Crop Prices and USDA Pre-Report Worksheet - Monday, 07 December 2015

As producers we have been waiting for some infusions of positive news in the market that can spark a rally in prices.  Kevin Van Trump of the Van Trump Report points out “we remain stuck in a price-range for corn somewhere between $3.20 and $4.40 per bushel.  Simple math tells us the mid-point of this range is $3.80, not so surprisingly that seems to be where corn appears to feel the most comfortable.” 

This graphic is a 5-year technical chart of corn by The Van Trump Report

Van Trump went on to say that in his opinion corn has some upside potential in 2016 “especially with the funds short nearly -150,000 contracts.  If we can get some additional weather headlines out of South American, particularly larger uncertainty surrounding Brazil’s second-crop corn acres, I suspect we could test the upper-end of the range.” He feels that the 3 key ingredients needed for higher corn prices are:

  • A drop in value of the U.S. Dollar.
  • Additional negative weather for South America’s crop regions.
  • Higher crude oil prices.

IF these three factors would line-up we have a very good chance of seeing prices work higher.  IF this series of factors could remain in place for a few days then he believes that those holding short contracts would jump out of those positions but he cautions the chances of all of this happening aren’t high but there is hope.

  • The U.S. Dollar dropped by -2% Thursday, this is the Dollars worst day in 6 years.  This drop in the Dollar spurred a small rally in prices late last week.
  • Conditions in Brazil are very dry.  A farmer from Mato Grasso, Brazil reported recently that soybeans are beginning to fill the pods and without rain he believes his crop is “toast”.  In addition forecasters are predicting a dry spell in January which would add more crop stress.

Interesting note:  The World Bank has stated in their latest Commodity Markets Outlook that they expect agricultural commodity prices will finish 2015 down an average of -13%.  The decline is much higher for soybeans and other higher protein meals, those commodities are looking at a decrease in value of -25% on average this year.

Wednesday, December 9th, the USDA will release the December Supply and Demand report.  The worksheet is below:

U.S. Ending Stocks

 

December Est.

Avg. Trade Guess

Trade Range

USDA Nov.

Corn

???

1.768

1.640 - 1.810

1.760

Soybeans

???

0.462

0.445 - 0.478

0.465

Wheat

???

0.918

0.910 - 0.936

0.911

World Ending Stocks

 

December Est.

Avg. Trade Guess

Trade Range

USDA Nov.

Corn

???

212.08

209.00 - 214.00

211.91

Soybeans

???

82.64

81.00 - 84.00

82.86

Wheat

???

226.43

224.00 - 228.73

227.30

 

  • All values are based on billion bushels.

Much of the U.S. is enjoying above normal temperatures, some parts of the northern Plains and the Midwest will see morning low temperatures higher than average high temps for this time of year.  Areas of low pressure are expected to move east into the central U.S. and Great Lakes region later this week.  Strong to severe thunderstorms are expected to arrive between Friday and Sunday in the southern U.S. and then move into the Ohio Valley, mid-Mississippi Valley and Southern Great Lakes.  At this time the computer models aren’t in agreement but it’s possible that if temperatures drop low enough measurable snowfall could be expected from the Plains to the upper Midwest.  Behind this system more seasonable temperatures are expected to return.

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