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Market Report


Markets:

Dow -110.54
S&P -11.96
Nasdaq -23.75

 

The US Dollar continues to be weak, Gold rises.  Crude remains above $40.  Investors also await the Federal Reserve policy meeting later in the week.

 

Grain Markets:

May Corn +11’4 @ 3.83’2
May Beans +27’4 @ 10.14’4

 

Grain markets ended negative on Friday, losing a good chunk of last week’s gains.  Likely some profit taking seen here.  The negativity remaining throughout the overnight session, but support and buying coming back to grains this morning, support continues as we erase Friday’s losses in both Corn and Beans.

 

Weather continues to be the wild card, Rain throughout the Midwest could be supportive to markets despite planting progress being at acceptable levels.  Weather getting better in South America and the transition to La Niña is still on our mind.

 

Corn: Last week was the 2nd largest buying week ever, trading 125k contracts!  The best ever was last summer.  Planting progress out later today expecting to see somewhere near 30% versus 13% last week.

 

Strategy: Basis has definitely lost value, and continues to do so.  If the market continues to rally, eliminating basis risk will be essential to keep your market gains.

 

Good news, last week we saw Brazil lift their import tax on corn and anticipating some U.S. supplies will be booked as the country looks to supplement their feed supply.

 

Beans: Beans very strong again this am, due to continued fund buying.  Some due to weakness in the USD.  Also, some weather complications in South America and geo political concerns as Brazilian Senate moved yet another step closer to holding an impeachment trial for President Dilma Rousseff.

 

Strategy: Continue to layer in small sales to lock in profits and reduce long term price risk.  Using a floor strategy may also be applicable.

 

Old Crop Basis: Basis has continued to weaken in both corn and Beans, those that have locked in basis contracts as recommended 3/31 & 4/7 have definitely saved!  It still remains a concern moving forward.

 

Weather:  A very stormy and notably cooler pattern begins over the next few days across the central U.S., then lasts for at least 10 to 14 days as multiple systems trigger t-storms; heavy rain affects nearly all corn, soybean, and wheat areas. 1.00” to 2.00” of rain affects the southern third of Brazil corn today and tomorrow, followed by dry-cool weather. Dry and unusually cool in Argentina for 7 to 10 days.

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Looking forward in the Midwest, we see the forecast for the next 10 days as wetter than normal.  Wetter than normal spring and a hotter than normal summer?  This is yet to be seen, but the talk remains.image003 image002

What exactly is El Niño?

El Niño

El Niño means The Little Boy, or Christ Child in Spanish. El Niño was originally recognized by fishermen off the coast of South America in the 1600s, with the appearance of unusually warm water in the Pacific Ocean. The name was chosen based on the time of year (around December) during which these warm waters events tended to occur.

The term El Niño refers to the large-scale ocean-atmosphere climate interaction linked to a periodic warming in sea surface temperatures across the central and east-central Equatorial Pacific.

Typical El Niño effects are likely to develop over North America during the upcoming winter season. Those include warmer-than-average temperatures over western and central Canada, and over the western and northern United States. Wetter-than-average conditions are likely over portions of the U.S. Gulf Coast and Florida, while drier-than-average conditions can be expected in the Ohio Valley and the Pacific Northwest.

La Niña

La Niña means The Little Girl in Spanish. La Niña is also sometimes called El Viejoanti-El Niño, or simply “a cold event.

La Niña episodes represent periods of below-average sea surface temperatures across the east-central Equatorial Pacific. Global climate La Niña impacts tend to be opposite those of El Niño impacts. In the tropics, ocean temperature variations in La Niña also tend to be opposite those of El Niño.

During a La Niña year, winter temperatures are warmer than normal in the Southeast and cooler than normal in the Northwest.

More details on the current status of La Niña

https://www.climate.gov/enso

Greg Mockenhaupt

ProEdge Risk Management Consultant

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

1007 County Road O

Oakland, NE 68045

www.cvacoop.com

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About katcountryhub
I am a graduate of Northeast Community College with a degree in journalism. I am married to Jeff Gilliland. We have two grown children, Justin and Whitney and four grandchildren, Grayce, Grayhm, Charli and Penelope. I will be covering Lyons, Decatur, Bancroft and Rosalie and am hoping to expand my horizons as time progresses!

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