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Profit Watch Commentary – January 3, 2014

We will finish the first week of 2014 with a double whammy – a plunge in prices and a plunge in temperatures. Records are expected to fall across the country as frigid temperatures move in from Canada. Northern Minnesota may see wind chills of -75 degrees on Sunday morning. Wind chills colder than 50 below can cause exposed flesh to freeze in only 5-10 minutes. This weekend is expected to be the longest sub-zero period in 18 years. Bundle up!
The snowstorm in Chicago and out East coupled with the holidays have affected trading volume this week. Hopefully next week everyone will be back to work.
Believe it or not, the big January Crop report is only one week away. Early next week, the trade will be releasing private trade guesses on production and carryout. Informa got ahead of the game, and released their best guess today. As per usual, their production [ ]

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Profit Watch Commentary – Dec. 13, 2013

TGIF.  The rally we had going to start the week got side-tracked.  March corn futures faded about 14 cents from yesterday’s high.  From Monday’s high to today’s low, March beans dropped 36 cents.  Old crop soybeans still managed small net gains on the week.  All corn and wheat contracts lost ground on the week.

Soybeans managed a respectable comeback into the closing bell today led by meal.  The spot basis levels for outbound meal have been rising rather significantly in recent weeks.  Slow farmer movement of beans into processors along with an anticipated uptick in demand were the bullish features in the soya complex this week.  Potential trouble ahead for DDG exports has the soybean trade thinking more meal may have to get into that pipeline.

Of course, the trouble we’re referring to is China having issues with a particular unapproved GMO trait showing up in boats at their ports. The issue [ ]

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Profit Watch Commentary – Nov. 22, 2013

The soybean market caught on fire today. January soybeans closed up 28 cents at $13.195, matching the previous high this month. New crop was up nearly 8 cents at $11.67. Unfortunately, corn and wheat failed to show up to the party. December corn settled slightly lower at $4.22. New crop corn was unchanged at $4.5775. December wheat closed slightly higher at $6.495. July wheat (vs Chicago) closed up 3 cents at $6.59.

Something really strange happened in the grain market this week – grain prices didn’t get beat up! Perhaps we have put in the seasonal low? Soybeans put in the best performance of the week with January futures gaining 39 cents. Wheat got in on the action, but with much smaller gains of a nickel. December corn futures were sharply unchanged.

Wall Street didn’t have a problem with gains this week, or for the past seven straight weeks if you care [ ]

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Profit Watch Commentary – Nov. 15, 2013

Ouch!  Soybeans got smacked today.  A disappointing weekly sales figure from USDA for soybeans and soybean oil greeted the trade first thing this morning.  Then, Informa reminded the world that U.S. producers are likely to plant a record number of soybean acres next year.  Finally, the EPA rolled out some negative news late in the session.  A proposed cut in the RFS mandate for bio-diesel hit the soybean market hard in the closing minutes.  The January bean contract was down more than 35 cents at the low of the day.  March corn was down 6 1/2 cents at the low as the news was bearish for ethanol as well.

Rumors have been swirling for at least a week that the EPA was going to make a major announcement about the Renewable Fuels Standard.  They did in fact roll out a proposal about 15 minutes before the session ended that (if approved) [ ]

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Profit Watch Commentary – Nov. 8, 2013

Whew! The report is out of the way. And, more importantly, it was a great ending to a loooong week. December corn closed 6 cents higher at $4.2675, and posted a key reversal in the process. January soybeans settled nearly 30 cents higher at $12.96. December wheat was 3 cents lower and finished the day near $6.50. For the week, December corn gained a mere penny, January soybean netted 44 cents and Chicago wheat fell 18 cents.

We were happy with today’s rally, but we are thinking the boys on Wall Street are feeling even better. The DOW finished up 168 points to close at a record 15,762 points. It is the 5th straight weekly gain for both the DOW and S&P 500.  The Labor Dept reported that we added about twice as many jobs in October as Wall Street expected. Some analysts felt the jobs numbers were shaky (or will [ ]

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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 [ ]

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Short-Dated New Crop Options

A new, cost-effective alternative to traditional options, short-dated new crop options expire much earlier, resulting in premiums that are lower because of the reduced time value.  The three contract months are May, July, and September with corn options using the underlying December contract and soybean options using the underlying November contract.  Perhaps one of the biggest benefits to using these new options is the ability to trade high impact events, such as USDA reports or a dramatic change in the weather outlook.

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