Market Report

Markets
Stocks rekindled their rally this morning, spurred by rising commodities prices and upbeat data from China. Twenty-eight of the 30 components in the Dow industrials rose, from battered financial and technology stocks to better-performing consumer companies, pushing the index into positive territory for the month. The Dow gained 221 points, or 1.4%, to 16612. The S&P 500 rose 1.3%, while the Nasdaq Composite gained 1.5%.

Oil prices surged this morning on expectations of an accelerated decline in U.S. oil production. Booming U.S. oil output due to new shale oil drilling technologies helped push the global crude market into oversupply in mid-2014 and sent prices plunging. Since then, domestic output has remained more resilient than many investors and traders expected. U.S. companies sharply cut spending on new drilling, but they also got more efficient and lowered their costs.

Gasoline futures recently rose 4.2% to $1/gallon. Diesel futures rose 3.3% to $1.0596 a gallon.

Grain Markets @ 12:10pm
Mar Corn +2’0 @ 3.67’4
Mar Beans +4’4 @ 8.82’6

Seeing some overnight strength in grain, led by the Beans, to the surprise in option expiration that was seen, where 200+ SH 8.80 calls that were out of the money were assigned and over 8,000 SH 8.80 puts that were in the money by almost 2 cents, were NOT exercised or abandoned, which caught those short puts off guard and forced then to step in to buy Beans overnight and today. Which could be partially to blame for today’s strength.

Also important, as mentioned above, the strength in Crude Oil and World equity markets, notably the US Stock market now up 200 points, we potentially have a tailwind in grains.

USDA 2016 Ag Outlook Forum this Thursday and Friday is the first detailed estimate of new crop acreage and production. You can head over to USDA’s Website to get additional details and subscribe to real time updates. http://www.usda.gov/oce/forum/

USDA released the “Farms and Land in Farms report recently. You may find it interesting. The link is below. I have attached a chart from the report showing the average farms size is getting larger, while the number of farms is dropping.
There are state specific numbers, but saw this information as interesting.

Click to access FarmLandIn-02-18-2016.pdf

Exports

EXPORTERS SELL 100,000 METRIC TONS OF CORN FOR DELIVERY TO COLOMBIA DURING THE 2015/2016 MARKETING YEAR – USDA

Last Week

Friday 2/19

EXPORTERS SELL 101,600 METRIC TONS OF CORN FOR DELIVERY TO JAPAN DURING THE 2015/2016 MARKETING YEAR – USDA

Thursday 2/18

EXPORTERS SELL 106,162 METRIC TONS OF CORN FOR DELIVERY TO COSTA RICA DURING THE 2015/2016 MARKETING YEAR – USDA

Tuesday 2/16

EXPORTERS SELL 190,000 METRIC TONS OF CORN FOR DELIVERY TO COLOMBIA DURING THE 2015/2016 MARKETING YEAR – USDA

Weather

Plains are wetter in west central areas in the 6-10 day period. Showers in southern areas early this week will improve moisture for wheat.  Temperatures should cool a bit this week, but should still be above normal in most areas. The 6-10 day outlook is wetter in west central areas. A chance of snow on Weds evening here in Nebraska.  While the Eastern Corn Belt is expecting heavy snow.

Weather continues to be a non-event as soil moisture levels are seen as nearly full throughout the growing region.  With the latest imagery showing drought completely absent from the Corn Belt, with hardly any dry patches to speak of.

Insurance:  As we approach the crop insurance sign up deadline, I wanted to share with you a couple of things to consider discussing with your agent.

1. Yield Exclusion, this is the opportunity to exclude 2012 from your APH.  This only makes sense if 2012 is dragging down your APH and reducing your insured levels.  If you happened to have decent performance in 2012 it may not make sense to exclude it.  However in most cases, exclusion is very beneficial.  (RMA determines which crop year yields are eligible for exclusion by county.)  Discuss this with your agent to see what makes sense for your operation.
2. Common Land Unit Reporting (CLU), beginning ’17 CLU reporting will be a requirement to obtain insurance.  This consists of reporting by farm number, tract number, and field number.  This new requirement for ’17 will require additional paperwork.  It may be wise to discuss this with your agent so you can begin preparing ahead of this time next year.

Insurance Seminars:  ProEdge in cooperation with The Home Agency has been offering educational seminars on crop insurance options, and marketing.  That said, we will be wrapping these up with one final opportunity this Friday Morning at the East Hub in Oakland, holding one at 8:30am and another at 10:00am RSVP required.  Friday afternoon we will be holding the same seminars in Hinton, IA.  Please contact me for more details or to RSVP.

For Fun:

In The Wall Street Journal last week there was an article about the U.S. Government is looking to eliminate the $100 bill, and even considering the $50 bill. While Benjamin Franklin wouldn’t immediately lose his place on the face of American money, no new $100 bills would be issued under Mr. Summers’s plan.

The last time the U.S. clamped down on large-denomination bank notes was 1969, when the Fed and Treasury discontinued issuance of $500, $1,000, $5,000 and $10,000 bills.

All of this in an effort to reduce “illegal activity”.  Much of the illegal activity facilitated by cash might have less to do with drugs or prostitution than with mundane tax avoidance. This type of activity has been dubbed the “gray economy” or “shadow economy.” The activities themselves aren’t illegal at all—painting a house, receiving tips at a restaurant—but conducting the transaction in cash makes it easy to avoid paying taxes on it.  I think this is really what it comes down to.

The Internal Revenue Service has published periodic estimates of how much income it thinks goes unreported: Its most recent estimate, for the year 2006, estimated that $385 billion in taxes should have been collected but went unpaid. The government’s deficit that year was only $250 billion, meaning that the so-called tax gap is so large it could make the difference between deficit and surplus in some years.

Article found here http://www.wsj.com/articles/the-plot-to-kill-the-100-bill-1455667926?mod=e2tw&cb=logged0.6661449681590577

Greg Mockenhaupt

ProEdge Risk Management Consultant

P: (402) 685-5613 | Greg.Mockenhaupt@cvacoop.com

1007 County Road O

Oakland, NE 68045