Home / Markets / Markets Analysis / Corn market / Time to Lift Soybean Hedges for Profits

Time to Lift Soybean Hedges for Profits

Ray Grabanski 08/05/2014 @ 8:15am President, Progressive Ag www.progressiveag.com

Unlike this week, little precip fell across the Corn Belt last week. But, still yield models for corn and soybeans were about steady in spite of the lack of rain, with the USDA Crop Progress Report showing corn conditions down just 1% G/E ratings and soybeans steady. 

That does mean that conditions no longer are improving for corn and soybeans as they were steadily during the months of June and early July. However, we are not seeing significant declines, either, yet, and that is surprising considering how dry it has been in the month of July in many areas of the Corn Belt.  

Weather includes the this week's forecast that calls for the best rain in the Corn Belt in weeks, with 60% coverage of .25 to 1 inch, locally 2- to 3-inch rains that will alleviate some crop stress in areas where it falls.  However, more rain is needed to keep the high yield potential in crops.  There is some rain in portions of South Dakota, Iowa, Illinois, Indiana, and Michigan today that will greatly aid the areas that get rain.  More rain is forecast to develop over the central Corn Belt today, including parts of Montana, South Dakota, and western Iowa as well as parts of Illinois, Indiana, and Michigan. The central Corn Belt will be favored in the coming rainfall this week, with parts of Iowa and Missouri getting 2- to 3-inch rain amounts in the coming week.  

Pro Ag is choosing to remove soybean hedges by taking some huge profits right now and standing on the sidelines for now.  We are near the year's lows, and now yield potential is being sapped out of the grains due to lack of rain in July and August. So we will take our soybean profits and stand on the sidelines for now, waiting for the time when rains will take yield potential higher again, or the ensuing harvest begins. Make sure you're willing to put these hedges back on if you take them off, as it's likely that harvest lows will be below current levels.  Since we are near the year's lows for soybeans and yield potential has declined or remained almost steady for two weeks, it's time to remove hedges for selective hedgers.    

Pro Ag remains on the bearish side of the ledger for corn, as the Pro Ag yield models remain high for corn (still 170 bu/acre this week) as well as HRS wheat. 

Surprisingly, the soybean crop conditions were unchanged in this week's USDA Report at 71% rated G/E despite a dry week that included little rain in the Corn Belt. That kept the soybean yield model relatively high at 45.68 bu/acre, actually up 0.07 bu/acre or just slightly.  That was a surprise considering the dry week we had the past week.  Corn conditions did decline 2% to 73% rated G/E, with the Pro Ag yield model declining slightly to 170 bu/acre, down over 0.5 bu/acre this past week.  

Crop development is ahead of normal nationally, although the northern states of North Dakota, Minnesota, Michigan, and Wisconsin still lag normal development slightly.  Corn silking is at 90% vs. 88% normally, and dough stage is 36% vs. 29% normally at this time.  Soybeans are 85% blooming vs. 83% normally, and are 57% setting pods vs. 48% normally at this time.  Other crops showed a slight decline in cotton conditions of 1% to 53% G/E, with sorghum also declining 1% to 59% G/E.  Rice conditions were steady at 71% rated G/E, as was HRS wheat at 70% rated G/E.  Oat conditions declined 1% to 63% rated G/E, with barley conditions also down 1% to 66% rated G/E.  Pasture and range conditions declined 2% to 50% rated G/E.  

Crop development shows that winter wheat is 90% harvested vs. 85% normally, and HRS wheat 97% headed vs. 97% normally, with oat harvest 56% complete vs. 49% normally.  Overall, we still have an above-average crop of corn, soybeans, and HRS wheat coming this summer, but the conditions no longer suggest an improvement in crop conditions or yield potential due to the recent dryness in crops (especially corn and soybeans).  

 

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

This material has been prepared by a sales or trading employee or agent of Progressive Ag Marketing, Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Progressive Ag Marketing's Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION.

The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Progressive Ag Marketing believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that advice we give will result in profitable trades.

CancelPost Comment
MORE FROM RAY GRABANSKI more +

Soybean Exports Sizzle As Winter Roars Early By: 11/18/2014 @ 10:53am Grain prices rose to their highest levels in months last week as the surge started around October 1…

November USDA Crop Report By: 11/11/2014 @ 9:41am USDA came out Monday, Nov. 10 with their monthly production and supply/demand update, and in it…

Are Postrally Grain Price Slides a… By: 11/04/2014 @ 12:43pm Grains have had a very nice counter seasonal rally during harvest of what is expected to be a…

MEDIA CENTERmore +
This container should display a .swf file. If not, you may need to upgrade your Flash player.
Cool Tools Christmas Edition: Craftsman Two-in-One