Margin Watch: Mid-January

January 19, 2010 by Chip Whalen

Margins improved significantly following the latest USDA report, as the data was considered particularly bearish for the corn market. Contrary to expectations, corn production increased 230 million bushels based on both a higher harvested area and yield forecast, despite the weather issues experienced during this fall’s harvest. Corn has lost around 50 cents since the report was issued. While the report figures were not quite as bearish for the soybean market, meal has nonetheless been under pressure as well, trading around $20/ton lower since the beginning of the year… Get the Complete Report »

Margins have improved noticeably since the end of 2009 as the USDA’s latest supply/demand figures caused a sharp selloff in feed prices. The corn data in particular was rather bearish as the government raised their crop production forecast despite expectations for a decline due to the poor harvest weather this season. In addition, meal prices have been under pressure also, although the USDA’s soybean production and ending stocks figures were closer to market expectations. Meanwhile, milk prices have been firm with a sharp advance on Friday in particular following a 10.5 … Get the Complete Report »

Cattle production margins have improved significantly since year-end, due mainly to a sharp selloff in corn futures which are down around 50 cents since the beginning of January. The USDA’s latest supply/demand report revealed a corn crop that was much higher than traders were expecting. Despite a very wet harvest season that caused some crops to remain in the fields, the government increased both the harvested area and yield to project a record corn crop 230 million bushels above their previous estimate. Unfortunately, feeder cattle prices have also been increasing … Get the Complete Report »

Crop margins deteriorated significantly since the beginning of the year as the market has sold off around 50 cents/bushel in response to the USDA’s latest supply/demand report. Contrary to market expectations of a 100 million bushel decline in production due to the extremely wet fall season that caused some crops to remain in the field, the government increased both the harvested area and the yield to project a record crop over 13 billion bushels–up 230 million bushels from their previous forecast. While some of this increased production is expected to be consumed by additional… Get the Complete Report »

Crop margins are down sharply since the end of the year, as the futures market has lost about 80 cents/bushel since the beginning of January. Indications that South America’s crop is progressing well with favorable weather conditions have pressured the market while concerns are growing about the possibility of slower Chinese demand. The latest USDA report highlighted a 2 million ton increase in Brazil’s soybean production forecast, and the Chinese government recently raised a key interest rate to tighten credit markets… Get the Complete Report »

Margins held relatively steady since the end of December, as a decline in futures prices and a strengthening in basis values were basically offsetting. The market has come under pressure recently as the USDA’s latest supply/demand report showed a 76 million bushel increase in ending stocks, as exports, domestic feed use and seed demand were all lowered. Exports are now projected down to 825 million bushels which would be the lowest since the 1971/72 crop year, as the U.S. has effectively priced itself out of the world market. Meanwhile, extreme financial pressure on… Get the Complete Report »

About the Author

Chip Whalen, CIH

Chip Whalen

Chip is one of our resident educators with over fifteen years of teaching, trading, and senior risk management experience.

There is a risk of loss in futures and options trading. Past performance is not indicative of future results. The information contained in this publication is taken from sources believed to be reliable, but is not guaranteed by Commodity & Ingredient Hedging, LLC, nor any affiliates, as to accuracy or completeness, and is intended for purposes of information and education only. Nothing therein should be considered as a trading recommendation by Commodity & Ingredient Hedging, LLC. The rules and regulations of the individual exchanges should be consulted as the authoritative source on all contract specifications and regulations.

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We provide customized agricultural price management consulting services and educational programs to livestock and crop producers, food and feed companies, milling, crushing, and trading firms.

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