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

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


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

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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.

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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

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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

 

USDA Report Results


US Carry Out and World Ending stocks come in slightly higher in both Corn and Beans.  This was expected by the trade and seen as neutral, causing no real movement in the market.

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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


1/25/16 @ 9:35am
Dow -62.29
S&P -10.98
Nasdaq -13.12

 

Grain Markets

 

1/25/16 @ 9:37am
Mar Corn +0’4 @ 3.70’6
Mar Beans-0’6 @ 8.75’6

 

A special treat for you this morning, Luke Beckman ProEdge Grain Sales Manager commenting on current markets below on Market Journal.  Luke covers the current climate in detail, and I have nothing to add.

https://www.youtube.com/watch?v=18ozZcG_TSE&feature=youtu.be

 

Weather

Massive Blizzard blankets east coast, hitting as much as 30 inches in some states, 60 million people under storm warning, 250,000 without power, at least 30 dead, 12,000 flights cancelled, travel ban in NY, 11 stated declared State of emergency.

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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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