Margin Watch: August

September 1, 2013 by Chip Whalen

Margins deteriorated during the second half of August, due primarily to rising feed costs as hog prices were largely flat over the past 2 weeks. Late season heat across the Central Midwest has combined with ongoing dryness to spark a rally in corn and especially soybeans as analysts begin to trim yield estimates ahead of the September crop report. USDA and va beach strippers last estimated national corn yield at 154.4 bushels per acre with soybeans at 42.6, and recent deterioration in crop condition ratings suggests those estimates will be reduced further. The soybean balance sheet is projected to become very tight again should … Get the Complete Report »

Dairy margins deteriorated further since the middle of August as feed prices have moved up while milk has held relatively steady over the past two weeks. Late season heat in the Central Midwest has combined with prevailing dryness to inject new risk premium into the grain market and soybean complex in particular. Crop conditions have been deteriorating and there is concern that USDA will again lower their yield estimates for both corn and soybeans in the upcoming September WASDE report. Both crops saw a yield decline in August, with corn down 2.1 bushels per acre to 154.4 while soybean yield fell 1.9 from July to 42.6 bushels per acre. The soybean balance sheet would become very … Get the Complete Report »

Beef margin projections were mixed over the past two weeks, improving in some marketing periods while weakening in others. On a relative basis, forward margins are still historically strong through the April marketing period, above the 90th percentile of the previous ten years. The main feature during the second half of August has been the return of heat to the Central Midwest, which combined with prevailing dryness and a continued lack of significant rainfall has further deteriorated crop condition ratings. USDA will release their next WASDE report on September 12, and the market is bracing for a further … Get the Complete Report »

Corn margins have been mixed over the last two weeks only to finished unchanged from the middle of August. The main feature during the period has been weather. A late season heat wave has given market participants pause as to how large the coming harvest will result. Given the lateness of plantings this year, the heat witnessed could have stressed crops enough to bring yields lower. The ProFarmer crop tour reported its estimate for the crop at 13.46 billion bushels with a national average yield of 154.1 bushels per acre compared to the USDA that currently sees yields at 154.4 bushels per acre and production amounting to 13.763 billion bushels. ProFarmer, in a rare move … Get the Complete Report »

Soybean margins have surged since the middle of August as prices challenged contract highs. The main feature of the past two weeks has been weather. Hotter and dryer than normal has been the profile across the Midwest, causing market participants to re-evaluate production forecasts. Given the late plantings, soybeans were entering the critical development phase of pod fill. Weather during that stage of development should include adequate moisture and moderate temperatures, neither of which occurred. The ProFarmer crop tour reported its … Get the Complete Report »

Wheat margins have been mixed as nearby margins have improved slightly while deferred 2014 margins have slipped further. The main domestic feature during to period has been delayed harvest of spring wheat. Currently, 42% of the spring crop has been harvested, well behind the 10-year average of 65%. Warm temperatures in the coming weeks should help to speed up the domestic harvest pace. Also helping to support prices has been increased export sales recently. Cumulative 2013/14 sales are currently record … 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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