Grain Futures Update

News & commentary on Grain Futures markets including wheat, soybeans, corn & more.

Grain Futures Update is a blog dedicated to bringing updates, news and commentary on grain futures markets including the commodities wheat, corn, soybeans and more.

This blog is brought to you by Zaner Group, one of America's oldest family-owned and operated futures and forex brokers.  Zaner provides a wide range of services from research and recommendations to the execution of all your futures needs.

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Futures, options and forex trading is speculative in nature and involves substantial risk of loss.  These recommendations are a solicitation for entering into derivatives transactions.  All known news and events have already been factored into the price of the underlying derivatives discussed.  From time to time persons affiliated with Zaner, or its associated companies, may have positions in recommended and other derivatives.


Grain Options Play: Corn Dribbles Lower, Beans Break Hard

Posted on 8/26/2016 8:29:26 PM by: Matt McKinney, Market Strategist @ Zaner. 312-277-0115.

Direct-312-277-0115, http://www.mmckinneyfutures.com/

TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.

 

 

 

Grain Options Play: Corn Dribbles Lower, Beans Break Hard

While Key Support Was Taken Out In The Corn Some Time Ago, While Soybeans Just Made Another Leg Down Breaching Critical Support.

 

Fundamentally, with the Pro Farmer crop tour finished all indications point to a revision up in Soybean yields and down in Corn yields on the upcoming September USDA report. This caused Soybeans to get slammed this week, making yet another leg down. While Corn couldnt help itself and it closed at a new low close for the move as well.

This big move down in Soybeans this week caused my bullishness to waiver if only slightly. Yet I remain firm in my belief that the potential in the Corn and Soybean markets is to the upside and that currently we are looking at some of the lowest prices for Corn that we will ever see.

On the weather front it would appear that current forecasts of warm dry weather conditions in the Corn Belt are just what the crops need. But remember we still have September and harvest left and no crop is ever made until its in the bin.

With all of the bearish news smothering the Corn and Soybeans recently Im actually quite impressed with how these markets have held up. So for farmers who are pessimistic, discouraged, or just fed up I urge you to hang in there and keep it moving because if you can manage through this much brighter days are right around the corner.

 

For Our Zaner Daily Commentary:http://www.zaner.com/offers/?page=16&ap=mmckinne

 

Technically, I have added my favorite technical indicators to the charts below. I have coined them the "10/20/50/BB Trend Finder". They are the 10 (red line), 20 (green line), and the 50 (blue line) day Simple Moving Averages or SMAs. I have also added Bollinger Bands or BBs (light blue shaded area) and Candlesticks (the red and green bars with the candlestick wicks, and on this daily chart each bar represents one day of trading).

These few technical indicators can tell me many, many different characteristics about the market at a quick glance so I have them saved on my charts in MARKETHEAD, so they can populate on any chart I choose at the click of a mouse.

 

 

On the daily Corn chart above the market has made a new low close for the move and it looks to be retesting the previous low. In addition, the 10 day and 20 day SMAs are curling lower indicating a short term down trend and the BBs are both pointing sideways indicating a range bound market.

 

On the daily Soybean chart above, the market has made an abrupt change in trend as both the 10 day and the 20 day SMAs have been breached on the downside. The change in trend is not from up to down, but from up to no longer up.

 

I figured all this out by putting my "10/20/50/BB Trend Finder" on the chart above and applying these indicators to the charts at the click of a mouse which I found at: http://www.markethead.com/2.0/free_trial.asp?ap=mmckinne, which is a web application that we have developed for our clients called MARKETHEAD where I get about 70-80% of all my research from. That means I get both technical and fundamental research from this web app and I am a veteran series 3 Broker of 17 years. So if Im using it then maybe my readers should check it out. Yes?

 

 

Grain Options Play:

One potential strategy could be to buy Bull Call Spreads and in a 3 to 1 ratio a Put. For exact details on this strategy, months, expiration dates, strike prices, and number of positions feel free to contact me at 312-277-0115 or mmckinney@zaner.com.

 

CME Options On Futures: The Basics: http://www.zaner.com/offers/?page=9&ap=mmckinne

 

FREE QUOTE- "Experience has taught me a few things. One is to listen to your gut, no matter how good something sounds on paper. The second is that your generally better off sticking with what you know. And the third is that sometimes your best investments are the ones you dont make."

-Donald Trump

 

FUTURES, OPTIONS AND FOREX TRADING IS SPECULATIVE IN NATURE AND INVOLVES SUBSTANTIAL RISK OF LOSS. THESE RECOMMENDATIONS ARE A SOLICITATION FOR ENTERING INTO DERIVATIVES TRANSACTIONS. ALL KNOWN NEWS AND EVENTS HAVE ALREADY BEEN FACTORED INTO THE PRICE OF THE UNDERLYING DERIVATIVES DISCUSSED. FROM TIME TO TIME PERSONS AFFILIATED WITH ZANER, OR ITS ASSOCIATED COMPANIES, MAY HAVE POSITIONS IN RECOMMENDED AND OTHER DERIVATIVES.

FOR CUSTOMERS TRADING OPTIONS, THESE FUTURES CHARTS ARE PRESENTED FOR INFORMATIONAL PURPOSES ONLY. THEY ARE INTENDED TO SHOW HOW INVESTING IN OPTIONS CAN DEPEND ON THE UNDERDLYING FUTURES PRICES; SPECIFICALLY, WHETHER OR NOT AN OPTION PURCHASER IS BUYING AN IN-THE-MONEY, AT-THE-MONEY, OR OUT-OF-THE MONEY OPTION. FURTHERMORE, THE PURCHASER WILL BE ABLE TO DETERMINE WHETHER OR NOT TO EXERCISE HIS RIGHT ON AN OPTION DEPENDING ON HOW THE OPTION'S STICKE PRICE COMPARES TO THE UNDERLYING FUTURE'S PRICE. THE FUTURES CHARTS ARE NOT INTENDED TO IMPLY THAT OPTION PRICES MOVE IN TANDEM WITH FUTURES PRICES. IN FACT OPTIONS PRICES MAY ONLY MOVE A LITTLE.

THE LIMITED RISK CHARACTERISTIC OF OPTIONS REFERS TO LONG OPTIONS ONLY AND REFERS TO THE AMOUNT OF THE LOSS, WHICH IS DEFINED AS THE PREMIUM PAID ON THE OPTION(S) PLUS FEES.


Is the Soybean Yield Growing?

Posted on 8/25/2016 5:19:50 PM by: Ted Seifried, VP, Ag Hedging @ Zaner. 312-277-0113.

As of the close on Thursday soybeans were over 40 cents off of Monday's highs even with good export sales.  However, with favorable weather conditions the trade may now be starting to think that the USDA's current yield estimate may not be big enough. Where do soybeans go from here?

In the August WASDE (World Agricultural Supply and Demand Estimates) report the USDA estimated the national average soybean yield at 48.9 bushels and acre.  This would represent a new record national average yield and new record production.  But, with recent rains in the eastern corn belt and favorable weather in the forecast is the trade now thinking that this soybean crop may set new records by an even wider margin?

In the mean time demand continues to show signs of strength.  Last week exporters reported new soybean export sales for the 2016/2017 marketing year at 1.94 million metric tons.  Of the 1.94 million metric tons a little over 1 million went to China while 770k went to "unknown destinations" which is likely also mostly China.  These are huge numbers for this time of year and well above the pace of the last two years.

For the moment the USDA is estimating a 330 million bushel carry over for the 2016/2017 marketing year.  While this would have been a comfortable excess a few years ago, record demand could chew through these stocks quickly especially if there were any hiccup in South American production or if demand proved to be stronger than the USDA's early estimates like it has in many years.  So, if the 330 million bushel holds true there may be reason to think that soybeans will need to keep a premium in the market at least until South American production is known.  On the other hand, if yields (and therefore production) are on the rise than this creates even more cushion and lessens the need for the market to carry premium.

The 2016 growing season has been an interesting one.  There have been a lot of arguments about the potential of this crop and the effect of the combination of above normal temps and precip.  In the next few weeks we will find out more when combines begin to roll.  Strong demand may have given soybeans a reason to be optimistic, but maybe not if we are breaking record production by a long shot.

Give us a call if you would like more info on the strategies we are using or if you would like to set up an account to put a plan in action.  Ted Seifried - (312) 277-0113.  Also, feel free to give me a call or shoot me an email if you would like to talk about your marketing plan, the markets, weather, or just to visit.  Follow me on twitter @thetedspread if you like. 

December Corn Daily chart:

 

November Soybeans Daily chart:

December Wheat Daily chart:

 

Producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.

In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!

Ted Seifried (312) 277-0113 or tseifried@zaner.com

Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=tseifrie


Posted on 8/25/2016 4:21:12 PM by: Ted Seifried, VP, Ag Hedging @ Zaner. 312-277-0113.

On Monday Pro Farmer will kick off the 2016 crop tour with results to follow on Friday.  This tour is closely followed by the markets every year, but this year it seems that grain markets are holding their breath waiting for the results.  Why is the Pro Farmer crop tour such a pivotal event this year?

On the August WASDE report the USDA estimated the national average corn yield at 175.1 bushels an acre.  If realized this would be a new record corn yield by 4.1 bushels an acre and a new record production by a long shot.  This was a bearish shock to the market as it was well above average trade guesses.  However, despite the bearish shock of huge yield and huge production the corn market has closed higher 5 sessions in a row since the report was released.  It would seem that at least some of the trade is skeptical about such large numbers.

The 2016 growing season has been an interesting one.  Last winter some weathermen were predicting a hot and dry summer which could have a negative impact on crops.  As it turns out they were half right.  We certainly saw the heat with the contiguous US seeing the 3rd warmest June-July on record.  However, July precip ranked near the middle of the 122 years on record.  So the question is - what do you get with hot and wet conditions?

According to the USDA the answer is a record corn crop by a long shot.  Which may be true, but others have questions about what the lingering effects from the heat might be. Some areas had to endure very hot temps during pollination, tip-back has been talked about a lot this year, and some have suggested that kernel depth cold be shallow and test weights could be down significantly.  Also, some of the satellite imagery based yield forecasts are also looking for smaller yields than the USDA with 3 of them having an average of 166-169.8 bushels an acre.  In recent years the satellite imagery yield forecasts have been pretty close to final yield numbers.

Enter the Pro Farmer Crop Tour.  This will be the first publicly released crop tour yield estimate of this type of size.  While Pro Farmer may not peg the national average yield because they do not cover the entirety of the growing area, we will get the chance to compare the most important states with the USDA.  In other words, the Pro Farmer crop tour will be in a position to either confirm or dispute the lofty USDA expectations.

In a year where it has been very difficult to put a finger on yields, a good old crop tour is now the focus of the market.

Give us a call if you would like more info on the strategies we are using or if you would like to set up an account to put a plan in action.  Ted Seifried - (312) 277-0113.  Also, feel free to give me a call or shoot me an email if you would like to talk about your marketing plan, the markets, weather, or just to visit.  Follow me on twitter @thetedspread if you like. 

December Corn Daily chart:

 

November Soybeans Daily chart:

December Wheat Daily chart:

 

Producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.

In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!

Ted Seifried (312) 277-0113 or tseifried@zaner.com

Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=tseifrie


Grain Options Play: Pre/Post Harvest Rally On The Horizon?

Posted on 8/20/2016 4:17:17 AM by: Matt McKinney, Market Strategist @ Zaner. 312-277-0115.

Direct-312-277-0115, http://www.mmckinneyfutures.com/

TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.

 

 

 

Grain Options Play: Pre/Post Harvest Rally On The Horizon?


As We Head Into Harvest Are The Grain Markets Poised For A Rally?

 

Fundamentally, with all of the bearish news seemingly factored into the Corn and Beans, the markets could be setting up for a pop in he coming days and weeks. As we have seen some late session buying indicating potential short covering Im reminded that this is how we began the spring rally this year.

The big factor in the spring rally this year was that after funds covered shorts they subsequently went long perpetuating dog piling on the long side by the speculators. Grains benefited then by the fact that funds went long after covering their shorts instead of going short again or not trading Grains.

The fund managers are smart and realize that with Corn and Beans at these low prices they have more profit potential to the upside than to the downside. This is one of the reasons Im bullish here and why I look for an upcoming rally.

For Our Zaner Daily Commentary:http://www.zaner.com/offers/?page=16&ap=mmckinne

Technically, I have added my favorite technical indicators to the charts below. I have coined them the "10/20/50/BB Trend Finder". They are the 10 (red line), 20 (green line), and the 50 (blue line) day Simple Moving Averages or SMAs. I have also added Bollinger Bands or BBs (light blue shaded area) and Candlesticks (the red and green bars with the candlestick wicks, and on this daily chart each bar represents one day of trading).

These few technical indicators can tell me many, many different characteristics about the market at a quick glance so I have them saved on my charts in MARKETHEAD, so they can populate on any chart I choose at the click of a mouse.

 

On the daily Corn chart above the market has built a solid base putting in a blow out bottom at contract lows. We now have a short term upward trend indicated by the 10 day SMA pointing higher and the market trading above it.

 

On the daily Soybean chart above, the market is almost in a PRINCIPAL trend up, which is the strongest form of an upward trend hat my indicators can show me. Im merely waiting for the 20 day SMA to curl up and point higher along with the 10 day SMA.

 

I figured all this out by putting my "10/20/50/BB Trend Finder" on the chart above and applying these indicators to the charts at the click of a mouse which I found at: http://www.markethead.com/2.0/free_trial.asp?ap=mmckinne, which is a web application that we have developed for our clients called MARKETHEAD where I get about 70-80% of all my research from. That means I get both technical and fundamental research from this web app and I am a veteran series 3 Broker of 17 years. So if Im using it then maybe my readers should check it out. Yes?

 

 

Grain Options Play:

One potential strategy could be to buy Bull Call Spreads and in a 3 to 1 ratio a Put. For exact details on this strategy, months, expiration dates, strike prices, and number of positions feel free to contact me at 312-277-0115 or mmckinney@zaner.com.

 

CME Options On Futures: The Basics: http://www.zaner.com/offers/?page=9&ap=mmckinne

 

FREE QUOTE- "Experience has taught me a few things. One is to listen to your gut, no matter how good something sounds on paper. The second is that your generally better off sticking with what you know. And the third is that sometimes your best investments are the ones you dont make."

-Donald Trump

 

FUTURES, OPTIONS AND FOREX TRADING IS SPECULATIVE IN NATURE AND INVOLVES SUBSTANTIAL RISK OF LOSS. THESE RECOMMENDATIONS ARE A SOLICITATION FOR ENTERING INTO DERIVATIVES TRANSACTIONS. ALL KNOWN NEWS AND EVENTS HAVE ALREADY BEEN FACTORED INTO THE PRICE OF THE UNDERLYING DERIVATIVES DISCUSSED. FROM TIME TO TIME PERSONS AFFILIATED WITH ZANER, OR ITS ASSOCIATED COMPANIES, MAY HAVE POSITIONS IN RECOMMENDED AND OTHER DERIVATIVES.

FOR CUSTOMERS TRADING OPTIONS, THESE FUTURES CHARTS ARE PRESENTED FOR INFORMATIONAL PURPOSES ONLY. THEY ARE INTENDED TO SHOW HOW INVESTING IN OPTIONS CAN DEPEND ON THE UNDERDLYING FUTURES PRICES; SPECIFICALLY, WHETHER OR NOT AN OPTION PURCHASER IS BUYING AN IN-THE-MONEY, AT-THE-MONEY, OR OUT-OF-THE MONEY OPTION. FURTHERMORE, THE PURCHASER WILL BE ABLE TO DETERMINE WHETHER OR NOT TO EXERCISE HIS RIGHT ON AN OPTION DEPENDING ON HOW THE OPTION'S STICKE PRICE COMPARES TO THE UNDERLYING FUTURE'S PRICE. THE FUTURES CHARTS ARE NOT INTENDED TO IMPLY THAT OPTION PRICES MOVE IN TANDEM WITH FUTURES PRICES. IN FACT OPTIONS PRICES MAY ONLY MOVE A LITTLE.

THE LIMITED RISK CHARACTERISTIC OF OPTIONS REFERS TO LONG OPTIONS ONLY AND REFERS TO THE AMOUNT OF THE LOSS, WHICH IS DEFINED AS THE PREMIUM PAID ON THE OPTION(S) PLUS FEES.


Grain Options Play: Pre/Post Harvest Rally On The Horizon?

Posted on 8/19/2016 10:07:37 AM by: Matt McKinney, Market Strategist @ Zaner. 312-277-0115.

Direct-312-277-0115, http://www.mmckinneyfutures.com/

TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.

 

 

 

Grain Options Play: Pre/Post Harvest Rally On The Horizon?


As We Head Into Harvest Are The Grain Markets Poised For A Rally?

 

Fundamentally, with all of the bearish news seemingly factored into the Corn and Beans, the markets could be setting up for a pop in he coming days and weeks. As we have seen some late session buying indicating potential short covering Im reminded that this is how we began the spring rally this year.

The big factor in the spring rally this year was that after funds covered shorts they subsequently went long perpetuating dog piling on the long side by the speculators. Grains benefited then by the fact that funds went long after covering their shorts instead of going short again or not trading Grains.

The fund managers are smart and realize that with Corn and Beans at these low prices they have more profit potential to the upside than to the downside. This is one of the reasons Im bullish here and why I look for an upcoming rally.

For Our Zaner Daily Commentary:http://www.zaner.com/offers/?page=16&ap=mmckinne

Technically, I have added my favorite technical indicators to the charts below. I have coined them the "10/20/50/BB Trend Finder". They are the 10 (red line), 20 (green line), and the 50 (blue line) day Simple Moving Averages or SMAs. I have also added Bollinger Bands or BBs (light blue shaded area) and Candlesticks (the red and green bars with the candlestick wicks, and on this daily chart each bar represents one day of trading).

These few technical indicators can tell me many, many different characteristics about the market at a quick glance so I have them saved on my charts in MARKETHEAD, so they can populate on any chart I choose at the click of a mouse.

 

On the daily Corn chart above the market has built a solid base putting in a blow out bottom at contract lows. We now have a short term upward trend indicated by the 10 day SMA pointing higher and the market trading above it.

On the daily Soybean chart above, the market is almost in a PRINCIPAL trend up, which is the strongest form of an upward trend hat my indicators can show me. Im merely waiting for the 20 day SMA to curl up and point higher along with the 10 day SMA.

 

I figured all this out by putting my "10/20/50/BB Trend Finder" on the chart above and applying these indicators to the charts at the click of a mouse which I found at: http://www.markethead.com/2.0/free_trial.asp?ap=mmckinne, which is a web application that we have developed for our clients called MARKETHEAD where I get about 70-80% of all my research from. That means I get both technical and fundamental research from this web app and I am a veteran series 3 Broker of 17 years. So if Im using it then maybe my readers should check it out. Yes?

 

 

Grain Options Play:

One potential strategy could be to buy Bull Call Spreads and in a 3 to 1 ratio a Put. For exact details on this strategy, months, expiration dates, strike prices, and number of positions feel free to contact me at 312-277-0115 or mmckinney@zaner.com.

 

CME Options On Futures: The Basics: http://www.zaner.com/offers/?page=9&ap=mmckinne

 

FREE QUOTE- "Experience has taught me a few things. One is to listen to your gut, no matter how good something sounds on paper. The second is that your generally better off sticking with what you know. And the third is that sometimes your best investments are the ones you dont make."

-Donald Trump

 

FUTURES, OPTIONS AND FOREX TRADING IS SPECULATIVE IN NATURE AND INVOLVES SUBSTANTIAL RISK OF LOSS. THESE RECOMMENDATIONS ARE A SOLICITATION FOR ENTERING INTO DERIVATIVES TRANSACTIONS. ALL KNOWN NEWS AND EVENTS HAVE ALREADY BEEN FACTORED INTO THE PRICE OF THE UNDERLYING DERIVATIVES DISCUSSED. FROM TIME TO TIME PERSONS AFFILIATED WITH ZANER, OR ITS ASSOCIATED COMPANIES, MAY HAVE POSITIONS IN RECOMMENDED AND OTHER DERIVATIVES.

FOR CUSTOMERS TRADING OPTIONS, THESE FUTURES CHARTS ARE PRESENTED FOR INFORMATIONAL PURPOSES ONLY. THEY ARE INTENDED TO SHOW HOW INVESTING IN OPTIONS CAN DEPEND ON THE UNDERDLYING FUTURES PRICES; SPECIFICALLY, WHETHER OR NOT AN OPTION PURCHASER IS BUYING AN IN-THE-MONEY, AT-THE-MONEY, OR OUT-OF-THE MONEY OPTION. FURTHERMORE, THE PURCHASER WILL BE ABLE TO DETERMINE WHETHER OR NOT TO EXERCISE HIS RIGHT ON AN OPTION DEPENDING ON HOW THE OPTION'S STICKE PRICE COMPARES TO THE UNDERLYING FUTURE'S PRICE. THE FUTURES CHARTS ARE NOT INTENDED TO IMPLY THAT OPTION PRICES MOVE IN TANDEM WITH FUTURES PRICES. IN FACT OPTIONS PRICES MAY ONLY MOVE A LITTLE.

THE LIMITED RISK CHARACTERISTIC OF OPTIONS REFERS TO LONG OPTIONS ONLY AND REFERS TO T


How Good are Crop Conditions at Predicting Soybean Yield?

Posted on 8/18/2016 4:38:50 PM by: Ted Seifried, VP, Ag Hedging @ Zaner. 312-277-0113.

This week the USDA held soybean crop conditions at 72% good to excellent. This represents the highest rating at this point of the growing season since 2004.  This is certainly a well rated crop at this point.  As we approach the August USDA WASDE report we have seen soybean yield estimates on the rise, and based on crop conditions it is easy to see why.  But, does how much stock should we really be putting into crop conditions?

It is important to note that the month of August is very important for soybean yields and a lot can change if weather becomes more threatening.  But, at 72% good to excellent this is a very highly rated soybean crop according to the USDA NASS.  If we consider that we are currently 9% above last year, a year where we set the record national average soybean yield, the possibilities are staggering. 

However, if we look a little further than last year we notice something interesting about the statistical based crop conditions.  In 2015 the soybean crop was never rated higher than 65% good to excellent after week 2 and ended up at 64% G-E.  We set a record national average soybean yield at 48 bushels an acre...  In 2014 the soybean crop was never rated below 70% good to excellent and ended up at 73% G-E.  The national average yield for soybeans was 47.5 bu/acre.

So, in 2014 we had a crop with a final rating 73% G-E and a 47.5 bu/acre national average yield.  In 2015 we had a crop with a final rating of 64% G-E and a 48 bu/acre national average yield.  How is it possible that a crop rated 9% lower in the G-E category in 2015 yielded .5 bu/acre higher than in 2014?  (Do not try to tell me trend-line yield jumped that much in a year)  The answer is fairly complicated and has a lot to do with the mild August-September in 2015.  The simple answer is that crop conditions are not a perfect predictor of yield.

There are more examples of inconsistency if we look at the last 15 years.  In 2004 the soybean crop was rated at 66% good to excellent and we set a new record national average yield at 42.2 bu/acre.  The 2005 soybean crop finished at 57% G-E and ended up with a 43.1 national average yield.  The 2005 crop set a new record yield by nearly a bu/acre even though it was rated 9% below the previous record setting year.  Then the following year (2006) finished at 62% G-E and a 42.9 national average yield, a 5% higher rated crop than the previous year but lower yield.

The one consistency through all of these years, and likely this year as well, is that none of them were a shocking failure.  But, as we have seen multiple times in the last 12 years a higher rated crop doesn't necessarily mean a higher yield.

If weather remains good for the next 4-6 weeks it seems clear that we will have a very good soybean crop out there.  However, I warn traders and analysts alike that crop conditions are not a perfect science.  It is important to remember that this is a statistical based model that the USDA uses to make an assumption.  It is based mostly on precipitation during specific time frames and large swings in temperature can sometimes be underweighted.  So, while I do not intend to argue with rising yield estimates I do think we need to take the ones that are solely based on crop conditions with a grain of salt.

Give us a call if you would like more info on the strategies we are using or if you would like to set up an account to put a plan in action.  Ted Seifried - (312) 277-0113.  Also, feel free to give me a call or shoot me an email if you would like to talk about your marketing plan, the markets, weather, or just to visit.  Follow me on twitter @thetedspread if you like. 

December Corn Daily chart:

 

November Soybeans Daily chart:

December Wheat Daily chart:

 

Producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.

In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!

Ted Seifried (312) 277-0113 or tseifried@zaner.com

Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=tseifrie


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