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What's Happening
in MarketMaxx?
August 19, 2008
USDA’s crop production forecast only added to the volatility seen in
corn and soybean markets. Corn prices ended the week down about 28
cents/bu. after up and down moves following the report last Tuesday.
December 2008 corn futures closed Friday at $5.49/bu. November 2008
soybeans closed the week at $12.19/bu. after a 55-cent drop on Friday.
But both corn and soybeans rallied back strong yesterday.
Corn production is forecast at 12.3 billion bushels, down 6% from last
year but 17% above 2006. Yields are expected to average 155 bu./acre,
up 3.9 bu. from last year. It would be the second highest on record,
behind 2004. Soybean production is forecast at 2.97 billion bushels, up
15% from last year but down 7% from the record high production of 2006.
Yields are expected to average 40.5 bu./acre, down 0.7 bu. from 2007.
But it would still be the fourth largest production on record.
As Missouri agricultural economist Melvin Brees points out in our Market
Commentary section below, hopefully most growers took advantage of the
high prices seen earlier in the summer. There will likely be other good
marketing opportunities before harvest. But there will also be more
market plunges.
Using the marketing tools available on www.MarketMaxx.net can help you
become a better marketer, like those who have made some sound marketing
moves to obtain leaderboard status.
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MarketMaxx Leaderboard
(August 16, 2008)
Top 10 Leaders – Corn Contest (August 16, 2008)
Greg Salac, Summerdale, AL, $9.09.6
Howard Wilson, Marlette, MI, $8.68.14
Kent Borstad, Faulkton, SD, $8.30.74
Thomas Salac, Robertsdale, AL, $8.23.4
Roy Sangmeister, Manhattan, IL, $7.54.1
Marcus Spotts, Nora, IA, $7.33.27
Corey Brandau, Peotone, IL, $7.30.98
Scott Odle, Linden, IN, $7.30.1
Matt Shriver, Ursa, IL, $7.28.94
Greg Kaiser, Foley, AL, $7.21.53
Top 10 Leaders – Soybean Contest (August 16, 2008)
Roy Sangmeister, Manhattan, IL, $20.01.8
Corey Brandau, Peotone, IL, $19.90.95
Ed Krelo, Elkville, IL, $17.05.17
Greg Salac, Summerdale, AL, $16.55.08
Thomas Salac, Robertsdale, AL, $16.54.12
Greg Kaiser, Foley, AL, $15.60.43
Scott Arthur, Washington, IN, $15.54.78
Rachel Wilson, Reeds, MO, $15.47.12
Kile Coleman, Gravity, IA, $15.33.21
Rick Lemke, Mequon, WI, $15.08.66
MarketMaxx Prizes
Remember – you’re playing for some major prizes in
MarketMaxx. If you’re a farmer who hasn’t served as a
licensed commodity broker the past five years, you might take the keys
to a new combine or tractor. Go to www.marketmaxx.net/ today and
learn all about the great prizes you’re playing for in the
MarketMaxx contest.
Grand prize for the corn contest is a Gleaner R5 or A5 series combine
(up to 100 combine separator hours). The soybean winner will receive a
year's use (not to exceed 250 hours) of the choice of any PowerMaxx
CVT-equipped AGCO RT or DT series tractor.
Second prize for each contest is a complete computer system plus
software from Syngenta Crop Protection. Third prize in the corn contest
is a complete Leica mojoRTK auto-steer system from Leica Geosystems.
Third prize in the soybean contest and fourth prize in the corn contest
is a DICKEY-john mini GAC Plus handheld moisture tester.
Visit www.marketmaxx.net/ and
explore numerous links to help you improve your marketing plan. Look
over economist Kevin McNew’s review of corn and soybean basis trends.
There are also links to The Brock Report, CBOT, Chicago
Mercantile Exchange, Kansas City Board of Trade, New York Board of
Trade, Minneapolis Grain Exchange and Cash Grain Bids.
Also, go to www.marketmaxx.net/
and check out the MarketMaxx forum. You can also monitor how your
trades in the corn and soybean contests stack up to the leaders.
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Market Commentary
Is There A Corn Marketing Strategy For The Current
Situation?
By Melvin Brees, University of Missouri Agricultural Economist, Food and
Agricultural Policy Research Institute (FAPRI)
This is not usually a good time of the year to sell corn. The seasonal
pattern for corn prices is that quite often prices peak in late June or
early July and then decline as they have this year. However, it is also
not unusual for prices to bounce back following their summer low,
especially with late-season production worries – much like what are
occurring this year.
USDA lowered 2008-2009 corn price forecasts by 50 cents. They are now
expected to range from $4.90 to $5.90. New-crop corn prices at most
locations have been below or in the lower one-half of this expected
price range. Hopefully, most have already priced or at least protected
prices for corn that must be delivered at harvest time.
While the current supply/demand projections and a carryover of more than
1.1 billion bushels appears to provide some supply cushion, any
production disappointments could quickly reduce corn supplies to
critical levels and send prices sharply higher. That could result in
opportunities for making additional sales.
Soybean market prices also continue to be volatile. Prices have recently
been pressured by fund liquidation, strength in the dollar, improving
crop condition reports, export sales cancellations and other market
factors. November 2008 soybean futures prices went down by more than
$4.50/bu. following a June high of more than $16.30. In spite of their
tighter supply estimates, USDA lowered 2008-2009 soybean price forecasts
by 50 cents with an expected range from $11.50 to $13. While old-crop
basis has improved, many new-crop cash bids have been well below the
bottom of this range.
However, the August USDA estimates with lower production and unchanged
use projections provided bullish market news. The soybean market
responded with about $1 price gains in the two days of trading following
the report before correcting with lower prices on Thursday and early
Friday morning.
Volatile corn and soybean market prices can be expected to
continue. Production risk remains high due to the lateness of the
crops. The tight supply/demand balances for both corn and soybeans
suggests the markets will have to bid for acres again in 2009. Energy
prices, fund trading, dollar value, strong world demand, tight world
grain supplies, politics and a number of other factors create additional
uncertainty in the grain markets.
Market volatility produces marketing opportunities, but making
additional sales or deciding to store grain when markets are volatile
involves considerable price risk. Price action since the June highs also
demonstrates how quickly prices can decline in volatile markets. When
prices are volatile, marketing strategies need to include protection
against downside risk, as well as upside pricing goals.
Additional
Commentary
Crop Ratings Mostly Steady To Lower
From The Brock Report
USDA’s rating of U.S. corn conditions held steady last week, but
soybean conditions declined slightly as dry weather affected crops in
the eastern Midwest.
USDA’s latest weekly crop update rated corn condition 67%
good/excellent, unchanged from a week earlier and up from 58% a year
earlier as improved conditions in the western Corn Belt offset lower
ratings in the eastern belt.
U.S. soybean conditions were rated 62% good/excellent, down from 63% a
week earlier, but up from 54% a year earlier.
Crop development continued to trail well behind normal, with USDA
estimating that 49% of the U.S. corn crop had reached the dough stage
against an average of 68%, while 14% of the crop was denting against an
average of 30%.
An estimated 75% of the soybean crop was said to be setting pods, behind
a five-year average of 87%.
In the No. 2 producing state of Illinois, the portion of the corn crop
rated good/excellent fell by 4% to 68% due to the effects of drier
weather, but that decline was offset by improved conditions in the top
corn state of Iowa, where the good/excellent rating rose 4 points to
69%.
Corn conditions also declined in Indiana, Ohio, Michigan and Wisconsin,
with the impact of dry weather most notable in Wisconsin, where the
good/excellent rating fell by 11% to 64%.
Soybean conditions also declined across the eastern Midwest, with
Illinois soybean conditions rated 66% good/excellent, down 4% from a
week earlier.
Soybean conditions also declined in Indiana, Ohio, Michigan, Wisconsin
and Minnesota. Soybean conditions in the top producing state of Iowa
held steady at 65% good/excellent.
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Other News That Can
Impact Corn And Soybean Prices
Pork Exports Stupendous
National Hog Farmer, sister publication to Corn & Soybean
Digest says the good news last week was something that virtually
everyone already knew: Pork exports have been stupendous! June pork
exports were 111% larger than a year ago and brought year-to-date (YTD)
total pork exports to just over 1.8 billion pounds, 67% larger than last
year.
The star market was once again China/Hong Kong with June shipments there
totaling just over 96 million pounds product weight, 552% larger than
last year. June’s shipments put YTD pork trade with China at 427
million pounds, 483% larger than in 2007. Japan was the second-largest
market again in June but remains our largest market YTD at 469 million
pounds, 18% larger than last year.
U.S. exports to other markets have also performed well this year. YTD
shipments to Russia are up 138%, while trade with Mexico and Canada has
grown by 29% and 25%, respectively. The value of U.S. pork exports
through June has grown by 57%. China/Hong Kong also leads in this
category with shipments there growing by 681% this year. The value of
shipments to Russia has grown by 157% so far in 2008.
Note that Russia’s percentage growth for value is larger than its
volume percentage growth, indicating that this historically
hyper-price-sensitive market is demonstrating a willingness and ability
to pay more for pork products.
Beef exports are also up A new report by the U.S. Meat Export
Federation shows demand for U.S. beef is surging. For the first six
months of 2008, beef and beef variety meat exports increased by 30% over
the same period last year, reaching a total volume of 445,036 metric
tons. The dollar value of the exports -- $1.58 billion --represents a
39% increase. Exports in the first half of this year reached 71% of the
volume and 87% of the value achieved in the first six months of 2003
(before the Mad Cow scare reduced exports substantially).
Auto Industry Looks To Ethanol
Soyatech reemphasizes that ethanol has emerged as a key part of
the national energy debate. It's seen as a solution to a variety of
ills, ranging from high gas prices to global warming to an unquenchable
thirst for foreign oil. As such, farmers, politicians and auto
executives are calling for accelerated production of it.
“We believe that sustainable biofuels are the right way to go,”
says General Motors Spokesman Alan Adler. “That's why we've committed
to making half of our U.S. production E85-capable by 2012.”
GM says it already has 3 million E85 vehicles on the road today and by
2012 it plans to be cranking out 2 million of them a year. Similarly,
reports Soyatech, Ford Motor Co. has pledged that it, too,
will make half its production vehicles capable of running on alternative
fuels by 2012 and virtually every other global automaker has similar
plans for a stable of flex-fuel vehicles.
Much of the motivation for this migration to ethanol stems from the
Energy Independence and Security Act of 2007. Among its many provisions,
the Energy Act calls for production of 36 billion gallons of biofuels by
2022, up from 4.7 billion gallons in 2007. Fifteen billion of those
gallons will come from corn, while the rest will be derived from other
sources such as sugarcane and possibly even trash and old tires.
“We know that gasoline and food prices are going to stay high,” says
John Caupert, director of the National Corn-To-Ethanol Research Center.
“So the question is this: Do you want to send your hard-earned U.S.
dollars to a Saudi prince or an American farmer? Ethanol gives you that
choice.”
Two Key USDA Deadlines In September
Farmers may need to circle the dates of Sept. 16 and Sept. 30 on their
calendars, the National Corn Growers Association (NCGA) says. Sept. 16
is the deadline for signing up for the permanent disaster program
Congress included in the 2008 Farm Bill, while Sept. 30 in the last day
to enroll in the 2008 Direct and Counter-Cyclical Payment program.
NCGA believes the new permanent disaster program is a big improvement
over previous ad hoc programs that had to be passed individually by
Congress. “The new disaster assistance program is better because it is
more comprehensive than past programs, which took an ad-hoc approach,”
says NCGA President Ron Litterer. “This approach is not only more
equitable and reliable, but it helps to eliminate duplicate payments for
the same losses.”
The Food, Conservation and Energy Act of 2008 requires participants in
the new disaster programs to have crop insurance or non-insured crop
disaster assistance coverage for the land for which assistance is being
requested, and for all farms in all counties in which they have an
interest. Because this law was enacted after the application periods had
closed for those programs, a waiver was authorized that allows producers
to pay a buy-in fee to be eligible for this new disaster assistance.
Payment of the applicable fees will allow growers to be eligible for
benefits for losses under Supplemental Revenue Assistance Payments
Program (SURE) and the Livestock Forage Disaster Program, among others.
Litterer adds that Sept. 30 is the deadline for growers to sign up for
the 2008 Direct and Counter-Cyclical Payment Program, which helps
deliver certainty for the crop year and the option of a timely advance
payment.
“It’s important for growers to be aware of these deadlines so they
can make informed decisions about an important part of farm finances,”
says Litterer. “Given how many applications must be reviewed, we urge
farmers to learn what they are eligible for and apply as soon as
possible.” For more information, growers are urged to call or visit
their local USDA Service Center.
Land Values Up
Farm real estate values, a measurement of the value of all land and
buildings on farms, averaged $2,350/acre on Jan. 1, 2008, up 8.8% from
2007. The $2,350 is a record high and $190 more than a year earlier.
Both cropland and pasture values for 2008 are record highs. Cropland
value rose by 10% to $2,970/acre, up from the previous high of $2,690 in
2007. Pasture value rose by 6% to $1,230.
While commercial and residential development has slowed in many regions,
farm real estate values continue to increase. Strong commodity prices
and farm programs, outside investments, favorable interest rates, and
tax incentives continue to be the factors that drive farm real estate
values to record levels. Livestock prices, recreational use and urban
development remain the predominant influences that increase pasture
values.
Regional increases in the average value of farm real estate ranged from
1.6% in the Northeast region to 15.5% in the Northern Plains region.
The highest farm real estate values remained in the Northeast region,
where development pressure continued to push the average value to
$5,080/acre.
The Northern Plains region had the lowest farm real estate value, at
$1,110/acre, up 15.5% from the previous year. In the Corn Belt region,
cropland values rose 14.8% to $4,260. The Southern Plains region
increased from the previous year, to $1,490. The Northern Plains region
also had the highest average percentage increase in pasture value, 19.7%
above 2007.
In the Southern Plains and Mountain regions, which account for more than
half of the pasture in the U.S., pasture values per acre increased 17.1%
and 6.4%, respectively.
Agribusiness Job Web
Site
Looking for more good employees or ready for a move to a
new agribusiness position? Then go to www.agribizjobs.com/home/.
Penton Media’s Ag Group, of which Corn & Soybean Digest is a
member, has a targeted online career center. Agribizjobs.com
offers industry employers a growing, qualified audience of ag
professionals and industry job seekers with agribusiness-specific
categorized job listings. It’s a joint effort by Corn & Soybean
Digest and its sister publications, BEEF, Farm Industry News,
Farm Press, Hay & Forage Grower and National Hog Farmer.
At www.agribizjobs.com/home/
employers can view complete but anonymous resumes for free, and pay only
to connect with a job seeker. Job seekers can post resumes in
ag-specific employment categories and sign up to receive e-mail alerts
when new positions are posted that match their search criteria.
The site’s Anonymous Resume Bank enables both active and passive job
seekers to list their experience and qualifications in a protected
environment, allowing them to stay connected to the employment market
while maintaining full control of their confidential information.
Updated Marketing,
Biofuels And Other News At Corn & Soybean Digest Web Site
Follow the latest analysis of corn and soybean futures
prices and market trends at cornandsoybeandigest.com/ --
our flagship Web site. There’s information on the new farm bill
regulations; insect, weed and disease control; market commentary; and
lots of other news you can use to better manage your farm.
If your latest issue of Corn & Soybean Digest magazine isn’t
handy, the site’s magazine archives section enables you to access it
and past issues to revisit subjects that can impact your corn and
soybean production and marketing. The site's news from across the Corn
Belt, other corn- and soybean-production areas and the worldwide markets
for corn and beans can help you stay on top of events that can help or
hurt prices.
Go to cornandsoybeandigest.com/
now and stay up-to-the-minute on the timeliest analysis and other
information on corn and soybean production and prices.
Subscribe
To These Other E-Newsletters from Corn & Soybean Digest
There are several other e-newsletters from Corn &
Soybean Digest. They include F.I.R.S.T. Harvest Reports
(seasonal), Corn E-Digest, Soybean E-Digest and Crop News Weekly.
Check them out at subscribe.cornandsoybeandigest.com/subscribe.cfm?tc=NLSUB.
Thanks for taking time to review this MarketMaxx newsletter. If you have
comments or questions about MarketMaxx, e-mail your editor, Larry
Stalcup, at beef2lar@suddenlink.net.
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