Craig’s Closing Comments

September 2, 2015

I was doing a little reading on the Roman Empire last night.  I find it interesting that a politician named Clodius ran for the office of tribune on a "free wheat for the masses" platform and won.  Not surprisingly by 45 B.C. one of every three Roman citizens was on “wheat welfare”.  The Roman politicians didn’t stop there.  This idea reached its final apex in the year A.D. 274.  Emperor Aurelian, wishing to provide cradle-to-grave care for the citizenry, declared the right to relief to be hereditary. Those whose parents received government benefits were entitled as a matter of right to benefits as well. Aurelian gave welfare recipients government-baked bread (instead of the old practice of giving them wheat and letting them bake their own bread) and added free salt, pork and olive oil. Not surprisingly, the ranks of the unproductive grew fatter, and the ranks of the productive grew thinner.  As we all know, the Roman Empire eventually collapsed; thankfully our politicians today are much smarter than those of ancient Rome and would never do something so irresponsible with our great nation.

Craig’s Closing Comments

Craig’s Closing Comments

September 1, 2015

Corn:

We had a smattering of news to trade today.  Outside influences weighed heavily on the market today with the news that the Chinese manufacturing data showed industry in that nation contracting at the fast pace in three years.  That had our stock market on the defensive all session and pressed commodity prices lower as well.  In other China related news I see that China’s corn price has dropped 20% in the past month.  The Chinese government is also trying to lower the price of corn it pays to its farmers despite higher input prices.  We are on a roll so let’s go for a third bit of Chinese news.   Corn harvest in Brazil is 99% complete in Mato Grosso and 96% complete in Parana and Brazil is now offering corn into China at a level that is $0.25/bu cheaper than offerings from the USA.

Last night the crop conditions came out and as expected reflected a seasonal reduction of 1% from last week.  We had the funds selling 7,000 contracts today but at the end of the day I am personally getting to an area I would rather buy than sell from a pure speculative standpoint.  After the close FC Stone released their September production survey and had the national average yield pegged at 165.9 bu/acre. I plugged that number into the most recent supply & demand chart and left the rest of the USDA numbers unchanged.

Craig’s Closing Comments

August 28, 2015

I would certainly never pretend to place myself in the pantheon of great market analysts but since I do stick my neck out most every day and project where markets are headed I think it can be instructive to look at what other economic giants have predicted about markets in days past.  As I look at the current economic situation these seem to jump out at me:

John Maynard Keynes in 1927: “We will not have any more crashes in our time.”

H.H. Simmons, president of the New York Stock Exchange, Jan. 12, 1928: “I cannot help but raise a dissenting voice to statements that we are living in a fool’s paradise, and that prosperity in this country must necessarily diminish and recede in the near future.”

Craig’s Closing Comments

August 27, 2015

We have had a great deal of talk about China the past week.  I know folks are getting sick of hearing about it but at the risk of beating a dead horse the following chart really illustrates the role that China plays as the Big Dog in the commodity market.  If their economy falters demand for a lot of commodities could plummet.

Closing Comments

Lynn Miller

August 26^th, 2015

I read an article in Bloomberg today that outlined China’s actions for the past year, the rally and the recent sharp selloff.  These actions have cost world equities a total somewhere in the realm of $5 trillion dollars.  China is looking for scapegoats while the rest of the world is just simply blaming China in one way or the other.  It’s an interesting little read about how this has built over time.

Closing Comments

Lynn Miller

August 25^th, 2015

China continues to be the market mover of the day.  Giving us a corrective tone to start the morning as they announced they would implement further measures to stem the selloff.  They announced cutting key lending rates by 25 points and moreover would lower the banking reserve rations by 5 basis points.  This news did rally broad markets and supported US indices, most notably a 1.25% raise in the dollar.

Corn:

We closed lower today in a choppy low volume day.  I guess if you’re looking for something positive, the Dec contract has been holding between $3.70 and $3.90 during some real volatile times.  Many analysts believe that prices below $3.70 will force bushels to the bin.  Talk a dry August may be reducing yield is floating around, also talk of yields in Iowa shrinking now due to disease pressure.

Technically all three indicators are bullish the December futures.  Mind you; however, that we closed right on the moving average today and the stochastics are in neutral territory, so we could be easily persuaded to make a technical move either direction from here.  Look for support at $3.57 with selling targets at $3.80, $3.94 and $4.05.

Craig’s Closing Comments

Craig Haugaard

August 24, 2015

The headlines are certainly exciting these days.  In case you missed it here are a few that jumped out at me today.

Angry investors capture head of China metals exchange – Financial Times of London

Households just saw $1.8 trillion in wealth vanish as stocks fall – Market Watch

Stock up on canned food for stock market crash, warns former Gordon Brown adviser – The UK Independent

Corn:

Craig's Closing Comments

Craig Haugaard

August 19, 2015

Corn:

The Pro Farmer crop tour rolled on today with reports coming from Nebraska and Indiana.  Tour participants pegged the Indiana yield at 142.9 bu/acre versus the USDA’s August estimate of 158 bu/acre.  They came up with an average of 165.2 bu/acre for Nebraska.  The USDA has Nebraska pegged at 187 bu/acre.  Historically the Pro Farmer tour has been fairly low on the Nebraska yields.  If history is any guide today’s results probably mean we should see Nebraska at about 181 bu/acre. 

In domestic demand news the weekly ethanol report showed 101.325 million bushels used in the production of ethanol last week.  We are left needing to average 97.959 million bushels per week to achieve the USDA projection.

In news out of China the government said it will continue stockpiling corn for another year.  Many in the market had feared the government was going to release it back onto the world market so we appear to have dodged that bullet.

At the present time two of my three technical indicators are bearish both the September and December corn futures. 

Craig's Closing Comments

Craig Haugaard

August 18, 2015

Corn:

The Pro Farmer crop tour continued across the fruited plain today and found, as expected, a very good crop in the western Corn Belt.  On the other hand the tour participants reported a great deal of variability in the eastern Corn Belt.  One thing that I saw reported by several sources is that the ear count is good but when you husk it you find a very short ear.  I know the USDA uses ear counts as part of the formula they use to determine projected yield.  Could this short ear phenomenon be the surprise that catches traders off guard and ultimately give the bulls some fuel to run on? 

Speaking of the USDA numbers, I was visiting with an analyst today when he made the comment that the projected yield this year didn’t match up with the bushels of yield per point of crop rated good to excellent last year.  I don’t believe that I have ever seen it compared this way before but it is an interesting concept.  Last year we had a final crop rating of 72% good to excellent with a national average yield of 171 bu/acre.  That would give us 2.375/bu per point of good to excellent.  If we took that 2.375 and multiplied that times yesterday’s good to excellent rating of 69% we would get a projected national average yield of 163.9 bu/acre which is 4.9 bu/acre less than the USDA gave us to contemplate in last week’s report.  I don’t know if there is any validity in looking at it this way but I found it interesting if nothing else.

At the present time two of my three technical indicators are bearish both the September and December corn futures. 

Craig's Closing Comments

Lynn Miller

August 17^th, 2015

Numbers, Numbers and more numbers…. But, do they mean anything to the market?

Corn:

• Export inspections were reported at 890,083 MT vs 801 last week and within estimates.
• Corn conditions were down 1% tonight at 69% good to excellent.
• ProFarmer tour is under way.  Numbers in OH were slightly concerning compared to the USDA with Northwestern OH and Northeastern IN averaging 120.4
• Prevent plan acres reported at 2.3 million with most acres lost in Missouri and Mississpi.

Some ProFarmer reports talk of loss of Nitrogen, wet areas that are now dry, poor pollination and wildly variable ear sizes.

Talk of good weekly weather and carryout fear of the USDA’s 168.8 yield added pressure to prices while thoughts ProFarmers lowere numbers might be right added support.  Funds were sellers of 3,000 corn contract.  They are estimated long 100,000 contracts.

Technically, 2 of 3 indicators remain bearish the nearby September futures.  The only bullish indicator right now are the stochastics; however, we are approaching the 10-day moving average and the MACD is wanting to come together.  So maybe, just maybe continued information from Pro Farmer will give the trade some ideas.  I would be looking to make old crop sales at $3.80, $3.90 and $4.05. Don’t set your sights too high, the September futures expire at the end of next week.