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What's Happening
in MarketMaxx?
Sept. 2, 2008
As a weakened tropical storm Gustav churns through parts of Mississippi,
Arkansas, Louisiana, Oklahoma, Texas and other states, farmers in those
regions remain concerned about severe damage to crops. At the same
time, Hurricane Hanna is threatening the East Coast and could cause
problems for growers in Georgia and other states. The impact of these
storms will likely cause reactions to corn and soybean markets this
week; how, no one really knows. But corn prices were off over 16
cents/bu. yesterday, and soybeans were down over 25 cents.
On a lighter note, the MarketMaxx corn and soybean marketing
games are entering the final two months of trading. Remember,
MarketMaxx ends Oct. 31, so be studying how to get all of your
remaining simulated corn and soybean bushels traded before then. All
100,000 bu. of corn and 50,000 bu. of soybeans must be traded in order
for you to win. And remember, you must be actively farming and have not
served as a commodity broker in the past five years to be eligible for
the great prizes below.
MarketMaxx Leaderboard
Top 10 Leaders – Corn Contest
Greg Salac, Summerdale, AL, $10.07.83
Thomas Salac, Robertsdale, AL, $9.28.2
Howard Wilson, Marlette, MI, $8.68.14
Kent Borstad, Faulkton, SD, $8.30.74
Roy Sangmeister, Manhattan, IL, $8.24.28
Greg Kaiser, Foley, AL, $8.05.68
Corey Brandau, Peotone, IL, $7.97.18
Charles Bonner, Summerdale, AL, $7.97.1
David Bitto, Elberta, AL, $7.90.78
Edward Mitteness, Astoria, SD, $7.71.58
Top 10 Leader Stats - Soybeans
Roy Sangmeister, Manhattan, IL, $21.98.89
Corey Brandau, Peotone, IL, $21,62.99
Ed Krelo, Elkville, IL, $18.84.62
Thomas Salac, Robertsdale, AL, $18.41.81
Greg Salac, Summerdale, AL, $17.98.18
Greg Kaiser, Foley, AL, $17.34.65
Jim Spahr, Seward, NE, $15.98.47
Steve Mercer, Kearney, NE, $15.87.7
Rachel Wilson, Reeds, MO, $15.84.92
Dave Huitink, Orange, IA, $15.72.24
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MarketMaxx Prizes
There are some big prizes in MarketMaxx. If
you’re a farmer who hasn’t served as a licensed commodity broker the
past five years, you can win a year’s use of 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. Corn and
soybean futures charts help you follow the movement of the most recent
three-month contracts. 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.
Got a question about a MarketMaxx trade, then visit the
MarketMaxx forum. It’s at www.marketmaxx.net/ and gives you
an opportunity to network with other players. The site enables you to
monitor how your trades in the corn and soybean contests stack up to the
leaders.
Market
Commentary
Looking Ahead -- Forward Pricing Opportunities For
’08 Crops
By Kevin McNew, President, Cash Grain Bids
Grain prices have been in a steep slide over the past two months.
Concerns have waned about yield losses as a result of the early season
floods, and now most are expecting normal to perhaps even better than
normal crop yields for the forthcoming harvest. Since July 4th, corn
futures plummeted nearly $3/bu., although they’ve bounced back a $1
over the last few weeks of trading. Meanwhile, soybeans gave up $4/bu.
but have managed a $1.50-bounce in the recent recovery.
A full-fledged recovery to the highs set back in early July seems
unlikely at this juncture. The market seems prone to trading to the
downside and with the summer quickly running out there seems like little
incentive for traders to push price levels higher. As such, it seems
like an opportune time to explore forward pricing opportunities for
new-crop corn and beans. Should you price your crop for harvest delivery
or hold on to it and face added storage costs?
This year in particular it will be important to gauge your cost of
storage. Higher energy costs mean added costs for drying and storing the
grain, even if on-farm storage is an option. Second, holding $13
soybeans and $6 corn is a lot more costly then holding $6 soybeans and
$3 corn. If you are borrowing money such as on an operating loan at 8%,
then holding corn or beans instead of paying back those loans is costing
you 4 cents/bu. per month for corn and 8.7 cents per month for soybeans.
So, adding on to that a 3-cent monthly cost of storing grain would put
your monthly storage charge at around 7 cents a month for corn and 12
cents a month for soybeans -- a pretty hefty price tag to overcome.
Will the market guarantee you 7 cents (12 cents) a month for storing
corn or soybeans this year? To answer that question, we examined what
elevators, ethanol plants, river terminals and other grain buyers are
paying for various forward contracts after harvest. The analysis is
based on same-buyer comparisons from one month to the other to assure
consistency in quoted spreads.
For example, using Iowa, December forward contracts are on average 9.1
cents/bu. higher than the October price. Storing it until March, you
could lock in an extra 24.3 cents over the harvest-time price in Iowa.
So, does it pay to store or would you be better off selling at harvest?
The answer appears to depend on where you farm. Western Corn Belt states
have limited opportunities for storing at a profit. In fact, only in
South Dakota could you earn a positive storage return when you factor in
costs, this occurs in January, where you would earn an extra 2.7
cents/bu. over storage costs. In the Eastern Corn Belt states of
Illinois, Indian and Ohio, storage seems more feasible. Storing corn
until January seems to be the best option and makes an extra 5-9
cents/bu. over storage costs.
For soybeans, costs are higher and the prices for deferred delivery
don’t appear to justify the added costs. Again, the eastern belt fairs
better when it comes to storing. Farmers in these areas may be able to
earn about 2-cents/bu. more over harvest delivery when you factor in
storage costs.
This year more than ever you will want to do your math. Examine your own
storage costs; carefully weigh those costs against the the returns be
offered for different delivery periods by your local buyers. However, it
seems likely most farmers will find it best to just forego storage, and
push the crop to the market off the combine.
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Additional
Commentary
Corn and Soybean Ratings Decline
By Richard Brock, President, Brock & Associates
Corn and soybean conditions declined in late August as dry weather
across the Midwest led to some moisture stress on crops. But U.S. crop
ratings remained above a year earlier.
Crop development remained clearly behind normal after the slow start to
the growing season. A lack of moisture slowed development in some areas.
U.S. corn conditions were rated 64% good/excellent, down from 67% a week
earlier, but up from 59% a year earlier, according USDA’s weekly crop
update. U.S. soybean conditions were rated 61% good/excellent, down from
62% a week earlier, but up from last year’s reading of 54%.
USDA reported that 68% of the U.S. corn crop was in the dough stage,
down from a five-year average of 82%, while only 26% of the crop had
started denting against an average of 47%. Some 88% of the U.S. soybean
crop was said to be setting pods compared with a five-year average of
94%.
Moisture stress on crops was most noticeable in the eastern Midwest with
the good/excellent ratings for Ohio’s corn crop down 9 percentage
points and the rating for Indiana’s falling by 6 points. The
good/excellent rating for Ohio’s soybean crop fell 7 percentage
points, while the rating for Indiana soybeans was down 4 points from a
week earlier.
In the top corn- and soybean-producing state of Iowa, corn conditions
were rated 65% good/excellent, down from 69% a week earlier and 70% a
year earlier.
Only 13% of the Iowa crop had reached the dent stage, well behind the
five-year average of 40%. Iowa soybean conditions were rated 63%
good/excellent, down from 65% a week earlier and 75% a year earlier.
An estimated 89% of the state’s soybean crop was setting pods against
a five-year average of 98%. Despite recent dryness, topsoil moisture
remained adequate/surplus across 67% of Iowa, while subsoil moisture was
adequate/surplus over 82% of the state.
In the No. 2 producing state of Illinois, corn conditions improved to
74% good/excellent from 72% a week earlier and 72% a year earlier.
However, only 29% of Illinois corn was reported to be denting, versus a
five-year average of 63%. Illinois soybean conditions also improved to
68% good/excellent from 66% a week earlier and 63% a year earlier. Some
92% of Illinois soybeans were setting pods against an average of 95%.
Illinois soil moisture was rated 61% adequate/surplus.
For more information on crop conditions and market trends, go to www.brockreport.com/.
Other News That Can
Impact Corn And Soybean Prices
New Tool Offers Comparison Of Old And New Farm
Legislation
USDA’s Economic Research Service has released an Internet-based,
side-by-side comparison of key components of the 2008 Farm Bill with
previous farm legislation. The National Corn Growers Association (NCGA)
welcomed this informational resource on the new law. “Federal
legislation is often complex and cumbersome,” says Ron Litterer, NCGA
president. “Having a look at how the new farm bill measures up
compared to the prior law is a useful resource for growers and
others.”
The 2008 Farm Bill sets priorities for a broad range of farm- and
food-related programs for the next five years. The new farm bill Web
site includes new features such as an A-to-Z list of major provisions, a
user's guide and a search function.
Go to www.ers.usda.gov/farmbill/2008/
for a side-by-side look at the old and new farm bills.
Saudis Look To Buy Ag Land Overseas
Dow Jones reports that Saudi Arabia plans to set up a new
investment fund to buy agricultural land overseas in an effort to meet
rising food demand in the Middle East's largest economy. "The Saudi
government and agricultural firms will invest in the new company," says
Abdullah Al Shoaibi, a senior engineer at the Saudi Fund For
Development, which will establish the new investment company.
Oil-rich Persian Gulf Arab states, which pump a fifth of the world's
oil, are rushing to buy land overseas amid rising concerns over food
security after a global jump in the price of agricultural commodities.
Wheat and rice supply for the domestic Saudi market will be the new
fund's initial priorities, the Saudis say. Rapid population growth
across the Gulf is also forcing the region's planners to divert more
energy, previously allocated for agricultural production, to feed their
booming industrial and domestic economies.
CME Group Inc. Completes Acquisition Of NYMEX
CME Group Inc. (NASDAQ: CME) has announced that it has completed its
acquisition of NYMEX Holdings, Inc. (NYSE: NMX). The combined companies
will provide customers around the world with access to all major
benchmark asset classes, including interest rates, equity indexes,
foreign exchange, energy, agricultural commodities and metals.
CME, which includes the Chicago Board of Trade, says the merger creates
a company with pro forma 2007 annual revenue of $2.7 billion and average
trading volume of approximately 14.2 million contracts per day in the
first two quarters of 2008. Customers from more than 85 countries trade
CME Group products, primarily electronically.
Corporate headquarters of the combined company will remain in Chicago.
CME Group's New York office will be located at the NYMEX World
Headquarters.
Ag Groups Ask Congress To End Railroad Antitrust Exemptions
Diverse interests within the U.S. agriculture sector, including the
American Farm Bureau and the National Farmers Union, have agreed to join
forces to stop the railroads’ monopoly stranglehold on rural America.
The groups are calling on Congress to pass reform legislation to end the
railroads’ hidden tax on products shipped by rail. They say the hidden
tax, which results from the railroads’ abuse of their monopoly power,
hits farmers and rural America especially hard, because of their
reliance on freight rail transportation for shipping and receiving
goods.
“Rural America is getting fleeced by the railroads, one shipment at a
time,” says Glenn English, chairman of Consumers United for Rail
Equity and CEO of the National Rural Electric Cooperative Association.
“Rural areas are more likely to be served by only one railroad, and
railroads use that unrestrained market power to drive up prices with
overcharges on everything from grain shipments for food and fuel to coal
for electricity.”
Also weighing in with their support of rail reform legislation are the
American Coalition for Ethanol, as well as the Alliance for Rural
America, a broad 13-member coalition whose member organizations include
the American Corn Growers Association, the National Farmers Organization
and the American Agriculture Movement. These organizations have come
together to support passage of the Railroad Antitrust Enforcement Act
– H.R. 1650 in the House and S. 772 in the Senate. The legislation
would end the railroads’ exemption from antitrust law, to which
virtually all other U.S. businesses must adhere.
U.S. Grain Exports Snagged By Infrastructure Delays
General Financial/Business News reports that across the country,
from grain elevator to grain elevator, golden wheat and corn are piled
in towering mounds, waiting for a rail car to haul them to market.
It's the dark side of the booming global demand for U.S. corn, wheat and
soybeans. The surge in exports is revealing inefficiencies in the
country's railways, highways and rivers that carry the grain that helps
feed the world. And those bottlenecks are costing farmers, shippers and,
ultimately, consumers millions of dollars a year.
Mark Hodges, the executive director of the Oklahoma Wheat Commission,
has seen it firsthand. Earlier this summer, when consumers around the
world hungered more than ever for American wheat and corn, he hopped
into his pickup truck and toured local grain elevators. "When you're
putting wheat on the ground, there's going to be a loss," Hodges said.
"They don't ever like to put it on the ground, but when wheat is $7, $8
or $10/bu., they sure don't like to put it on the ground."
A large harvest this fall is expected to test the system even further.
Some agribusiness groups worry the bottlenecks could hurt the U.S.
standing as a global food provider as other nations, such as Brazil and
Argentina, compete for a lucrative share of the market.
Cattle On Feed Placements Low
The most recent USDA Cattle on Feed Report came in as somewhat of a
bullish surprise due to lower-than-anticipated placements. July 2008
placements were the second lowest on record for July. Marketings came in
very near expectations while on feed numbers remain below a year ago.
Placements by region were in sharp contrast; down 10% in the Corn Belt
while up 10% in the Southern Plains.
The lower than expected placements could give a boost to December and
February live cattle futures prices. There is nothing in the report that
changes the outlook for higher prices, according to Texas Cattle Feeders
Association. Current projections suggest a high of $107/cwt this fall.
With the tightest supplies currently projected to occur in October, look
for potential highs to occur near this time period.
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Agribusiness Job Web
Site
The new ag employment Web site www.agribizjobs.com/home/
offers excellent opportunities for job seekers and ag companies. The
site, part of 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
Want quick and easy access to the latest analysis of
corn and soybean futures prices and market trends, go to our flagship
Web site cornandsoybeandigest.com/.
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.
MarketMaxx is a biweekly e-newsletter for registered
players of MarketMaxx. To make trades or update your MarketMaxx account
visit http://www.MarketMaxx.net.
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Copyright 2007, Penton Media. All rights reserved. This article is
protected by United States copyright and other intellectual property
laws and may not be reproduced, rewritten, distributed, re-disseminated,
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