USDA - July 9th, 2010

The USDA Reports out this morning were neutral to negative. Look for lower openings across the board. Click here to see the entire report: http://usda.mannlib.cornell.edu/usda/current/wasde/wasde-07-09-2010.pdf

USDA basically gave us a repeat of the positive numbers from their Stocks and Acreage reports June 30th. Since the market has been trading the smaller numbers the USDA gave us last week, there is nothing new for the bulls to grab onto from today’s reports. Weather looks mostly beneficial in North America and China leaving only Europe and Russia as areas of a little concern.

We recommend selling the last increment of corn in the bin and the balance of new crop corn you want to have priced before harvest. Be sure to sell enough new crop corn to cover cash flow needs until March. You don’t want to be forced to sell at a cheap price to pay a bill you know will be due on January 1.

Use this rally to buy put options on all 2010 corn you are leaving unsold. Call your Roach Ag consultant to get put options purchased.

Don’t let anybody (most likely yourself but possibly some broker who thinks he or she knows what prices will be) talk you out of making some small sales on December 2011 and 2012 corn. Sell futures with each year currently at $4.17 yourself if your cash buyer won’t offer a decent contract.

Soybeans are still one day away from a Sell Signal. We base our Sell Signals off the month with the greatest volume and that is currently November. July beans which have considerably smaller volume are solidly in a Sell Signal. Nothing wrong with selling some old beans you have kept for gambling and getting a start on next week’s Sell Signal on new crop.

June 30th, 2010

Today’s much awaited USDA Acreage and Stocks Reports were bullish for corn, positive for beans, and negative for wheat.

The USDA reported that U.S. farmers planted 87.9 million acres of corn, up 2% from last year but well below the average trade estimate of 89.229 million acres. Using 170 bushels per acre average yield gives us a crop 226 million bushels smaller than traders figured. The Stocks were also smaller than expected, coming in at 4.31 billion bushels, 288 million smaller than the average trade guess.

When you add the smaller stocks to the smaller acreage total, corn supplies are down over 500 million bushels. That is a very big difference from what traders had in their minds when corn closed yesterday. Corn is worth more and will be sharply higher today. We also have a bigger demand base (smaller stocks means bigger usage) or the USDA will eventually be forced to reduce last year’s production number. These numbers increase the need to grow a big crop this year.