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USDA Report


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Greg Mockenhaupt

ProEdge Risk Management Consultant

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

Greg Mockenhaupt

Greg Mockenhaupt

 

 

1007 County Road O

Oakland, NE 68045

www.cvacoop.com

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Market Report


Dow +127.62
S&P +11.97
Nasdaq +45.02

The S&P 500 touched an intraday record this morning, topping levels last seen more than a year ago in a reflection of investors’ bets that the U.S. economy remains a pocket of solidity in a troubled world.

The S&P 500 climbed 0.5% to 2141.02 early this am, exceeding its intraday record of 2134.72 hit in May 2015. The Dow Jones Industrial Average rose 106 points, or 0.59% to 18252. The gains left the S&P 500 on pace to close at a record, with the Dow Industrials within 1 percentage point of the blue chip index’s record close of 18312.39.

A better-than-expected jobs report Friday was the latest boost to S&P 500, which has gained more than 16% since falling to a yearly low in February. Stocks have been bolstered by signs of strength in the U.S. economy, a recovery in oil prices and the Federal Reserve’s cautious stance toward raising interest rates.

Some investors and analysts said the rally highlights the appeal of U.S. equities at a time when the global economy faces an uncertain future in the wake of the U.K. vote to leave the European Union. At the same time, central banks are continuing extraordinary efforts to promote growth and inflation that have helped send government bond yields to historic lows.

http://www.wsj.com/articles/european-stocks-buoyed-by-rally-in-japan-1468223360

 

Grain Markets 7/11/16 @ 11:55am

Sept Corn -8’2@3.46’6
Dec Corn -8’2@3.54’2
Aug Beans+0’2@10.83’4
Nov Beans+2’0@10.59’6

With corn losing almost $1 from the highs we are now under the spring insurance level of $3.86.  Fundamentally the crop looks good and another trend line production year or above year will increase carryout.  I fear the bears and the possibility of corn dropping below $3.25, though I am not ruling out the markets ability to re-trace back to $4.00 it will surely take the help from some hot and dry weather to get us there.

 

Demand seems to be strong, many anticipate USDA bumping export demand.  With a good crop we would also see ending stock move higher and possibly a reduction in corn used for feed.  There is talk of wheat competing with corn for feed usage.

 

Opportunities –

  • Reserved for clients

 

Beans:

With USDA predicting and average of 46.7 Bpa.  A swing in either direction can really change bean pricing.  Based on fixed demand, a yield of 48 bpa would potentially give us a 441 mln bu carry out, while 44 bpa take us down to 109 mln bu carryout.  You can see the significant difference here.

 

Chinas demand for beans remains strong, however if China continues to have financial issues and is forced to devalue currency, could ultimately give them less buying power.  Just keep in mind China is about 60% of the worlds export soybean demand.  Chinas financial situation is certainly worth paying attention to.

 

Concern of a LATE La Nina still remain for beans.  Thoughts that weather concerns surfacing in August adds to uncertainty.  The next 30 days keep a close eye on weather as it is likely to cause a roller coaster of market volatility.

 

Weather:

Weather has certainly been the dominating factor in market movement.  More wide spread rainfall and cooler forecasted temps have removed a lot of weather risk premium from the markets.  Though we are running out of time, there is still an opportunity for weather risk to once again become a factor.  The next 5 days offer rains throughout the Corn Belt, the eastern Corn Belt (needing rain) looks to have good rain in the forecast.

Greg Mockenhaupt

ProEdge Risk Management Consultant

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

 

Greg Mockenhaupt

Greg Mockenhaupt

 

1007 County Road O

Oakland, NE 68045

www.cvacoop.com

Market Report


Markets @ close:

Dow -108.75

S&P -14.40

Nasdaq -39.67

 

US Dollar steady/higher. trend is higher.  Crude Oil is lower, trend is sideways.

 

Grain Markets @ Close:

Sept Corn -9’2 @ $3.50’6

Dec Corn -9’0 @ $3.58’0
Aug Beans -54’2 @ 11.10’0

Nov Beans -60’2 @ 10.77’2

 

Attached you will find a preview of the CVA Radio ad, set to air later this week.

 

USDA S&D Report around the corner July 12th

 

More acres, More bushels and more moisture.  Funds are liquidation record long position.  Funds sell 8k corn on the day, their long position is 132K, down from 275K on June 17. trend is lower.  Funds sell 7K Beans, their net long position is estimated to be 193K. The record is 260K.

 

South America – Argentina reported that 41% of their corn harvest is now completed compared to 60% LY and the 3 yr. average of 65%.

 

Export inspections: corn 57.1 last week 48.6, good number; beans 10, last week 11.6, another decent week.

 

Export sales: corn: old 18 million, 21 over estimate, new 21 million bushels. Beans old 27 million, 10 over the USDA estimate, new 29 million.

 

Corn crop condition rating, estimate 1-2% lower unchanged at 75% good to excellent, vs. 71% LY and 67% is the 5 yr average. This year’s corn crop is the 6th best rated since 1989.

Bean crop condition rating estimated to be 1-2% lower. decline 2%, 72% good to excellent, vs. 65% LY and 64% is the 5 yr average. The condition of this bean crop only surpassed by the crop of 2014.

 

Basis begins to firm up in the area as markets drop.

 

Corn/Soybean Ratio – It’s worth noting that the corn/bean ratio at about 1:3

 

Weather:

Saw heavy rain over the 4th of July weekend across the Midwest, as well as cooler temps.  Weekend rains in Missouri, Kansas, Illinois, and Indiana ease concerns over recent drier trend in those areas.  Weather tension eases and grain markets see pressure.  Chances of rain for the first part of the week and a couple days of heat and humidity.

Greg Mockenhaupt

ProEdge Risk Management Consultant

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

Greg Mockenhaupt

Greg Mockenhaupt

 

 

 

 

 

1007 County Road O

Oakland, NE 68045

www.cvacoop.com

Market Report


Dow +189.80

S&P +21.35

Nasdaq +66.35

 

Land O’Lakes To Acquire Ceres: Land O’Lakes Inc. and Ceres Inc. announced June 17 that they have signed a definitive merger agreement under which Land O’Lakes will acquire all of the outstanding capital stock of Ceres in a transaction valued at approximately $17.2 million

 

U.K: The prospect of a U.K. exit from the EU had sent stocks around the world tumbling in recent sessions, while bond yields dropped to record lows as investors feared the move would spark a prolonged period of uncertainty and deal a blow to growth and trade in the world’s fifth-largest economy.  Stocks, sterling and oil soared at the start of the week after polls suggested the U.K. was more likely to vote to remain in the European Union in Thursday’s referendum than previously expected.  The pound surges more that 2% against the U.S. Dollar.

 

Grain Markets @ 12.36pm

 

July Corn -15’6 @ 4.22’0

Dec Corn -14’2 @ 4.34’4

July Beans -13’4 @ 11.46’0

Nov Beans -11’6 @ 11.36’4

 

For a glimpse of last week check out the ProEdge Update found here: http://cva-assets.s3.amazonaws.com/content/uploads/2015/03/ProEdge-Update-061716.pdf

 

Looking forward: June 30th at 11am will be the USDA planted acreage report.  I anticipate the extreme heat we have been seeing will impact the production.  I don’t see the production numbers growing.  I do believe the markets has already added a lot of weather premium to the market, and with forecasted record heat I anticipate support continues in the market places.  Conversely if we had a turn to cooler weather as well as good rain, we could see the markets lose traction quickly.

 

Strategy: Using call options to keep upside potential on presold grain.  For example short dated $4.40 corn calls are about 19 cents.  This can be done through brokerage or CVA.

 

Weather

Trained weather spotters in the Fremont area recorded rain totals of 6.3 inches overnight, and there are reports of flooding and downed trees in the area.  Parts of Douglas and Dodge counties are under a flash flood warning till 4:30 a.m. Saturday.  See video here http://www.ketv.com/news/reports-of-heavy-rain-flooding-in-fremont/40114986

This week chances of thunderstorms, but no real rain opportunities throughout the corn belt.

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My Blog

 

Check out weekly blogs at http://www.cvacoop.com/blog/

 

The market is full of surprises and we continue to see the grain markets rally.  Recently seeing a lot of volatility in both corn and soybeans, it leaves many wondering what to do next.  Will the market go up?  Will the market go down?  Many producers hold out because it may go higher, however, that philosophy could mean a missed opportunity.  Many producers also find themselves looking in their rear view mirror, saying I wish I would not have sold so early.

 

The reality is no one has the ability to look into the future.  Sales are made based on the information a producer has at that moment in time.  That being said, a rally like this was unexpected.  A producer who sells ahead makes that first sale and HOPES it will be the worst sale of the year.  What?!?! You may ask, then why make it?  To that I say, to manage your risk, to lock in a profit.  For example, if a producer sold 40% of their new crop beans at $10.50, and come harvest time beans are worth $12.00, the producer is averaging $11.40 futures price on their entire crop.  However, if the harvest price drops to $9.00 the average price would then be $9.60.

 

Market Moves Up
  Percent Price
Sold 40% $10.50
Harvest 60% $12.00
Average 100% $11.40
Market Moves Down
  Percent Price
Sold 40% $10.50
Harvest 60% $9.00
Average 100% $9.60

 

Selling ahead a solid way to protect your operation from a bear market.  Without risk management producers stand the risk of having a losing year.  Market timing is everything, and locking in profitable sales to guarantee income is never a bad idea.  Selling on the way up and continuing to “grab profits” from the market is a guarantee of success.  Waiting for a home run often back fires when the market rally ends abruptly and a producer finds himself unsold and currently at an unprofitable level.

 

When it comes to marketing, many find it to be very emotional.  Never beat yourself up for selling too early or selling too late.  The key is to lock in profits incrementally and guarantee profits for your family.

 

Final thought:  This principle also applies to producers who sell from their bins not selling ahead).  Selling incrementally and locking in profit as they become available is a sound business practice.  Selling ahead only offers a larger window of opportunity to sell.

 

Greg Mockenhaupt

ProEdge Risk Management Consultant

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

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1007 County Road O

Oakland, NE 68045

www.cvacoop.com

Market Report


Markets @ 11:31am:

Dow -51.46
S&P -6.98
Nasdaq -28.27

Microsoft Corp. said today it has reached a deal to buy LinkedIn Corp. the professional social-networking company, for $26.2 billion in cash as it pushes to make its products more connected.  Microsoft will pay $196 per LinkedIn share, a 50% premium to LinkedIn’s closing price on Friday.  Shares of LinkedIn, which had dropped 42% so far this year through Friday’s close, jumped 47% to $192.95. Microsoft shares fell 2.7%.

Outside Markets:

US Dollar steady/higher.  Thursday and Friday this week Fed reserve open committee June meeting to be held.

Oil prices fell to their lowest point in 11 days today, a second day of losses connected with another increase in U.S. drilling activity.

Baker Hughes Inc. said late Friday that the number of rigs drilling for oil in the U.S. rose by three in the week ended June 10, the second straight weekly increase. It is reinforcing views that the recent rally may encourage more drilling that keeps oil markets oversupplied.

U.S. oil has lost 4.9% since Wednesday’s settlement, its sharpest pullback by percentage in more than a month. Brent, the international oil benchmark, briefly fell below $50 a barrel for the first time in a week.

 

Grain Markets @11:33am:

July Corn +10’6 @ $4.33’6
Dec Corn +13’0 @ $4.43’6
July Beans +3’2@ $11.81’4
Nov Beans +8’4 @ $11.71’2

 

Exports:

U.S. corn export inspections, for the week ended 6/09/19, were impressive at 1.697 MMT (66.8 million bushels), coming in sharply above expectations of  900k-1.1 MMT (35.4-43.3 million bushels).  U.S. soybean exports were disappointing at just 137k tonnes (5.0 million bushels) as they were at the bottom end of market expectations of 100-250k tonnes (3.7-9.2 million bushels).

 

Informa:

Was released at 10:30am today

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Condition:

Corn crop condition rating, 75% good to excellent, vs. 74% LY and 70% is the 5 yr average.

Bean planting progress expected to be 83% vs. 77% LY and the 5 yr average of 77%. IL 72%, IA 88%, Nebraska 73%, MN 99%, IN 86% (93 LY 86% ave), OH 63% (81 LY, 63% ave). Initial bean crop condition rating, 72% good to excellent, vs. 69% LY and 68% is the 5 yr average.

 

Corn: Extreme heat has the bulls in control giving corn good strength to start the week, as well as price action due to last weeks USDA report.  Heavy overnight volume.

Volume was above the 5 day average, while Open interest was up in new crop December only +3K, July down 32K as the heavy daily liquidation begins and spreading to Sept continues.  Funds sell 12k on the day, current long position is 206k.

 

 

Beans: Overnight volume was above the 5 day average while the open interest was higher. Funds buy 13K, their net long position is estimated to be 244K. The record is 260K.

 

Strategy: Keeping upside open for corn is probably not going to hurt anyone.  This can be done by purchasing a call option, and there is no margin calls associated with that.  Also Corn Dec ’17 Bonus premium gets 20 cents on a $4.50 offer.  Take the 20 cents and add it to one of your sales today in exchange for a ’17 offer.

 

Weather:

Heavy Rain for the Plains, Midwest to Start the Week: Portions of the Plains and Midwest will see several rounds of thunderstorms early this week due to a slow-moving low pressure system. Some of the thunderstorms may turn severe with damaging wind gusts and large hail being the main threats. Damage to recently planted summer crops is possible. On Monday, thunderstorms are possible from western Kansas and eastern Colorado into western Nebraska, western South Dakota, eastern Wyoming and far southeastern Montana. Again, winds and hail damage are possible throughout.

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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


Dow -86.87
S&P -3.98
Nasdaq +6.00

The Dow industrials and S&P 500 fell this morning, with major indexes still on track to end the month higher despite mounting expectations for a U.S. interest rate increase.  The Dow Jones Industrial Average fell 84 points, or 0.5%, to 17789. The S&P 500 lost 0.2% and the Nasdaq Composite Index gained 0.1%.   That left the Dow industrials on pace to finish the month 0.1% higher, while the S&P 500 was headed toward a 1.4% May gain.

Some analysts said the monthly gains for major indexes since their climb off February’s lows was an encouraging sign for equities markets, given new concerns about increased interest rates and other global uncertainty.  Expectations for the Fed to announce an interest-rate increase this summer have risen dramatically since the start of the month, while the dollar has gained for four consecutive weeks.

http://www.wsj.com/articles/european-stocks-steady-as-investors-look-to-upcoming-key-events-1464681623

 July Corn -7’0 @ $4.05’6

New Corn -4’2 @ $4.09’2
July Beans -5’2 @ $10.81’2
New Beans -0’2 @ $10.56’0

 

Corn:

The corn made some gains recently hitting $4.13 on the July board Friday and touching it again last night during the evening trade.  Happy to see the corn finally getting some attention reaching levels we haven’t seen since October ‘15.  Basis continues to suffer as the board rallies and those producers that locked in basis levels have seen the benefit.  Looking forward we are needing to price these basis contracts and we seem to be getting some opportunities.  Be sure to place offers, we don’t want to miss out on a bounce.

I am enjoying seeing the grain prices upward move, however I remain realistic, keeping in mind if U.S. weather cooperates we could easily see a corn crop upwards of 14 billion bushels and domestic ending stocks of 2.2 billion bushels or more.  I guess the moral of the story is manage your risk and hope for it to go higher.

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Beans: 

July beans remain fairly range bound since the bounce May 10th, but the stretch to $10.98 last week was promising.  We can always hope to shoot past $11, which would provide some real potential from a technical perspective.  However there are discussions regarding the switch to beans from corn, which is not necessarily bullish news for the beans.  I don’t anticipate the funds care much about that however.  It seems for now political risk, the US Dollar, and oil prices seem to have more impact than the actual crop does.  So where do we go from here?  Do markets continue to rally or do beans settle down?  No one knows.  As a producer it is wise to reduce risk at profitable levels.  Understanding it is very easy to kick yourself when prices go higher but from a risk management perspective it’s the right move and fits the longer-term goals of a profitable operation.

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So let’s talk about weather into the summer.  Should we be concerned?  The Weather Channel says the trend of warmer-than-average temperatures overall during summer months the last several years is expected to continue.  Well-above-average temperatures are expected this summer from the West Coast into the northern Plains, Great Lakes, Ohio Valley, mid-Atlantic and Northeast.

The only area where cooler-than-average temperatures are expected this summer will be across much of Texas, Oklahoma, Arkansas and Louisiana, again, owing partially to the soaked ground from a spring of heavy rainfall.

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“We expect that the full La Niña forcing will not be in place by June, but will come roaring into play by July and, especially, August,” Crawford said. “We expect a strongly ‘back-loaded’ summer with the heat continuing into September.”

Typically, La Niña summers feature hotter temperatures from the central U.S. into the Northeast.

Crawford notes that during previous years where rapid changes from El Niño to La Niña occurred, the worst of the summer heat was focused from the northern Plains to the Great Lakes states.

Another factor to consider regarding temperatures this summer are sea-surface temperatures in the western North Atlantic, which are forecast to be warmer than any time over the past five years. That often results in warmer temperatures in the eastern U.S.

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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 -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

Monday’s Market Report


Markets 4/4/16 11:36am:

Dow -8.89
S&P -1.47
Nasdaq -4.77

U.S. Stock markets has been on the way up for six weeks now.  This morning drifting lower, holding near their 2016 highs after a recent rally spurred by a weakening dollar and stabilizing oil prices. Major U.S. indexes have rallied for six of the last seven weeks and many investors took comfort in Friday’s solid readings on U.S. manufacturing activity and the March jobs report, which further eased concerns about the strength of the economy.

Oil prices have back tracked reversing all of this year’s gains.  We are now back to levels below where we started early January.

 

May Oil/Crude Futures image001

Grain Markets 4/4/16 11:31am:

Corn+0’2@3.54’2
Beans-4’6@9.13’4

 

As you know last week’s USDA report was released and the special report addressed all USDA data.  In summary:

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As far as planting goes, Producers in NE Nebraska are patiently waiting to start planting corn.  Crop Insurance start date for our area is April 10th.   Moisture is more than adequate with 2-3” of total moisture over the last 2 weeks. Temps have been sporadic with daytime highs ranging from 40-75 deg. night time lows range from 24-35 deg. with current 4” ground temp at 47 deg vs. 43 deg same day last yr.  Bottom line our soil profile is pretty full and we do have some standing water, ideally we would like a warmer and dryer forecast through April… this week cool mid 50’s and dry.

With regard to acres, there is talk of many producers switching back to beans.  At least those that were considering corn on corn.  Things have changed and the corn to bean ratio is now back to where we like to see it at 2.5.

 

Corn:  The big weight on Corn is the Planting Intentions, which, even if we do see some switches out of corn and into beans, either due to wetness or better returns for Beans given the rally in the SX/CZ ratio, still means we need a rather sizable crop yield loss to turn this market around, given the current stocks at 1.9 bln bu and the fact that it might take a national yield under 160 bu/acre to drop stocks enough to matter.

 

Strategy: Call strategies are cheap right now.  This will allow you to move the corn now, have a floor, and a shot at upside.

 

Beans: started overnight a little firmer but have turned into negative territory during the day session, as we saw Soymeal break to losses of $2-3, which is likely due to the fact that the non-Commercial or Spec Fund had covered some of this short, but the cash markets are not following meal values higher, as demand is lethargic and totally hand-to-mouth, as corn’s long term bearish outlook does not bide for meal staying too high in value.

 

Strategy:  8.00/9.60 Triplex contracts are right in the money.  If you don’t have in an offer, this may be an opportunity.

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Retirement: Saving for retirement?  The rules are about to change.  New rules aimed at stockbrokers will have enormous impacts on the way Americans save for retirement.

The rules aren’t coming from the government’s financial regulatory apparatus but from the Labor Department. This week, it is expected to release final regulations that will require brokers getting paid to provide investment guidance on a retirement account to act solely in the best interest of the investor.  It will affect IRA’s, and 401K’s as well.

Read more here:  http://www.wsj.com/articles/new-government-rule-rewrites-retirement-savings-1459762202

For Fun: Last week this was going around, I received it by email, text, and of course Facebook.  But if you haven’t seen it, it is good for a chuckle……or a tear or two.

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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

3/14/16@11:07am
Dow -12.87
S&P -6.49
Nasdaq -3.72

Crude oil moved higher and the U.S Dollar moved lower last week, which positively influenced stock and commodity prices.  U.S. stocks fell this morning, offering clues to the course of monetary policy this year.  The Dow Jones Industrial Average slipped 25 points, or 0.1%, to 17188 shortly after the opening bell. The S&P 500 dropped 0.2%, and the Nasdaq Composite declined 0.3%.

Crude oil has slid more than 70% from its peak in ’14.  However, U.S. oil prices are up more than 45% from a 13 year low in February which came to an end after major producers held discussions about capping output.  As the bullish sentiment increases, the oil market remains supportive.  Could this rally lead to its own demise?  Higher prices will likely encourage shale producers to ramp up output again, muddying any forecasts for shrinking U.S. supply. Shale wells can be drilled and fracked within a matter of months, compared with the years it can take to complete other types of oil wells.

April Crude Oil

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Grain Markets

3/14/16@11:10am
May Corn +3’0 @ $3.68’0
May Beans+0’2 @ $8.96’0

 

Last trading day for March futures

 

In the News: El Nino may be weakening, but it is still clobbering crops in the Asia-Pacific region, effecting sugar, rice and palm oil production. http://www.wsj.com/articles/el-nino-may-be-weakening-but-it-is-still-clobbering-crops-1457953780

 

Corn:

The funds continue to increase their net short position and go further in to record territory.  Beneficial rains throughout the southern plains with more to come.  Nearby corns resistance in the low to mid $3.70’s.  We have seen a bit of a bounce in corn but fundamentally nothing has changed.

 

Beans:

May futures broke through the 50 and 100 day moving averages last week on its 8 day run closing higher and higher.  Farmer selling remains steady as prices rise.  Processor basis levers steady to weaker as they take more bushels.

 

As beans seem to push higher there is likely some resistance at $9, as many have offers in at those levels for the nearby.  Much of this rally comes from short covering, and funds seem to be adding some additional shorts as the market keeping us under $9 for the May.

 

Weather

After unseasonably warm weather in the Midwest, cooler temps on the way.  Still mild weather and some chances of thunderstorms tonight.

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New Cars:

 

New vehicle sales in the U.S came in at 17.5 million in 2015.  Used car sales (mostly subprime borrowers) has also been on the rise.  Total volume of U.S auto loans now reaching an all-time high of close to $1 trillion.  Impressive growth for the industry.

The concerning part is the default rate.  Through February, about 12% of the underlying loans were at least 30 days past due, a third of which were more than 60 days delinquent. In another 2.6% of loans, borrowers had filed for bankruptcy or the vehicles had been repossessed.  This from Equifax.

Those borrowers are at the outer fringe of the auto market. Still, the high level of missed payments for loans made so recently is a warning sign for an industry that needs every customer it can get to keep sales increasing at a record pace.  It will be interesting to see where auto makers go from here.

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Read more here: http://www.wsj.com/articles/subprime-flashback-early-defaults-are-a-warning-sign-for-auto-sales-1457862187

 

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


Blog/Radio:

Some key considerations prior to crop insurance renewal can be found in my blog here:

http://www.cvacoop.com/blog/crop-insurance-around-the-corner/

 

Also for fun I have attached the radio spot I did on crop insurance with Chad Moyer, in case you are interested in giving it a listen.

 

Markets:

@10:20am

Dow +39.07

S&P +8.17

Nasdaq +10.54

U.S. stocks rebounded today, but gains were muted as investors awaited in the coming days comments from the European Central Bank and the Federal Reserve.  The Dow Jones Industrial Average surpassing 17,000 this am.

Metals prices have been on a roll, but some wonder how long it can last.  Since mid-January, the price of copper is up 13.5%, while zinc has jumped about 25% and iron ore has soared 57%. Analysts cite a number of reasons for the rise, from an improving Chinese property market to a sense that metals were oversold in 2015.

April Oil Future continue to re-bound reaching as high as $38.04 this morning.  Thus looking more promising for ethanol and bio margins.

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Grain Markets:

@11:11am

May Corn -0’4 @ 3.60’0

May Beans -1’4 @ 8.83’0

 

USDA Supply & Demand report came out today at 11:00am, showing corn unchanged and beans with an additional 10 mil carryout.  Neutral information and the reaction was uneventful.

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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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