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Recovery after $1 loss?

Agriculture.com Staff 09/10/2009 @ 9:33am

Soybean prices dropped $1 last week in a washout-type trade, as everyone seemed bullish soybeans due to late planting/late crop development. The market taught bulls a lesson last week, and now that the medicine was dealt out last week, the market is stabilizing and even rallying some this week. It's possible we could even gain back 50c of the loss before we resume the downtrend!

There is some discussion for the 2009 crop year that yields might be reduced by USDA in Friday's report, contrary to what most analysts (including Pro Ag) are suspecting will happen. In fact, tomorrow a press release will be provided from a satellite imagery company that believes the crop is smaller than the August report numbers - and it may be considered bullish (especially in soybeans) if people believe the numbers. The thought process behind it is that with late planting and a cool summer, there just wasn't enough time/light to produce a bumper crop of soybeans or corn. Therefore, yields won't be like 2004 or 1994, both cool years that produced record shattering crops.

It would be nice to get a good bounce during the uncertainty over crop sizes, as still the debate is healthy regarding what the final crop size will be. And just when the crop size is questioned the most and the market bounces back the most from that inquiry - that's when we'll have a chance to hedge it again!

Frost is still a topic of conversation if you look at crop maturity, and this is more of an issue for corn than soybeans. Soybeans are behind in maturity, but not by much. In a few weeks or at normal frost time, most soybeans will be safe from freeze risk and we don't have to worry about soybean losses anymore. But corn could be a different story, as it might take until mid October to make grain for some areas.

Pro Ag is especially worried about corn, as we could easily lose 2-4 bu/acre from a normal frost date for the Corn Belt, and an early frost would present even more problems. For now, the forecast does not yet include frost in it for any major growing areas, but things can quickly change at this time of year.

While we are not very bearish for now, eventually we do foresee a slide in grain prices (maybe even later this week) into harvest time, with some price pressure still expected in the coming few months. Lets hope the market can rally this week to give us yet another chance to get short again!

ACRE Signup Percentages Small

Signup for the ACRE program seems smaller than expected, with many shunning the new program even though it seemed to make sense for most corn/soybean producers. Preliminary indications of 10-20% signup in MN, ND, SD, and MT seem small by the numbers we would have expected. A couple reasons why it might be so small:

1) Wheat and barley producers were reluctant to signup given their expected big crop yield in 2009. So far, the growers who didn't sign up may be OK as an LDP has been generated for barley and durum growers in recent weeks, and HRS wheat isn't far away. With large yields (2 crops in one year???) and no potential loss in ACRE, having LDP eligibility might be well worth the wait until next year.

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