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Profit Watch Commentary – Nov. 1, 2013

Prices finished the week off on a poor note. Soybeans and wheat took the worst beating this week.November soybeans lost 34 cents and December wheat fell 23 cents.  December corn fell 12.75 cents lower, but it has been in a funk for some time.  Today, December futures carved out a fresh low of $4.2575. The fundsare holding onto a record short in corn, so perhaps we are nearing the bottom.  If you want some good news, get off LaSalle street and head over to Wall Street.  The DOW was up 70 points today and closed at 15,616. Unbelievable.

The S&P is also going up like gangbusters. The dollar has also taken off, but that isn’t good news for ag.  A stronger dollar makes our goods more expensive to buy. We are not surprised to see prices drift lower this harvest. Producers, in general, are pleasantly surprised with yields this year.  Evidently the cooler temps played a much greater (and beneficial) role in production versus the lack of moisture.  We should have a decent handle on bean yields as harvest is nearly complete.  Traders are guessing bean harvest will be 85-90% complete by Monday.  Corn harvest is probably 70-75% complete. The weather forecast is a mixed bag, so harvest pace will likely be slow going forward. The USDA will release production estimates next Friday. The market is more anxious than usual about next week’s report.  In the meantime, we will be entertained by private guesses.

Today, two well-recognized firms released their estimates.  Their estimates exceeded USDA’s September estimates in both corn and soybeans. Larger estimates were one of the reasons prices fell today. Ironically, Informa and FC Stone published identical corn yields of 161.2 bpa.  Informa has factored in record corn yields for IN/OH/MI.  FC Stone expects the same records with IL added to the list. On average, Informa and Stone increased the Iowa yield 3 bpa, Minnesota +1.5 bpa and Nebraska +6 bpa. In the last 33 years, the USDA has increased yield estimates from September to November 61% of the time.  The largest increase came in the record breaking years of 1994 and 2004. (See below for a summary of estimates.) Thus, the odds are HIGH that yield will increase.  How much the USDA will offset yield with an acreage revision will be key.  Informa bumped their soybean estimate significantly to 43.3 bpa.  FC Stone also put out a healthy 42.8 bpa estimate.  Wow. Late plantings didn’t mean a thing? Informa thinks Ohio will set a new record this year.  FC Stone thinks IL, OH and MI will set new records.  The odds of the USDA increasing bean yields from Sep to Nov is 55% in the past 33 years.  Once again, what will the USDA change in acreage versus yield?

 
Corn                Informa    FC Stone    USDA
November yld est     161.2      161.2      ???
November prodn est  14.223     14.367      ???
Prior yld est        158.8      158.7     155.3
Prior prodn est     14.010     14.150    13.843
Soybeans
November yld est      43.3       42.8      ???
November prodn est   3.298      3.270      ???
Prior yld est         41.7       41.4      41.2
Prior prodn est      3.176      3.163     3.149
Crop Insurance Prices (Unofficial)
Corn     $ 4.39     $ 5.65 Spring
Soybeans $12.87     $12.87 Spring

Have a Great Weekend.

CBOT  Closes                  Today    Wkly Chg      Yearly Highs

Dec 13 Corn          $ 4.27 1/4     -  1          -  12 3/4    $ 6.05
May 14 Corn        $ 4.37 1/2     -  1 3/4   -  14 1/2     $ 6.14
Jul 14 Corn          $ 4.52 1/4     -  2          -  16            $ 6.21Dec 14
Corn                     $ 4.66 3/4     -  2 3/4   -  16           $ 5.87 3/4
Dec 15 Corn        $ 4.82 3/4     -  1 1/2   -  13 1/2     $ 5.68 3/4
Nov 13 Beans     $12.66          – 14 1/4    -  34           $14.09 1/2
Jan 14 Beans     $12.51 1/2     – 14 3/4   -  42           $14.06
Mar 14 Beans    $12.37          – 13 1/4     -  35           $13.77 3/4
Jul 14 Beans      $12.24 1/2     – 10 1/4   -  25 1/4   $13.50 3/4
Nov 14 Beans    $11.45 3/4     – 12 1/2   -  19 1/4    $13.15
Nov 15 Beans    $11.41 3/4     – 10 1/4   -  20           $12.71 1/2
Dec 13 Wheat    $ 6.67 3/4     +    1/4   -  23           $ 8.34 1/2
Mar 14 Wheat    $ 6.79 3/4     +    1/4   -  22           $ 8.45
Jul 14 Wheat     $ 6.84 3/4     +  1 1/4   -  16 3/4    $ 8.22 1/4

KCBT Closes

Dec 13 Wheat   $ 7.33 1/2     -  7         -  25 1/2    $ 8.90
Mar 14 Wheat   $ 7.36            -  6 1/4   -  23           $ 8.90 1/2
Jul 14 Wheat    $ 7.22 3/4     -    1/4   -  14 1/4    $ 8.39

MPLS Close

Dec 13 Wheat   $ 7.25 1/2     -  4 3/4   -  19 1/2   $ 9.03 1/4
Mar 14 Wheat  $ 7.37            -  4            -  18         $ 9.06 1/2
Jul 14 Wheat    $ 7.48 1/2    -  1 3/4   -  16            $ 8.90

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