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AgriSource Commentary  

Friday  January 16, 2009

Quite the week!  Sharp price moves in both directions was a feature.  A bombshell of a USDA started the week with limit-down moves.  A full-blown South American drought and confirmation of huge Chinese soybean purchases helped us finish the week blasting higher.

Argentina will apparently be facing a CRITICAL situation next week if the current forecast is accurate.  Very light and scattered weekend rain is expected across the dry growing areas and then very little chance of beneficial rain is in sight with 100 degree temperatures in the outlook!  Some analysts are projecting losses in South America over the last month or so at more than 150 million bushels of beans and nearly 350 million bushels of corn.  The crop losses will continue to mount if relief doesn’t come soon.

Another market factor for the trade to absorb on Friday was the release of Informa’s 2009 planted acreage estimates.  As you can see below they increased their corn acres 1/2 million from last month and dropped the soybean acres 600,000.  Their numbers are now closer to the numbers that AgriSource customers across the Corn Belt indicated last month.  We’ll be doing another survey in conjunction with the Iowa-Nebraska Equipment Dealers Association at the Iowa Power Farming Show in three weeks.  We’ll be curious to see if our numbers shift with the change in prices.

                                           AgriSource Survey

        Last Yr   Informa Jan  Informa Dec      December

Corn      86.0        82.7         82.2           83.8          

Beans     75.7        80.8         81.4           80.0

As long as we’re on the subject of the upcoming farm show in Des Moines February 3-5....if you plan on coming be sure to look us up.  We’ll have a booth there all three days.  On Tuesday afternoon we’ll be doing a one-hour Market Outlook and Crop Insurance presentation. AgriSource representatives will be putting on several meetings in the coming months.  We’ll keep you posted on where and when.

Update from yesterday:  Do you have the July-August soybean spread on in your brokerage account?  This trade was recommended nearly 3 months ago.  We told you it could be like watching paint dry.  That spread has not moved more than 3 cents week after week.  However, with the incredibly strong pace of exports combined with the South American weather situation AND the prospects for 4 or 5 million more new crop soybean acres this year (which puts a drag on the August contract)....the spread has finally started moving.  It is now trading + 6 1/2.  Those of you that put the trade on at the recommended spread of -2 are now up 8 1/2 cents per bushel.  A few of you put 50,000 bushels (or more) of this trade in place and here’s the math....50k x 8 1/2 cents = $4,250 gross profit.

We may take a look at cashing in the spread next week.  It all depends on the weather “down south” and if the Chinese continue buying beans. 

As you can see below, we recommended an old crop soybean sale this morning and the target was reached near the high of the day. Soybeans have rallied more than $2 1/2 from the December low. It’s time to lighten up on some more old crop inventory, folks.  If the forecast changes for South American and/or China announces to the world that they have bought all the beans they need....the bottom will likely fall out of this market. Consider catch-up advice first thing next week if you missed the sale.

CBOT  Closes                    Today     Wkly Chg  Contract Highs

Mar 09 Corn   $ 3.91         +  25 3/4   -  19 3/4    $ 8.11 1/2

May 09 Corn   $ 4.01 3/4     +  25 1/2   -  19 1/2    $ 8.17

Jul 09 Corn   $ 4.12 1/2     +  26       -  19        $ 8.21 1/2

Dec 09 Corn   $ 4.36 3/4     +  25 3/4   -  17 1/2    $ 7.02

Dec 10 Corn   $ 4.55 3/4     +  22 1/4   -  10        $ 7.03

Mar 09 Beans  $10.20         +  25 1/2   -  16        $16.49

May 09 Beans  $10.29         +  25 3/4   -  16 1/2    $16.51

Jul 09 Beans  $10.38 1/2     +  25 1/4   -  17 3/4    $16.49

Nov 09 Beans  $ 9.72         +  11 1/2   -  57 1/2    $15.54 1/2

Nov 10 Beans  $ 9.87         +  10 1/4   -  53        $15.55 1/2

Mar 09 Wheat  $ 5.78 1/4     +   9 1/2   -  51 1/4    $12.64

Jly 09 Wheat  $ 6.02 1/4     +   9 1/2   -  51        $11.35

Jly 10 Wheat  $ 6.66 1/4     +   8 1/2   -  46 1/2    $11.10 

KCBT Closes

Mar 09 Wheat  $ 6.09         +  14 1/2   -  42        $12.75

Jly 09 Wheat  $ 6.29 3/4     +  14 3/4   -  43        $11.35

Jly 10 Wheat  $ 6.74 1/2     +  14 3/4   -  44 1/4    $11.20

MPLS Close

Mar 09 Wheat  & 6.52 3/4     +  11       -  27 1/2    $13.00

Jul 09 Wheat  $ 6.49 3/4     +   8 1/2   -  41 1/2    $12.20  

The risk of loss in trading commodities can be substantial, and

past performance is not necessarily indicative of future results.

Therefore, you should carefully consider whether such trading is

suitable for you or your organization in light of your financial

condition. Any examples given are strictly hypothetical and no

representation is being made that any person will or is likely to

achieve profits or losses similar to those examples. Neither the

information, nor any opinion expressed shall be construed as an

offer to buy or sell any futures or options on futures contracts.