Market Report

Markets:
11/2/15 9:40am
Dow +96.60
S&P +11.77
Nasdaq +34.07

Gasoline Prices: The price of gasoline is declining more slowly than oil, illustrating how consumers aren’t fully benefiting from falling commodities prices.

Typically, gas prices go up and down in tandem with crude oil, the main ingredient. But according to The Wall Street Journal, oil prices have been falling much faster than gas prices. Drivers have paid at least $1 billion more for gasoline than they would have if the historical pattern had continued this year, according to government and industry statistics.

Regular gasoline prices have fallen more than 28% in the past year to an average of $2.18 for a gallon of regular unleaded. By comparison, Brent crude, the global benchmark for oil, has fallen more than 50% to about $50 a barrel.

Grain Markets:
11/2/15 10:02am
Dec Corn -5’0 @ $3.77’2
Jan Beans -1’0 @ $8.82’6

Harvest continues its momentum as the weather continues to cooperate.  Many locations now with significant piles of corn on the ground.  Central Valley Ag hubs continue to aggressively serve our area producers as locations begin to fill up.  There is a lot of corn out there, and this is a blessing for most area producers.

Increased yield:  Many area producers are seeing some pretty impressive yields!  Increases in yield can significantly change your business plan, and could be the difference needed with the grain prices of today.  The chart below is an example, if you marketed/planned on 175 bushels per acre for corn and 50 for beans, you established your breakeven based on cost of inputs etc.  When the final yields come in, there is additional profit to be had across each and every bushel.  This is one of the reasons break even calculations are so important in budgeting and planning.  These windfall bushels are a great thing, so congratulations!

Corn/Beans:  The story is consistent between the two, corn and beans continue their range bound ways while we wait for a story which sends the market one way or another.  Though it seems there isn’t much more negative news to be had, the trade has built in with record yields, corn on the ground, and decent export numbers.  I think keeping an eye on South America, Ukraine & Brazil for a weather headline or something to give us an opportunity moving forward.  Another consideration is next week’s USDA Supply and demand report scheduled for November 11^th.

Weather:

The Weather Channel – If you are not quite ready for the chill that is normally associated with November then you may be in luck.  A warmer-than-average November is expected for the eastern half of the U.S. while colder than average temperatures are likely in parts of the West.

“The big news heading into November is an unusually strong sub-seasonal pulse that will oppose and overcome the baseline El Niño signal. What this means is that, for at least the first part of the month, the pattern will be more typical of La Niña conditions than El Niño conditions, with cooler temperatures across the West and unusually warm temperatures across the East,” said Dr. Todd Crawford, chief meteorologist of WSI, a division of The Weather Company.

http://www.weather.com/forecast/national/news/november-2015-temperature-forecast

For Fun:

Halloween weather was beautiful, and there was no football game scheduled for high school.  So we had over 100 Trick or Treaters.  The best part, we handed out full size candy bars, so the kids thought that was a great thing.  We did end up spending all day setting up our cemetery, and the boys and one of their friends got all dressed up to “scare” the kids.  It was a lot of fun for everyone!

Greg Mockenhaupt

ProEdge Risk Management Consultant

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

1007 County Road O

Oakland, NE 68045

www.cvacoop.com

Market Report

Markets 9:50am

U.S. stocks are getting hammered again this morning as the Chinese market plunges another -8.5%

Dow -663.16
S&P -66.44
NASDAQ -172.90

Grain Markets 9:51am

Sept Corn +3 @ $3.68 1/4
Dec Corn +3 @ $3.80 ¼
Sept Beans – 7 @ $8.98 ¼
Nov Beans – 8 @ $8.81

Grain markets were hammered overnight on the Chinese news Shanghai index closing down 8.49%, Japans Nikkei is down 4.61%, and the German DAX down 3.73%..  Seeing a rebound at the morning open.  We once again see corn green and the beans red.  Beans taking the brunt of the punishment, now seeing new crop cash prices today with 7 in front early this am.  Closing the overnight down .31 1/4 on beans and -.10 on corn.  The U.S. Dollar index trading down 1.26% and crude down $1.57 at $38.88/barrel.

Weather – The National Weather Service’s outlook for September calls for below-normal temps across the Corn Belt, with above-normal precipitation expected across western Iowa and the Central Plains, including Nebraska. Equal chances of normal, below- and above-normal precip are expected in eastern Iowa to the East Coast. The forecast should increase concerns about crops that are lagging due to late planting.

Corn – Really continues its range bound trade, I have mentioned verbally to many producers that I am not as negative on corn.  It just seems corn wants to stay in the $3.50-$4.00 range.  Though if oil continues it downtrend, this could negatively affect ethanol demand right here in our back yard.   On the bullish side, many including Profarmer think the USDA is overstating yields, and the unseasonably cooler temps in our area have some talking early freeze.

China extends corn buying spree as imports top 1 million tons, China’s corn imports rose for a fourth month to the highest in at least a decade as a slump in U.S. prices made purchases from overseas more attractive.  http://www.agweb.com/article/china-extends-corn-buying-spree-as-imports-top-1-million-tons-blmg/

Beans – Price just continue to fall each week, beans do not seem too afraid to head lower, losing 25 cents last week and another .32 this morning.  Chinese markets provide concerns for U.S. Beans export sales.  We could see a turnaround Tuesday type of event, but longer term I am afraid beans do not offer much for bullish news.

Pro-Farmer – On Friday, Pro Farmer announced its national corn and soybean forecasts after touring the U.S. from Ohio to South Dakota last week. Pro Farmer sees 2015 corn yield at 164.3 bushels per acre compared to the current USDA’s August forecast of 168.8 bushels per acre. Pro Farmer’s soybean forecast was lower than the USDA by .4 bushels per acre at 46.5 bushels per acre. Pro Farmer pegged 2015 corn production 363 bushels below the current USDA projection at 13.323 billion bushels. Soybean production is estimated at 3.887 billion bushels.

For Fun – With Football season just starting, I realize a diet is not in the future, but rather wings and beer.  Who doesn’t love getting together for the occasional game with friends and enjoy the great game of football.  To start off the season here are 10 facts about the NFL you may not know:

1. The New England Patriots were almost named the Bay State Patriots.
2. If you signed up for the Green Bay Packers season ticket waiting list today, you’d have to wait almost 1,000 years to get your tickets.
3. Wilson, which has been the exclusive maker of NFL footballs since 1941, produces 4,000 balls per day, or one for every Eli Manning interception.
4. Only the Green Bay Packers has ever won 3 NFL championships in a row (thus disappointing Pat Riley) and never once in the Super Bowl era.
5. Despite the misnomer that the NFL can only play Sunday, Monday and Thursday, the league has actually played games on every day of the week.
6. The Super Bowl trophy costs $25,000.
7. The oldest record in the NFL record book is one of the most famous: Ernie Nevers scored 40 points in a 1929 game, getting six touchdowns and four extra points.
8. Fred Dryer is the only player with two safeties in one game.
9. The total audience for the first televised football game in 1939 was 500, about 112,200,500 less than watched last year’s Super Bowl.
10. In the modern NFL draft, there’s only been one year in which a quarterback hasn’t been selected in the first two rounds.

Greg Mockenhaupt

ProEdge Risk Management Consultant

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

1007 County Road O

Oakland, NE 68045

www.cvacoop.com

Market Report

Markets

Dow -70.92
S&P -2.72
NASDAQ -3.92

The U.S Stock market opens fairly flat this morning, slipping into the morning.  July has been a rough month for commodities which continue their negative streak this morning.  Copper and Aluminum fall to 6 year lows.

Oil opened deep in the red, slipping to levels not seen since March.  Crude’s supply and demand picture looking bearish with China being the second largest oil consumer.  Concerns about the condition of the Chinese economy continues to leave a bearish tone for many investors.

Greek share prices plunged today after trading resumed in Athens following a five-week halt.  The Athex Composite earlier today traded as low as about 615, its lowest level in about three years.

Grain Markets 9:56am

Corn -2 ¼ @ $3.68 ¼
Dec Corn -2 ½ @ $3.78 ¾
Beans -3/4 @ $9.80
Nov Beans -3 @ $9.37 ¼

Weather

Weather this week looks good for crops in the field with temps in the 80’s and a chance of rain each day.

Corn/Beans

It seems the negative direction continues this week.  Primarily concerns of Chinese demand due to economic uncertainty, the continued strength in the U.S Dollar makes South American corn look cheap and potentially hurting U.S Exports, there just doesn’t seem to be a reason to be bullish. In addition, the USDA crop report is coming August 12^th.

Weather news could be a factor, however, the weather across the Midwest continues to be a non-event.

Strategy:  For those of you currently holding a corn hedge/HTA we are consistently an opportunity to roll from December to March for about 10-11 cents.  If you are planning to carry some of your corn into January or later, now may be the time to lock in the carry.  (Example $4.50 Dec Hedge, roll to March adds .11 = $4.61)

Basis:  As the market pushes down, we may see basis opportunities, with harvest approaching, it is going to be time to start watching basis levels, and setting those pre-harvest.

For Fun:

It’s been a year since our trip to Universal Studios, when we had the opportunity to go to “Springfield” and stop by Duff’s Tavern for a “Duff” beer.  No chance of buying one to go, Orlando and Los Angeles are currently the only place you can go get yourself a bottle of the fictitious beer.  Until now…. there was no discussion of making it commercially available, until recently Fox has decided to begin the venture starting internationally!

Quoted below from The Wall Street Journal

“For decades, real beer sellers from Australia to Germany to Colombia have been trying to capitalize on all this fake marketing by putting real versions of Duff Beer into the market—only to be shut down after hearing from lawyers for “Simpsons” owner 21st Century Fox.

But this week, the media giant is entering the Duff Beer business itself—beginning in Chile, with plans to roll out to more of South America and Europe by early next year.

The company has been consulting with a brewmaster to get the flavor just right, and plans subtle packaging with no obvious nods to the TV show—just an exact replica of the cartoon brew that will play like an inside joke for Simpsons superfans.

As for the domestic market, outside of the “Simpsons” section of Universal’s theme parks in Orlando and Los Angeles, no Duff is available in the U.S., but Fox isn’t ruling it out.

“I think there’s potential to have Duff everywhere in the world,” said Jeffrey Godsick, president of the media company’s consumer products division. (21st Century Fox and Wall Street Journal-owner News Corp were part of the same company until mid-2013.)

The global thirst for Duff is understandable. “The Simpsons” is the longest-running scripted series in television history, and so widely distributed that Fox executives say an episode is airing somewhere in the world, at all times, day or night, 365 days a year.”

You can read the rest here http://www.wsj.com/articles/duff-beer-tries-to-tap-markets-outside-springfield-1436553842

Greg Mockenhaupt

ProEdge Risk Management Consultant

P: (402) 685-5613 | C: (402) 380-9855 | Greg.Mockenhaupt@cvacoop.com

1007 County Road O

Oakland, NE 68045

www.cvacoop.com

Market Report

Markets

The big news on Monday was the substantial dip in the Chinese stock market, that trend continued and the 3 day sell of knocks 11% off the Shanghai Composite.  Despite government efforts to reverse the trend, the Chinese stock market continues to decline since peaking on June 12^th.

Commodities had a significant sell of yesterday pulling down gold, silver, copper, cotton, soybeans, corn, cattle, and Crude oil futures have continued to slide to a new 4 month low near $47 a barrel, but headed back in to positive territory midday today.

U.S Dollar strengthens again today, as many investors look for the fed to increase interest as early as September.

Ford reported a 46% increase in net income for Q2, logging its largest quarterly profit ever for North America.

Grain Markets 12:39pm

Corn -2 @ 3.71
Dec Corn -2 $3.81 ½
Beans +10 ¼ @ $9.71 1/2
Nov Beans +5 ¾ @ $9.39

Crop condition was raised from 69% to 70% good to Excellent on corn as compared to last years 75%, and soybeans were left alone at 62% good to excellent as compared to last years 71%

Corn

December Corn has lost .73 cents in the last 10 trading days, interestingly enough earlier this month, we went from the current trading level to the contract high in just 13 days.  We have literally went from $3.81 all the way up to $4.54 and back to $3.81 in 23 days.  Talk about a roller coaster ride.  There seems to be a lot of noise and no one is exactly sure what to hear, from a weather scare and flooding, to key fundamentals influencing world carry, Political, and of course the macro markets.  It seems they are all competing for attention.

A new gap was created yesterday.  We now have 2 gaps in the Dec ’15 corn contract, from a technical perspective we may see corn continue to trend down into contract lows prior to retracing those gaps.  Keep in mind the gap retracement could be post-harvest.

Strategy:  As the market dips, and affordable way to participate in upside potential on sold bushels is a simple “buy back strategy” utilizing options.  Which keeps capital risk low.

Beans:  Uncertainty in China w no doubt caused a lot of pain for the bean market yesterday seeing a 30 cent drop on Monday in Nov beans.   A bit of a turnaround Tuesday feel today though as beans gained at the open, but only up 5 cents at noon.  Beans are feeling a lot of pressure from the macro markets, fear of Chinese demand and the US Dollar making South America more appealing to international buyers.

Strategy: Beans may be a painful ride down, lock in a sale at a profitable level either cash or utilizing an HTA.  Bonus premium offers may be used to bring the value of the sale up.

Greg Mockenhaupt

ProEdge Risk Management Consultant

P: (402) 685-5613 | C: (402) 380-9855 | Greg.Mockenhaupt@cvacoop.com

1007 County Road O

Oakland, NE 68045

www.cvacoop.com