Fluctuating Markets and Off Topic Thoughts

Markets as of 10:12am 2/2/14

Corn +2 @ 3.72

Beans +2 @ 9.63

We start this week with the US dollar a little weaker and the stock market in the red, traders seem uncertain about “deflation” , the overall impact of the surging US Dollar and the meltdown in crude oil.  Especially after the disappointing 4^th quarter GDP number released last week.  In the news, U.S oil workers began the largest national strike since 1980 this Sunday, calling 3800 United Steelworkers Union workers to strike, if a full strike is called USW says it could affect as much as 64% of US Fuel production.

Last week was quite negative for grains despite solid exports last week.  Some strength comes back into the market this morning, but trade volume is very low which adds to volatility.  This volume could be a combinations of the Midwest shutting down due to the blizzard and  a great Super Bowl game leaving less interested in trading.

Corn: 

March corn broke the support line of 3.76 last week which could lead to some added pressure for this week.  New Crop corn (Dec ’15) broke the $4.00 mark on Thursday and Friday, but managed to close above $4.00 both days.  Selling ahead to reduce risk is a sound strategy to capture levels above $4.25 and take some downside risk off the table.  Risk management should be part of any marketing plan to gain any advantage possible.  Ethanol continues to produce despite margins, as stocks continue to rise we may see production slow.  At least until oil prices move back into a range that makes ethanol profitable.

Beans:

Seeing pressure from slowing exports, beans lost nearly 12 cents last week.  Seasonally, prices are behaving normally as South American supplies become available.  The next major support line is at 9.20, and the current trend is downward.  Remember, the trend is your friend.

Recommendation:

Due to the current market levels, it is difficult to make a recommendation strategy, it seems the profitable selling window has currently passed us by.  If a producer needs to free up some capital for cash rents, payments, etc.  A great strategy is Extended Price, which frees up 70% of the money, but keeps the producer in the market to participate in potential future rallies or losses just like in the storage bin.

Thoughts Off Topic:

Wow the Super Bowl was a nail biter, at least for me, it remained neck and neck as the Patriots and the Seahawks went back and forth until the final seconds of the game where the Seahawks were 2^nd down and inches from winning the game, but instead of handing the ball to Lynch over and over to get into the end zone, Wilson tried a pass…..and Malcolm Butler picked him off.  Brady was able to take a knee and run the clock for a Patriots victory.

But what’s up with the commercials this year?  I didn’t laugh once and quite frankly felt pretty depressed after a couple.  Especially theNationwide ad on preventable childhood deaths. It opens with a young boy listing several things he’ll never get to do, like ride a bike, get “cooties,” or travel the world with his best friend. “I couldn’t grow up, he says, “because I died from an accident.”  I have learned I shouldn’t say “you throw like a girl” ever again, and I am very excited about taking my kids to see the “Geriatric Terminator” because you know it will be a good movie.  I am not discounting the importance of protecting our children, but I it does not discount that the method used left folks feeling a bit creeped out.  Read more on NBC News “Super Bowl Ads Left Us Creeped Out or Crying”

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