National Ag Day. It is a good time to reflect on all the traditions and advancements that help make the U.S. agriculture industry second to none! Following are some interesting statistics about today’s agriculture industry....More
More than 87,000 farmers have been affected by the MF Global meltdown through their grain co-op ownership, even if they have never traded futures or options, as their co-op earnings may drop if the bankruptcy court doesn’t make the firm’s clients whole. Even the value of their co-op stock could be affected....More
It is widely anticipated that the 2012-2013 corn marketing year will be a transition from the current environment of tight stocks and high prices to one of a large crop, increasing stocks and lower prices. The futures market reflects that expectation as the March 2013 futures price is currently trading 80-85¢ below the March 2012 price....More