CORN MOVEMENT STAYS SLOW RUNNING ON EMPTY€¦ · 10/25/2013 · Combined Sept. 1 stocks of those...

Even though Midwestern farmers are now in the peak days of corn harvest, grain merchandisers are having a difficult time, more so than ever, acquiring grain. While basis bids have dropped substantially from the extreme premiums being offered at the end of last marketing year, the bids are still well above normal. The graph below shows how “hot” bids were at the end of the last marketing year as east Iowa corn bids went to $1.80 premium over the board.

As harvest got underway, new crop basis bids in that area fell to roughly a dime over December futures. As of midweek, those bids have jumped back to as high as $0.18 when normal for this time of year is roughly even with the board. In most areas of the country, basis patterns are similar. Central Illinois for example has a quoted average basis bid of $0.18 over the board, when normal for this time of year would be 10 to 15 under. Lafayette, Ind. is 15 under when normal would be 25 to 30 under. Minnesota is posting a bid on average at

about 15 under the board when normal would be closer to 50 under the board.

Basis bids, however, are swinging wildly. For example, while Finley, N.D. is reporting a basis of 51 under, a client not more than 50 miles from there sold grain for the next three months’ delivery to a local ethanol plant at 30 over the board. If ethanol plants aren’t getting as much corn bought as planned, basis bids can jump significantly in a short period of time.

Our expectation is that basis bids will continue strong throughout harvest as grain elevators try to fill their facilities, which were near empty at the end of 2012/13, as well as unit trams and barges waiting to be filled. There are three primary reasons basis levels will continue to be better than normal even though producers are harvesting a near record crop. They are:

1. Substantial amounts of storage available, unit trams and barges.

2. Money—producers have a lot of it,

CORN MOVEMENT STAYS SLOW

October 25, 2013

RUN

NIN

G O

N E

MPT

Y

“Technical analysis is a windsock, not a crystal ball. Be prepared to adjust your tactics if conditions change.”

– Carl Swenlin

While producers have continued to build their on-farm storage capacity in recent years, three straight years of lower-than-expected corn and soybean production capped by last year’s historic drought left Sept. 1 stocks of corn, wheat and soybeans at the lowest levels since 1996, contributing to the glut of available storage space going into this year’s harvest.

Combined Sept. 1 stocks of those 3 major field crops, at 2.819 billion bushels, filled only about 12% of the 23.6 billion

bushels of total U.S. storage space we estimate was available. What’s more, less than 31% of those stocks, 862 mil-lion bushels, were in on-farm storage. On-farm stocks were the lowest on re-cord going back to 1975 and took up just 6.5% of available on-farm storage space.

In Iowa, the top state in terms of on-farm storage, Sept. 1 corn stocks were only 67.5 million bushels and soybean stocks were just 12.5 million filling less than 4% of the available capacity as of last December. Illinois producers had just 29 million bushels of corn, 5 million of soybeans and 5.4 million of wheat in their bins, which filled just 2.7% of capacity.

-$0.50

$0.00

$0.50

$1.00

$1.50

$2.00

Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

2013/14 2012/13 2011/12 3-Year Average

Source: USDA-AMS, Brock Associates

East Iowa Corn Basis (ethanol plant bids, truck)

18¢ over December futures

2 800-558-3431

and thus don’t need to be marketing grain as of now for cash flow.

3. Most producers perceive current price levels to be too low, and since cash is not needed, farmer holding is going to be extremely tight until prices improve or until later in the season. The fear factor sets in and the grain then starts to move.

SUBSTANTIAL STORAGEThe table on page 2 shows where the

majority of grain storage is located. On Dec. 1, 2011, the United States had approximately 12.8 billion bushels of grain storage on farms. By December 2012, that jumped to about 13 billion and while the statistics are not yet available, we would estimate another 200 million was added this year, bringing total on-farm storage to 13.2 billion bushels. Add to that roughly 10.4 billion bushels of off-farm storage, and the total of 23.6 billion bushels is a lot.

It’s also interesting to look at the storage of the top 10 states. As of Dec. 1, 2012, Iowa led the pack with 2.05 billion bushels of on-farm storage and 1.38 billion in off farm. In second place is Illinois with 1.46 billion on farm and 1.45 billion off. Minnesota is not far behind with 1.45 billion on farm, and 690 million off. Over the last 10 years producers have been much more aggressive building storage on their own operations rather than taking the grain into commercial storage. One exception is Plains wheat country, where producers have traditionally put grain into commercial storage at harvest time rather than on farm. For example, Kansas has 380 million bushels of storage on farm while off-farm storage is 940 million.

Once corn goes into on-farm storage, it will be like pulling teeth out of an elephant to get any of that grain moved before January. Even then it’s going to take very good basis bids to get it off the farm. So what basis pattern should you expect going forward? Take a close look at the chart on page one. Basis levels obviously vary geographically but typically the patterns are similar to the one depicted on this chart. Don’t expect any pattern similar to what happened in 2012/13. The market is

CORN NOT MOVING (continued from front)

shifting from a year of almost running out of corn to one where two billion bushels will be left over. That’s going to result in something very different.

As grain elevators and ethanol plants try to fill storage, we would expect a stronger-than-normal basis into early December. In the last half of December, basis levels typically soften and we would anticipate the same this year. Then expect a relatively flat basis pattern going into March. In the chart, the dotted line is a three-year average. That may not hold up this year, since the last three years have been relatively tight for available supplies and this year is going to be the opposite. The pattern prior to three years ago was for a weakening of the basis starting in March and running all the way into harvest. That would be a more logical pattern this year versus what’s happened over the last three years.

One risky strategy this year is holding grain into late summer. That’s worked the last three years, but has high odds of failing this year. Why? If another large harvest comes in the fall of 2014, too many producers who are storing corn will wait until late in the old-crop year to dump supplies, fear will set in and basis levels will collapse. For example, the eastern Iowa corn basis by next July could be minus 30 as opposed to the three-year average of plus 75. The bottom line is that basis patterns this year are going to be entirely different than the last three years.

STRATEGYAs I write this on Thursday afternoon,

for hedgers we are still sitting 80% hedged on this year’s corn with only 20% sold in the cash market. As pointed out in last week’s lead story, we are watching this hedge position with a microscope now because futures are holding firm in the midst of harvest, which should not be the case. We are always uncomfortable being heavily short in a market with bearish

fundamentals when prices are flat or possibly even going higher. In other words, we may be putting profits on these hedges in the bank very soon. Having essentially been short this market for a year, it may be time to take to the sidelines.

More importantly, because of the recent basis gains it’s paying off much better having been short futures than having forward contracted the corn. In a perfect world, what we would like to see happen is for the market to bottom very soon, take

profits on the futures, let the cash market rally with a continued

strong basis and get the majority of this crop priced in the January/February timeframe. Of course, the world is not always perfect and so this strategy may not play out, but that

is plan “A” for right now. The upside is still going

to be limited, and will be all year with a two-billion-bushel

carryover hanging over the top of this market. As pointed out last week, demand is picking up substantially and quicker than many expect, particularly on exports, but even that’s not enough to override the size of this crop and carryover. If a bottom in the corn market is not made in September or October, odds favor it will not be made until July or August.

Iowa 2,050 Illinois 1,460 Minnesota 1,450 Nebraska 1,110 North Dakota 950 Indiana 800 South Dakota 690 Ohio 530 Missouri 500 Kansas 380 Others 3,055 U.S. Total 12,975

Source: USDA NASS

On-Farm Storage Capacity (mil bu, as of Dec 1, 2012)

3EMAIL [email protected]

Lead story . . . . . . . . . . . . .1Fundamentals . . . . . . . . .3News Analysis . . . . . . . . .4Corn . . . . . . . . . . . . . . . . .6Soybeans . . . . . . . . . . . . .8Management . . . . . . . . .10Wheat . . . . . . . . . . . . . . .12

Rice . . . . . . . . . . . . . . . . .14Cotton . . . . . . . . . . . . . . .15Hogs . . . . . . . . . . . . . . . .16Cattle . . . . . . . . . . . . . . .17Feed/Inputs . . . . . . . . . .18Financials/Energy . . . . .19Positions . . . . . . . . . . . . .20 C

ON

TEN

TS

As detailed in last week’s Brock Report, U.S. corn export sales are off to a much stronger start than a year ago. The same is true for wheat export sales and soybean sales are running moderately ahead of last year’s strong start, charting another record early pace. While export sales data for the past two weeks is not yet available with USDA still playing catch-up, sales data released Thursday showed U.S. corn export sales commitments 50.3% ahead of a year earlier as of Oct. 3, with wheat sales commitments 43.6% ahead and soybean commitments 14.7% ahead.

Export sales are also strong from a seasonal standpoint. As can be seen in the top chart at right, sales commitments for all three commodities, as a percentage of USDA’s marketing-year export forecasts, were comfortably ahead of the five-year average for sales as a percentage of final exports. Soybean sales commitments have been exceptionally strong on this basis, but as we have seen two of the past three years, that will change if South America grows another record crop.

One of the main factors behind the strong start to U.S. grain and export sales is clearly China. This has been business as usual in the soybean market in recent years as can be seen in the lower chart at right, which also highlights how dependent the U.S. soybean industry has become on Chinese demand. This year, China is having a major impact on U.S. wheat and corn sales as well. Through Oct. 3, China was the No. 2 U.S. buyer of corn for 2013/14 delivery, accounting for 22.9% of U.S. sales commitments. China has been the top buyer of U.S. wheat for 2013/14, accounting for 20.7% of all sales commitments.

COMMENTARY

FUNDAMENTALS

UPCOMING BROCK SPEECHES

2013 Maximizing Profits Winter SeminarsNat’l Sponsor: Monsanto, $95/Reg., $50/Spouse

Mon ., 12/2 - Lincoln, NETue ., 12/3 - Willmar, MN

Wed ., 12/4 - Mason City, IAMon ., 12/9 - Fishers, IN

Tue ., 12/10 - Oglesby, ILwww .brockreport .com or call 800-558-3431

37% 29% 42% 52% 51% 60% 60% 70% 62% 65% 0

200

400

600

800

1,000

1,200

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Rest of World

China

U.S. Soybean Export Commitments to China and Rest of World

as of October 3rd

Source: USDA FAS

Percentages indicate Chinese commitments as a percent

of total U.S. export commitments

Million bu

This Year 5-yr average

Corn 411 629 53% 51% 40%

Soybeans 943 1082 15% 74% 51%

Wheat 528 756 43% 64% 56%

Source: USDA FAS

U.S. Total Export Commitments (in million bushels), as of October 3rd

Commitments as a percent of total exports

Last year This year

y/o/y percent change

The next Brock Market Edge Seminar (BMES) will be sent after the release of the USDA Crop Production and Supply & Demand Reports on Nov. 8. Each BMES is sent via email with a link. If you do not currently subscribe to Market Edge or have not had a trial in the past two years, please call 800-558-3431.

4 800-558-3431

China’s expected growth, there is not much room for error. The GHI report says yield advances in biotechnology and precision agriculture will be crucial to continuing Brazil’s agricultural growth. It also calls for the continued removal of trade barriers.

EU WHEAT ACRES LIKELY UPWhile the wheat market recently has focused on planting/

harvest delays in the Black Sea region and crop problems in Argentina, winter wheat area in Western Europe appears set to rise with help from favorable seeding conditions. French analyst Agritel estimates France will sow 2-3% more winter wheat area versus last year.

Meanwhile, Jack Watts, senior analyst with Britain’s Home-Grown Cereals Authority told Reuters News Service that Britain’s wheat area could return to around 2 million hectares after falling to just 1.63 million for 2012/13 from 1.99 million in 2011/12 as a wet fall forced many farmers to switch land to spring barley. “Crop emergence has been good, establishment has been good. There are no major concerns,” Watts said. In No. 2 EU wheat producer Germany, a late summer harvest delayed winter wheat seedings, but they are now winding down. German wheat seedings are expected to be about the same as last year.

SHALE GAS LURES YARA TO U.S.The world’s top nitrate fertilizer maker, Yara International, is

apparently the latest entrant in a race by nitrogen manufacturers to expand in the U.S. amid the growth in shale gas output, which is a readily-available, low-cost energy source for production. The CEO of Norway-based Yara told the Wall Street Journal last Friday that the company is still discussing with BASF the details of a “world scale” ammonia plant to be based in the U.S. Gulf region, but the companies expect to make an investment decision by next summer. Jorgen Ole Haslestad expressed confidence the plant would be built.

Yara defined a world-scale ammonia plant as having a production capacity of about 800,000 metric tons a year, but said the size and cost of the U.S. plant hadn’t been decided yet. The plant would likely be located at one of BASF’s facilities in Geismar, Louisiana, or either Port Arthur or Freeport in Texas, BASF said. A number of other new U.S. nitrogen projects were announced in late 2012 and earlier this year. Egypt’s Orascom Construction Industries (OCI) has already begun construction on a plant in southeast Iowa and CF Industries plans a major expansion of its Donaldsonville, La. nitrogen plant. A $1 billion anhydrous ammonia plant is planned in Indiana and two new plants are under development in North Dakota, the epicenter of the shale gas boom.

A number of existing U.S. plants earlier idled due to high natural gas prices may also be brought back on line. Agrium, however, has stepped back from plans to expand production amid concerns about the rush by its competitors to up production. The current situation is a sharp reversal of the trend in the early 21st century when natural gas prices soared. Between 2000 and 2006, U.S. ammonia output declined 44% and ammonia imports increased 115%.

TRADE TIES BIND CHINA, BRAZILAs China’s middle class continues to grow and the chasm between

the food it produces and the food it needs to eat expands, look for Brazil to fill the gap. That’s one message of a report from the Global Harvest Initiative, which released an annual agricultural productivity report during the recent World Food Prize conference in Des Moines. The report notes that Brazil, which exported no soybeans to China as recently as 1995, shipped 22.8 MMT worth of beans there in 2012. Brazilian soybean exports now top the amount of soybeans the entire country produced as recently as 1993, the report said.

At current rates of agricultural productivity, China will produce only 72% of the food it needs by 2030. The good news, according to the GHI, is that by then Latin America, including the Caribbean, will produce 50% more than it needs, with productivity gains in Brazil driving this surplus. Brazil will be a “critical source” of food for China’s growing, affluent urban population, according to the report.

Of course a projection is one thing; meeting it is another, and given

WORLD WEATHER HOTSPOTSCorn and soybean harvest was in full swing across most

of the U.S. Midwest late this week amid cold, dry weather, but weather conditions will deteriorate next week with rain/snow expected to move from west to east across most of the Corn Belt between Monday and Thursday. Another lighter round of precipitation is advertised for Nov. 4-5.

Argentina’s winter wheat crop came through an early week frost okay, but frost returned to southeast Argentina Thursday and Friday mornings, again threatening the crop. Damage was likely minimal, as most locations did not reach freezing, but the crop is reproducing and highly vulnerable.

Weather models are advertising a large-scale beneficial rainfall event for the driest of Argentina’s crop areas the second half of next week. The rains will improve conditions for planting and early crop development, but won’t be enough to boost subsoil moisture, making follow-up rains crucial, says World Weather Inc.

Widespread frost and several light freezes occurred Friday morning over southeastern Australia, similar to what occurred last week. Damage to some winter grain and oilseed crops was suspected, although not confirmed.

WORLD NEWS ANALYSIS


PORCINE VIRUS SPREADSRecent rumblings that the porcine epidemic diarrhea virus was

wreaking more havoc in North Carolina took on some definition this week, as the state’s director of livestock health said cooler fall temperatures were increasing its spread. The virus has been detected on 250 farms there since June, the official, Tom Ray, told Reuters, with up to 150,000 sows affected. That is out of a herd of 8.7 million hogs and a breeding herd of 870,000 head. Ray said he was holding his breath as winter approaches, as that’s when the disease usually peaks.

If there’s good news, it’s that losses, which largely fall upon piglets, are greater now than they will be in the future, as a U.S. hog population that never encountered the disease before adapts. Still, the outbreak is a likely driver of a recent rally in hog prices.

Meanwhile researchers based at Virginia Tech said they have pinpointed the source of the virus to China’s Anhui province. While the virus is not a food safety threat and bears no sign of being transmissable to humans, the researchers noted that it shares genetic features with a bat coronavirus, indicating “the potential for cross-species transmission.”

CORN, SOY CROPS LOOKING GOODPerhaps because the government shutdown halted the reports

for a few weeks, Monday’s crop progress report, the first since USDA reopened, generated a lot of chatter in the corn and soybean markets to start the week. Nationally, the good-to-excellent rating for corn jumped 5 percentage points to 60%. In Iowa, the rating increased an eye-opening 9 percentage points to 45%. Illinois’ rating increased to 68% from 62%. Soybeans showed similar gains.

Futures prices fell after the Monday report, but in reality the ratings have questionable value at this time of year. While the quality of the crop can decline this late in the season, good weather isn’t likely to add yield. Either the crop is made, or it isn’t. This is particularly true in corn.

University of Illinois agronomist Emerson Nafziger thinks farmers rating their crops at this stage are viewing them through rose-colored glasses. “I think it reflects people’s state of mind as they see strong yields,” Nafziger told the Brock Report. He said the numbers have “no meaning” in terms of how the crop is advancing. What matters, in his view, is all the rain the Corn Belt saw in the spring and early summer and cool evening temperatures, which allowed the crop to withstand later drought.

CONGRESS ADDRESSES WATERWAYSGiven all the dysfunction in Washington and the current “kick-

the-can-down-the-road” ethos, addressing the nation’s crucial inland waterway infrastructure, without a crisis imminent, seems unlikely. Yet with South America a good bet to improve their infrastructure and erode the U.S. advantage in getting crops to

port, it is an essential issue.That’s why it’s encouraging that the House, by a 417-3 vote,

this week passed the Water Resources Reform and Development Act, which restructures funding for inland waterways. The bill streamlines environmental reviews, establishes hard deadlines and cost caps on studies, and increases the funding available for dredging and port maintainance. It now goes to conference with the Senate, which has passed a version with a few differences.

FARMLAND: AFTER THE BOOMThere’s little question the farmland boom has stalled, at least for

the moment. Various Federal Reserve bank reports have shown a slow-down, and Creighton University’s farmland index declined for the 10th time in 11 months in October. The question, of no minor interest to the farm economy, is: “Now what?”

The farmland boom of the 1970s was followed by a dramatic bust, as most of our readers know. But so was the other great U.S. farmland boom between 1900 and 1920, notes Iowa State agricultural economist Michael Duffy. Land values dropped 73% from 1920-1933, and 63% from 1981 to 1986. The current boom has similarities to those prior booms, namely a dramatic rise in farm income. The correlation between farmland values and farm income is extremely strong – since 1949, there is a 0.97 correlation between gross farm income and land values (1 is perfect correlation), according to Duffy.

In that context, our chart below is very interesting. It shows farmland values have strayed unusually far from the regression line, and would seem to indicate that either farmer incomes have to rebound or farmland values have to decline. However, Duffy and other economists have noted that unlike the last farmland boom, farmers aren’t accumulating significant debt along the way.

That should limit the chance of anything approaching a crash. But unless farm incomes unexpectedly rebound, farmland prices are likely to decline, Duffy says.

NATIONAL NEWS ANALYSIS

Photo: USDA/NRCS

y = 8.2041x - 383.63 R² = 0.9528

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

0 50 100 150 200 250 300 350 400 450 500

U.S. Gross Farm Income ($billion)

U.S

. Cro

plan

d Va

lue

($/a

c)

Current U.S. land value 14% above regression line .

2013 2013 estimated gross farm income correlates with cropland value closer to $3,500/ac vs. $4,000/ac current national value.

Data Source: USDA

U.S. Cropland Value is Highly Correlated to Gross Farm Income (1966-2013)

6 800-558-3431

CASH CORN

350

400

450

500

550

600

650

700

750

Apr May Jun Jul Aug Sep Oct

WEEKLY CONTINUOUS

CENTRAL ILLINOIS CASH CORN

Outside week down

CORN DECEMBER 2013 DAILY

14 DAY RSI

High: 6.65 9/7/12

Low: 3.98 1/46/29/10

Key Reversal Down

Resistance

Resistance

Contract Size: 5,000 buDaily Limit: 40 cents

Resistance

Source: DTN ProphetX


Year begins Sept 1 12/13 Est. 13/14 Proj 12/13 13/14 14/15ACREAGE (million)

Planted Area 97.2 97.4 97.2 94.8 92.5Harvested Area 87.4 89.1 87.4 87.2 85.0Yield 123.4 155.3 123.4 158.0 163.0

SUPPLY (mil bu) Beg. Stocks 989 824 989 824 2,307Production 10,780 13,843 10,780 13,778 13,855Imports 162 25 165 30 10

Total Supply 11,931 14,530 11,934 14,632 16,172USAGE (mil bu)

Feed & Residual 4,475 5,100 4,375 4,800 5,000Food/Seed/Ind 6,060 6,350 6,000 6,325 6,450

Ethanol & By-Products 4,665 4,900 4,605 4,850 5,000Domestic Use 10,535 11,450 10,375 11,125 11,450Exports 735 1,225 735 1,200 2,000

Total Use 11,270 12,675 11,110 12,325 13,450

Ending Stocks (mil bu, Aug 31) 661 1,855 824 2,307 2,722CCC 0 0 0 0 0Privately-Owned 661 1,855 824 2,307 2,722Stocks/Use 5.9% 14.6% 7.4% 18.7% 20.2%Farm Price ($/bu) $6.90 $4.40-5.20 $6.90 $3.40-4.00 $3.00-3.75

Brock USDA

MARCH 2014

JULY 2014

DECEMBER 2014

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00

-700,000 -600,000 -500,000 -400,000 -300,000 -200,000 -100,000 0 100,000 200,000 300,000 400,000

Jun '12 Sep '12 Dec '12 Mar '13 Jun '13 Sep '13

Commitments of Traders Futures and Options Combined, as of September 24, 2013

Source:CFTC

Price Contracts

Large Spec

Commercials

Price (left scale)

VOLUME

OPEN INTEREST

High: 6.16 8/23/11

Low: 4.74 10/14/13

High: 6.76 9/14/12

Low: 4.44 1/28/26/10

* September 1 stocks raised to 823.6 in 9/27 Grain Stocks report

CORN

U.S. SUPPLY & DEMAND

Key Reversal Down

High: 6.71 9/7/12

Low: 4.4510/14/13

COMMENTARY

It was a flat week in futures, but basis gains continue throughout the Midwest. Ample amounts of empty storage is resulting in corn being locked up instead of going to market at what many perceive to be low prices. Thus commercial companies are bidding up the basis to fill their space, as are ethanol plants. This type of bidding could well last for another four to six weeks.

Technically, however, the trend remains down, with no bottom con-firmed. This type of activity could also continue for quite some time. With an expected two billion bushel car-ryover looming, rallies in futures are going to be very limited. Most of the moves will be in basis price and not in futures prices in the near term. Cash-only Marketers’ Strategy: 60% of the crop has been sold as well as 20% of the 2014 crop. Sit tight. Hedgers’ Strategy: 20% sold in the cash market and short December fu-tures on the other 80%. December ’14 hedges cover 70% of the 2014 crop.

Resistance

Resistance

Resistance

*

*

8 800-558-3431

WEEKLY CONTINUOUS

NOVEMBER 2013

14-DAY RSI

1200 1250 1300 1350 1400 1450 1500 1550 1600 1650


CENTRAL ILLINOIS CASH SOYBEANS

Brokensupport

SOYBEANSHigh: 14.0975

9/14/12Low: 9.19

2/5/10


B r o k e n Support

Bearish reversal

Source: DTN ProphetX


Harvest has been behind normal and yields continue to come in mixed. Most, however, are leaning toward higher yields than expected. There are a few exceptions. The USDA reported net weekly soybean meal export sales at a whopping 850,100 metric tons, far surpassing expectations. The sales are already three weeks old, however, because of the government shutdown.

Technically, the trend remains down. November futures this week rallied to test the resistance at their 40-day moving average. We see limited potential on the upside above $13.20 basis January futures. Cash-only Marketers’ Strategy: Sales are still at 60%. We recommended catch up last week. Hedgers’ Strategy: 50% was sold months ago in the cash market and 20% was sold recently. Continue to hold short November futures on this year’s crop on the remaining 30%. For the ’14 crop, 10% has been contracted and 30% is short in November ’14 futures.

COMMENTARY JANUARY 2014

JULY 2014

NOVEMBER 2014

0.00 2.00 4.00 6.00 8.00

10.00 12.00 14.00 16.00 18.00 20.00

-400,000

-300,000

-200,000

-100,000

0

100,000

200,000

300,000

Jun '12 Sep '12 Dec '12 Mar '13 Jun '13 Sep '13

Commitments of Traders Futures and Options Combined, as of September 24, 2013

Price Contracts

Large Specs

Commercials Source:CFTC

Price (left scale)

VOLUME

OPEN INTEREST

High: 13.97 9/14/12

Low: 10.5411/17/10

High: 13.33 9/14/12

Low: 10.54 11/15/10

SOYBEANS

Year Begins Sept 1 12/13 Est. 13/14 Proj 12/13 13/14 14/15ACREAGE (million)Planted Acres 77.2 77.2 77.2 77.0 78.0Harvested Acres 76.1 76.4 76.2 76.0 77.0Yield 39.6 41.2 39.8 41.5 44.5SUPPLY ( mil bu) Beg. Stocks 169 125 169 141 174Production 3,015 3,149 3,034 3,154 3,427Imports 40 15 40 15 16 Total Supply 3,224 3,289 3,243 3,310 3,617USAGE (mil bu)Crush 1,690 1,655 1,693 1,665 1,680Exports 1,315 1,370 1,315 1,370 1,500Seed 90 87 90 91 88Residual 5 28 5 10 20 Total Use 3,099 3,140 3,102 3,136 3,288

Ending Stocks (mil bu, Aug 31) 125 150 141 174 329 CCC 0 0 0 0 0 Privately-Owned 125 150 141 174 329Stocks/Use 4.0% 4.8% 4.5% 5.5% 10.0%Farm Price ($/Bu) $14.40 $11.50-13.50 14.40$ $10.50-12.50 $8.00-9.00

USDA Brock


Broken support

High: 14.09 3/49/14/12

Low: 11.41 1/211/28/11

Broken support

Broken support

* Sept. 1 stocks raised to 140.6 in 9/27 Grain Stocks report, plus USDA revised ‘12/13 production data.

*

*

* 76.2* 39.8

* 3,034

10 800-558-3431

WEATHER

MARKET EDUCATION

1) Smartphones maintain a constant stream of news and prices. Also, technologies such as Bluetooth and autosteer in farm equipment allows farmers to do business in the field. Someone outside of the agriculture sector may roll his eyes at the thought of such luxuries, but the ability to multitask can get you through busy times.

2) Hire part time help. In a long-term hiring situation, I recommend hiring the person and later developing skills, but for last-minute roles, experience is key. Consider candidates such as retired farmers or farming neighbors waiting for crops to mature. It should not be embarrassing to seek extra help. Pay well to ensure the best skills possible. For example, around $12/hour is the average U.S. farm labor wage. You can get by much cheaper, but a mistake based on inexperience can be much more costly in the long run.

3) Use custom farming services. It may be not ideal to hire out fieldwork, but in certain circumstances, extra

equipment with a trained professional can be more efficient.

4) Delegate responsibilities to your successor. Provide guidance, but step back to give some authority to the other person. This is no different from any other time, but is much more important during a crunch because you truly

have more on your plate. This is a great chance to let the successor work under pressure.

It’s sometimes difficult to quantify the opportunity costs of neglecting the business side to complete fieldwork or

paying a little more to have extra help, but don’t lose sight of the big picture. Not all farms can justify the senior manager doing minimal fieldwork, use time management to stay true to your main purpose and best return.

Harvest got off to a late start for many producers this fall and many farms have experienced labor issues, or at least could use extra people. Illness, or even worse an injury to experienced help can make things more challenging.

The million-dollar question you ask each day is “how can I create the largest return for my business?” It’s tempting during busy times like this to hop into the combine, but is that the best use of your time? You may feel like more of a farmer when doing the field labor, but who is running the farm? I suggest finding a balance between keeping the equipment running and staying focused on the areas only you can control. Time management has to be a main objective. Planning for the future is a role few others can fill. Once you sit in the cab of that machine, the world around you and what’s happening there can easily be ignored.

So let’s look at some strategies to balance business and production work:

MACHINE JOCKEY OR MANAGER?

ON TOPIC

Katie Hancock, Marketing Consultant

INSIDE BROCK

DO YOU HAVE THE RESOURCES?

Beliefs 25%

Knowledge 25%

Available Capital

10%

Available Time 15% Mental/Emotional

25%

Marketing your production well is every bit as challenging as raising your product, whether it is crops or livestock. Like production, it requires time and capital—something that often fails to be included in the yearly budget.

However, marketing decisions also are influenced by factors that are much more difficult to see or appreciate. These include the mental and emotional state of the decision maker, his/her beliefs and his/her knowledge. Notice in the chart that, together, we weight these factors as three-quarters of the equation.

Problems sometimes arise in operations when partners don’t share the same knowledge, beliefs or emotional status. Periodically, it’s a good idea to assess all these factors in the context of your marketing and address any shortfalls or imbalances before they hurt your business.


EU TAKES PUNITIVE ACTION ON ARGENTINA BIODIESEL

Biodiesel producers in Argentina and Indonesia, which benefitted when the European Union slapped anti-dumping tariffs on U.S. imports in 2009, are now getting a taste of that same medicine. EU members agreed this week to impose punitive duties on imports from both countries, a move that is expected to be drastic enough to help the EU’s struggling industry. The two countries account for 90% of EU imports, and their share of the EU market had climbed to 22%, up from 9%, between 2009 and 2011.

While exports from both countries had already been declining this year in part because of provisional tariffs enacted in May, Argentina appears poised to fight. Reuters reported the Argentine government was preparing to take the matter to the World Trade Organization. The EU argues Argentina’s setting of domestic prices and mandatory blending requirements constitute dumping. The EU did, however drop a separate investigation this month into accusations Argentina is illegally subsidizing its industry.

BUNGE EYES EXIT FROM SUGAR BUSINESS

Bunge Ltd., which invested in a big way in the sugar and ethanol business in South America in 2007, is now considering selling the business. The company has said the sugar business would ultimately rival its agribusiness segment, but it has run into a series of challenges, including severe drought as it assumed control of plantations. Unlike its core grain and oilseeds, Bunge actually had to grow the crop, not just process and trade it. The fact that sugar is a perennial crop extended the pain from the drought, leaving them without enough sugar and lots of excess sugarmill capacity.

Bunge officials said earlier this year that they were making an effort to improve agronomic practices on their plantations. But they ran into problems this year when wet conditions hurt the crop’s sugar

content, the company said Thursday. CEO Soren Schroder said ethanol prices would have to jump 20% for Bunge to reach its targeted returns on the sugar and bioenergy business. But with Brazil’s policy of capping gasoline prices for consumers, that seems unlikely, which Schroder acknowledged. He said the company, which spent $1.3 billion in 2010 to expand the business under former CEO Alberto Weisser, is now exploring all options on the business, and that the “status quo” could not persist.

USDA GIVES BOOST TO ADVANCED BIOFUELS

The U.S. cellulosic biofuels industry, best described as “fledgling,” got a $181 million boost this week from the USDA, which announced that much in loan guarantees to builders of commercial-sized refineries or companies that will retrofit existing refineries to make advanced biofuels. It’s not the first such announcement, as USDA has provided $684 million since 2008 to support projects in eight states.

Advanced biofuels, a category that includes everything from wood and grass to animal fats and corn stover, have been painfully slow to get off the ground despite government mandates calling for the production. The industry has repeatedly failed to meet those mandates. However, with growth in conventional corn-based ethanol capped by the RFS and an effective 10% limit on blending throughout most of the country, cellulosic may have greater opportunities in the years ahead.

In the short-term, however, the industry faces the same calls for a reduction in the mandate as corn-based ethanol. Producers throughout the corn-based and advanced biofuels industries continue to await from word from the EPA following the leaking of a supposed draft document earlier this month suggesting cuts to the RFS mandate. That draft document, which remains unverified, proposed cutting the advanced biofuel requirement to 2.21 billion gallons, down from 2.75 billion this year.

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

6

8

10

12

14

16

18

20

22

24

26

Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct

Stoc

ks

Weekly Stocks Weekly Production

Wee

kly P

rodu

ction

Stocks

Production

Sources: EIA, through October 18, 2013

2011 2012 2013

(in millions of barrels)

BIOFUELS

Ethanol Production Increasing While Stocks Dwindle

Ethanol producers have been biding their time for cheaper corn, and now that it’s here they are pouncing. U.S. weekly production jumped to 897,000 barrels/day, the highest level since June 2012, in the week ended Oct. 18, the EIA reported. The strong demand may be reflected in corn basis levels, as bids at ADM facilities in Ce-dar Rapids, Iowa and Decatur, Ill. jumped this week. The production has also boosted ethanol stocks as seen above, but only slightly from a couple weeks ago. Stocks remain near the lowest level since EIA started tracking them in 2010.

12 800-558-3431

CHICAGO WEEKLY

CHI #1

CHI #2

CHI #3

MARCH 2014

JULY 2014

CHICAGO DECEMBER 2013High: 9.13 11/9/12

Low: 6.35 1/28/14/13

High: 8.57 3/4 11/9/12

Low: 6.509/12/13

BrokenResistance

Support

WHEAT

High: 9.12 1/4 11/9/12

Low: 6.47 3/49/12/13

Resistance


Brokenresistance

BrokenResistance

Support

Support

Support

BrokenResistance


650

700

750

800


650

700

750

800

850


Wheat continues to be the strength of the entire grain complex. Prices continued to grind higher this week but we anticipate December futures will run into heavy resistance in the $7.20 to $7.25 range if this rally can continue. On the downside, December futures will not likely challenge contract lows and will find major support at $6.60 on any selloffs.

Fundamentally the market is reasonably priced. Indications are that export demand for high-quality wheat remains solid, and there are enough crop concerns globally, from Australia to South America to the Black Sea, to keep the market on edge about supply.Cash-only Marketers’ Strategy: 60% of the crop was sold months ago. In the last two weeks we have pushed another 20% out the door bringing pricing to 80%. Hedgers’ Strategy: Same cash advice as above. No futures positions are on.

COMMENTARY

Year Begins June 1 12/13 Est. 13/14 Proj 12/13 13/14 14/15

ACREAGE (million)Planted Area 55.7 56.5 55.7 56.2 57.5Harvested Area 49.0 45.7 49.0 45.4 51.0Yield 46.3 46.2 46.3 47.1 47.1

SUPPLY (mil bu) Beg. Stocks 743 718 743 718 596Production 2,269 2,114 2,269 2,138 2,402Imports 123 140 123 120 120 Total Supply 3,134 2,972 3,134 2,976 3,118

USAGE (mil bu) Food/Seed 1,018 1,031 1,018 1,025 1,075Feed & Residual 390 280 388 280 250

Domestic Use 1,409 1,311 1,407 1,305 1,325Exports 1,007 1,100 1,009 1,075 1,200 Total Use 2,416 2,411 2,416 2,380 2,525 Ending Stocks (mil bu, May 31) 718 561 718 596 593 CCC 0 0 0 0 Privately-Owned 718 561 718 596 593Stocks/Use 29.7% 23.3% 29.7% 25.1% 23.5%Farm Price ($/Bu) 7.77 6.50-7.50 7.77 6.20-7.00 6.00-7.00

BrockUSDA


KANSAS CITY

650

700

750

800


HARD RED WINTER - NATIONAL CASH INDEX

December 2013

High: 9.65 1/4 9/14/12

Low: 6.98 1/29/17/13

MINNEAPOLIS

WHEAT

Brokenresistance

December 2013

High: 9.52 1/2 11/28/12

Low: 6.87 3/49/10/13

Brokenresistance

Source: Telvent DTN

HARD RED SPRING - NATIONAL CASH INDEX

SOFT RED WINTER - NATIONAL CASH INDEX

Source: Telvent DTN

Source: Telvent DTN

Support

Support

14 800-558-3431

Year begins Aug 1 11/12 12/13 13/14 Proj. 12/13 13/14

ACREAGE (Mil. Acres)Planted Area 2.69 2.70 2.49 2.70 2.45Harvested Area 2.62 2.68 2.46 2.68 2.43Yield (Pounds) 7,067 7,449 7,511 7,449 7,500

SUPPLY (Mil. cwt) Beg. Stocks 48.5 41.1 36.4 41.1 36.4Production 184.9 199.5 185.1 199.5 182.3Imports 19.4 21.1 22.5 21.0 22.5

Total Supply 252.8 261.6 244.0 261.6 241.1

USAGE (Mil cwt) Domestic & Residual 110.1 118.1 116.0 118.1 114.0Exports 101.6 107.1 98.0 107.1 98.0 Rough 32.7 34.2 35.0 34.2 35.5 Milled (Rough Eq.) 68.9 72.9 63.0 72.9 61.5Total Use 211.7 225.2 214.0 225.2 212.0

Ending Stocks 41.1 36.4 30.4 36.4 29.1

Farm Price ($/cwt) $14.50 $14.90 $14.70-15.70 $14.90 $14.75-15.75

BrockUSDAYear Beginning

Stocks Production Consumption Ending Stocks

Stocks/Use Ratio

2007/08 75.5 432.6 427.2 80.9 18.9%2008/09 80.9 448.7 437.2 92.4 21.1%

2009/10 92.4 440.6 438.1 94.9 21.7%

2010/11 94.9 449.3 445.5 98.7 22.2%

2011/12 98.7 465.8 459.7 104.8 22.8%

2012/13 104.8 468.9 468.9 104.8 22.4%

2013/14 105.2 476.8 474.6 107.4 22.6%

Change from Aug 0.4 -1.2 -0.7 -0.1 0.0% Values in million metric tons; bold numbers are USDA projections.

Nearby rice futures climbed for the third straight week, boosted by solid exports and technical buying as front-month November climbed to its highest level in a month. The contract has resistance at the late-September high of 15.61/cwt., and might find support at the 40-day moving average at 15.36.

January futures, however, ended slightly lower on the week, finding resistance at its 40-day moving average, which sat 12 cents above the market Friday.

USDA on Thursday reported weekly next export sales at 70,800 metric tons, a marketing year high, led by sales to Mexico and Haiti. The sales were three weeks old due to the government shutdown, however. Ample supplies, both domestically and globally, are weighing on the market.

There’s plenty of rice across Asia, including in Vietnam and Thailand, to limit the market’s upside. Some lingering concerns persist about India’s crop in the wake of Cyclone Phailin.Strategy: Both cash-only sellers and hedgers are 60% sold on expected 2013 production in the cash market.

COMMENTARYNEARBY CONTRACT

DEFERRED CONTRACT

RSI

WEEKLY CONTINUOUS

NOVEMBER 2013

14-DAY RSI

ROUGH RICE

RICE

WORLD SUPPLY & DEMAND U.S. SUPPLY & DEMAND

Resistance

High: 16.656/13/13

Low: 14.6910/7/13

Contract Size: 2,000 cwtDaily Limit: 50¢/cwt

Support

JANUARY 2014High: 16.795

6/20/13 Low: 14.915

10/7/13

Brokenresistance


MARCH 2014

DECEMBER 2013

WEEKLY CONTINUOUS

Cotton futures hit the skids this week, tumbling to a 10-month low amid speculative liquidation and am-ple supplies. The market fell each day, including sharp drops Wednesday and Thursday. Front-month December did manage to hold Friday above the 10-month low established Thursday.

The USDA, in its first weekly ex-port sales report since the shutdown, reported disappointing net sales of 44,000 running bales for the week ended Oct. 3, the lowest total since mid-August. The report included cancellation of 25,300 bales that had already been booked to Turkey. The weak sales, on top of improved crop ratings in Monday’s crop progress re-port, give the market an increasingly negative tone. Meanwhile world sup-plies are ample and India is preparing for a record crop thanks to a heavy monsoon season. Other than being oversold, there’s little apparent support for the market.Strategy: Cash-only sellers are 60% sold and hedgers are 50% sold in cash on the 2013 crop. Hedgers are short December 2013 futures on another 20% and short December 2014 fu-tures on 20% of next year’s crop.

COMMENTARY

14-DAY RSI

High: 107.36 6/09/11

Low: 70.706/05/12

COTTON

Marketing year begins August 1 12/13 13/14 Proj 12/13 13/14 14/15

ACREAGE (million acres)Planted Area 12.31 10.34 12.31 10.25 10.50Harvested Area 9.37 7.78 9.37 8.00 9.60Yield 887 796 887 820 817

SUPPLY (million 480-lb. bales) Beginning Stocks (August 1) 3.35 3.90 3.35 3.90 3.07Production 17.32 12.90 17.32 13.67 16.34Imports 0.01 0.01 0.01 0.00 0.00

Total Supply 20.68 16.81 20.68 17.57 19.41USAGE (million 480-lb. bales)

Mill Use 3.50 3.50 3.50 3.50 3.70Exports 13.03 10.40 13.03 11.00 11.90

Total Use 16.53 13.90 16.53 14.50 15.60Unaccounted 0.25 0.01 0.25 0.00 0.00

STOCKS (million 480-lb. bales) Ending Stocks (July 31) 3.80 2.90 3.90 3.07 3.81

Farm Price (¢/lb) 72.0 69-85 72.0 73.0 66-83

USDA Brock

U.S. SUPPLY & DEMANDYear Beginning

Stocks Production Consumption Ending Stocks

Stocks/Use Ratio

2007/08 62.86 119.58 120.54 61.90 51.3%

2008/09 61.90 107.24 107.56 61.58 57.3%

2009/10 61.58 102.16 117.02 46.72 39.9%

2010/11 46.72 116.33 113.50 49.55 43.7%

2011/12 49.55 125.14 102.92 71.77 69.7%

2012/13 71.77 121.04 106.76 86.04 80.6%

2013/14 86.04 117.42 108.74 94.73 87.1%

Change from Aug -0.31 1.04 -0.22 0.96 1.1%

Values in million 480-lb bales; bold numbers are USDA projections.

TOTAL OPEN INTERESTWORLD SUPPLY & DEMAND

Support

High: 102.00 6/20/11

Low: 71.556/01/12

Contract Size: 50,000 lbs.Daily Limit: 4¢/lb.

Brokensupport

Brokensupport

16 800-558-3431

$60

$70

$80

$90

$100

$110

$120

1/3 2/2 3/3 4/2 5/2 6/1 7/1 7/31 8/30 9/29 10/29 11/28 12/28 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Source: USDA AMS

DECEMBER 2013

9-DAY RSI

AUGUST 2014

FEBRUARY 2014

Lean hog futures continued to surge this week, with most months reaching new contract highs on expectations for high beef prices to boost pork demand and heightened speculation USDA’s Sept. 1 inventory report overstated U.S. hog supplies. Nearby Dec. futures also found support from their discount to the CME cash lean hog index, which firmed above $91.00 even as negotiated cash carcass values slipped. The futures strength came despite a dip in the com-posite pork cutout value.

Continued lower-than-expected weekly slaughter totals and reports of increased incidences of Porcine Epidemic Diaherrhea in North Carolina (See page 5) drove market talk that hog supplies are smaller than USDA reported. Estimated federally inspected slaughter for the week ended Oct. 20 was 3.6% below a year earlier and this week’s kill appears to be short again with the Saturday kill seen falling to 112,000 head from 135,000 last week. U.S. pork exports for August were down 2.5% from July, but were roughly stable with a year earlier.

Most lean hog futures contracts are now quite overbought on short-term momentum indicators, but it is difficult to say where this rally may peak with no resistance left above the market on daily price charts. Resistance on the weekly hog futures continuation chart is at the September high of $93.75. June futures have psychological resis-tance at $100.00, but no long-term chart resistance below $102.45.

Hedgers’ Strategy: Hedgers remain short December futures against 50% of fourth-quarter marketings and Feb-ruary futures on 25% of first-quarter sales, but exited June futures positions covering 50% of second-quarter mar-ketings on Thursday and Friday.

COMMENTARY

High: 99.5010/25/13

Low: 87.0253/20/13

High: 95.47510/25/13

Low: 86.9258/1/13

High: 90.6510/25/13

Low: 74.257/3/12

HOGS

JUNE 2014

High: 92.725 10/25/12

Low: 78.375 3/20/13

PORK CUTOUT VALUE FOB OMAHA

Contract Size: 40,000 lbs.Daily Limit: 3¢/lb.

Broken resistance

Support

1

5

2 4

3

Fivewave sell

signal

Support

Support


LIVE CATTLE DECEMBER 2013

9 DAY RSI

FEBRUARY 2014

APRIL 2014

Live cattle futures steadily recov-ered from last Thursday’s sharp re-versal down as a feared job action at the JBS beef plant in Greeley, Colo. didn’t materialize and cash cattle prices surged. Tight cattle supplies and surging beef prices set a strong market tone with nearby October fu-tures trading as much as $5 higher on the week before profit taking set in on Friday.

Active Plains cash trade developed on Wednesday at $132-$133 live, $2-$4 higher than last week and at $207-$208 on a dressed carcass basis. Some live cattle sold at a record $134 in Nebraska. Strong movement may mean smaller showlists again next week. Beef cutout values surged with the choice cutout moving above $200 per cwt. for the first time since June.

On the negative side, there were signs late in the week of beef buy-ers resisting high prices and packer margins remained well in the red de-spite the beef strength. If beef prices have topped out again, the cash cattle market rally could stall at least tem-porarily. Live cattle futures may be vulnerable to position evening ahead of Thursday’s delayed Cattle-on-Feed report, which should show Septem-ber placements up from last year.

Feeder cattle futures recovered strongly on Tuesday, then spent the rest of the week consolidating. A close by January futures above $169. 43 would signal yet another up move, while a close below $165.73 could trigger active technical selling. Hedgers’ Strategy: Fed-cattle mar-keters should take risk in the cash market for now. Feeder cattle mar-keters remain short January futures on 25% of marketings through the end of first quarter.

COMMENTARY

WEEKLY CONTINUOUS

CATTLE

Support

JANUARY 2014

FEEDER CATTLE NOVEMBER 2013

Major breakout

Major breakout

Contract Size: 50,000 lbs.Daily Limit: 3¢/lb

Daily Limit: 3¢/lb Contract Size: 40,000 lbs.

Support

Support

Support

Support

18 800-558-3431

FEED/INPUTS

It bothers us that corn futures did not come under further pressure this week as harvest activity accelerated, but the corn market remains in a downtrend, so we remain in no rush to take forward coverage on corn needs. Strength in basis levels due to pent-up demand and slow producer selling is still our biggest worry in the short-term. However, we see limited upside for flat prices through year’s end and there could be a significant pick-up in producer cash sales after Jan. 1.

We are keeping a close eye on the soymeal market with Dec. soymeal futures breaking out to a one-month high on Thursday. Strong demand from the export sector and livestock producers has kept futures and cash soymeal basis bids strong despite rising production. However, the futures rally appears to have stalled out on Friday.Feed Buyers’ Strategy: Corn and meal buyers should continue to buy hand to mouth for now. Fertilizer: Domestic ammonia prices softened a bit this week as the fall sales season has been soft so far. Demand for corn and wheat pre-plant has been light in most areas. The window for pre-plant applications will be reduced with the 2013 crop larger than expected and coming out of the field late. The world urea market may firm slightly in the short term, but domestic prices may be flat to soft as fall demand from wheat growers fades and imported supplies build. The world phosphate market remains soft. A combination of oversupply and a seasonal slowdown in demand is likely to keep DAP prices moving lower. Potash prices appear set to continue lower in late 2013 despite some improvement in demand.

COMMENTARY

SOYBEAN OIL DECEMBER 2013

SOYBEAN MEALDECEMBER 2013

High: 59.89 6/2/11

Low: 39.2010/2/13

High: 451.209/13/13

Low: 234.006/1/10

Contract Size: 100 tonsDaily Limit: $20/ton

Resistance

PROPANE NOVEMBER FUTURES

HEATING OILNOVEMBER FUTURES

Brokensupport


10-YEAR TREASURY BONDS NEARBY FUTURES

U.S. DOLLAR INDEX

DOW JONES INDUSTRIALSNEARBY FUTURES

GOLD DECEMBER 2013

FINANCIALS/ENERGY

Crude oil prices tumbled more than $3/barrel to settle under $100 for the first time since June as U.S. oil production posted a new 24 1/2 - year high of almost 8 mil bbl/day. Oil stocks are now almost 10% above the 5-year seasonal average, pushing supplies to 25.3 days of use, up from 22.6 days in July.

The U.S. Dollar Index slid further to a 13-month low against a basket of currencies, closing under 80 for the second week in a row. The dollar slumped to a two-year low against the Euro.

The stock market continues to defy gravity as the S&P 500 inched forward to another record high. Market cheerleaders are crowing that 76% of the companies that have reported Q3 earnings have exceeded earnings estimates. However, when the bar is set at a low 2.1% year-over-year growth target, expectations are easy to beat. Further, consider the fact that margin debt levels hit an all-time high in September. The last two times margin debt was this high were March 2000 (followed by an August stock market peak) and July 2007 (followed by an October market peak).

The 10-year Treasury Bonds advanced to their best levels since June, sending interest rates down 10 basis points to 2.50%. This key benchmark rate had almost doubled from 1.61% in June to 2.98% in September during the run-up to the recent U.S. government shutdown debacle.

COMMENTARY

CRUDE OIL (WTI) DECEMBER 2013

NATURAL GAS NOVEMBER 2013

Current Positions Open P/L Closed P/LCorn None $0 $31,094

Soybeans/ Meal S2SX4 @ $11.77 $225 $2,720

Feeder Cattle S2GFF4 @ $166.525 ($175) $6,000Wheat None $0 ($550)

Live Cattle None $0 ($3,300)Wheat/Corn

Spread

None $0 $4,187

2013 Total Profit (Loss) as of 10/24/13 $50 $40,150

Recommendations since last Brock Report: none

There is a risk of losses as well as profits when trading futures and options.

SPECULATIVE POSITIONS

GASOLINE NEARBY FUTURES

ETHANOL NEARBY FUTURES

GASOLINE - ETHANOL SPREAD

Brokensupport

Resistance

Brokenresistance

1

2

4

3

5-wavesell signal5

Resistance

20 800-558-3431

Pent-up agricultural data will continue to flow next week as the USDA plays catch-up, issuing three weeks of weekly export sales on Thursday as well as Cold Storage and Livestock Slaughter reports that had been delayed. For the investor community, the week’s highlights include CPI data and an FOMC announcement on interest rates Wednesday.

THE WEEK AHEAD

13/14 14/15 15/16Strictly Cash 60% 20% 0%

Hedgers Cash 20% 0% 0%Hedgers F&O 80% 70% 0%

13/14 14/15 15/16Strictly Cash 60% 20% 0%


13/14 14/15 15/16Strictly Cash 80% 10% 0%


13/14 14/15 15/16Strictly Cash 60% 0% 0%


HOGS 13-IV 14-I 14-II 14-IIIFutures 50% 25% 0% 0%

Options 0% 0% 0% 0%

CATTLE 13-IV 14-I 14-II 14-IIIFutures 0% 0% 0% 0%

Options 0% 0% 0% 0%

FEEDERS 13-IV 14-I 14-II 14-IIIFutures 25% 25% 0% 0%

Options 0% 0% 0% 0%

MILK Oct Nov Dec JanCash 45% 25% 25% 0%

Futures 0% 0% 0% 0%

13/14 14/15 15/16Strictly Cash 60% 0% 0%


CORN 13-IV 14-I 14-IICash 0% 0% 0%

Futures/Options 0% 0% 0%

MEAL 13-IV 14-I 14-IICash 0% 0% 0%

Futures/Options 0% 0% 0%

CONTACT USFor more information or customer service:

Brock Associates2050 W. Good Hope Rd., Milwaukee, WI 53209

Call 414-351-5500 or toll-free 800-558-3431 Email: [email protected]

PUBLICATIONSTHE BROCK REPORTPublished 48 times per year; © 2013 by Richard A Brock & Assoc., Inc.Subscription price: 1 year $495; 6 mo. $275; 3 mo. $150.DAILY MARKET COMMENTSComments include all new advice, cash strategies, current positions. Issued three times daily; available by email, Internet, DTN or FarmDayta for $360/year for non-subscribers to The Brock Report; $90/year for subscribers.

MARKET EDGEThese online presentations provide in-depth analysis of USDA’s key reports, as well as occasional other topics of importance to the markets. Issued monthly via email for $249/year for non-subscribers to The Brock Report or Daily Comments; $175/year for subscribers. COMMODITY NETWORK SYSTEMUse your phone to monitor recommendations even when you’re away from your desk. Buy a pre-paid block of minutes.

CONSULTING SERVICESBrock Associates offers different levels of personal marketing assistance. Call 800-558-3431.

BROKERAGE SERVICESBrock Investor Services offers complete brokerage services. Call 800-426-0923; in Indiana, 866-260-9819.

WORLD NEWS & WEATHERBROCK REPORT POSITION MONITOR

CORN

WHEAT

COTTON

LIVESTOCK

FEED PURCHASES

SOYBEANS

RICE

CORN MOVEMENT STAYS SLOW RUNNING ON EMPTY€¦ · 10/25/2013 · Combined Sept. 1 stocks of those...

Documents

Transcript of CORN MOVEMENT STAYS SLOW RUNNING ON EMPTY€¦ · 10/25/2013 · Combined Sept. 1 stocks of those...