WEB SITE: http://www.westcentralareaschools.net/wfm/midmn/
Marketing Groups
The first meeting will be held on Tuesday, December 7th at
8 am at Delta Commodities in the Hi Line Building just west of Prairie view Nursery.
December 2004 Market Update
It’s the time of the year that we need to pause and
give thanks to God for our many Blessings. Health and Happiness are truly more
powerful than wealth and possessions. This fall has proven to be very stressful for
many farmers in our area. Depressed prices and extremely muddy conditions have taken
the “fun” out of harvest.
WHEAT
Winter wheat crop ratings are excellent but the excessive
moisture in the Panhandle could reduce ratings and some acres in Missouri and Arkansas are
unplanted. World wheat stocks are plentiful and export competition is intense.
2004 WHEAT
Thanksgiving time is usually a time to clean-out the wheat
bins. If we make new lows (3.37 in Dec. Mpls wheat futures) clean-out bins or sell
if Dec. rally to 3.70.
2005 WHEAT
Sell 20% in Sept. 2005 futures at 3.80 and another 20% at
4.00.
CORN
The corn crop continues to grow - 11.741 billion bushels with a 160.2 BPA! Harvest
is about wrapped-up and now the market’s job is to find out where the farmer will
sell. Our best guess is if farmers can net 2.10-2.25 - the corn will move.
There might not be much moving until after the 1st, but then watch-out!
Exports have been slower than normal—competition from China.
2004 CORN
26 to 30 ¢ LDP is a good opportunity. Producers who bought futures to protect their LDP until the corn was in the bin can sell the futures and lock-in the LDP at the ASCS Office when we have an up day. We will then look to sell July futures (or HTA) in the 2.40 area.
Remember the price outlook is not anything like last year.
A Huge crop and a 1.8 billion-bushel carry over means we will only get small unsustained
rallies. Take advantage of the carry in the market (24¢ to July) and remember basis should be
locked-in for delivery next summer, as the basis could be wide when farmers see
another big crop growing-- and give up and sell the old crop.
2005 CORN
The outlook for 2005 corn has changed! They have
found Asian rust in beans in the Delta area in our country. What does this mean?
More corn acres - how many? We will have to wait to see-- but it is a sure
bet many farmers will cut back until they see what impact this rust has on yields.
In South America, the untreated acres have had a drastic reduction in yield.
We are currently 40% sold at 2.60 and would like to sell another 10% at 2.45.
Producers who have nothing sold yet-get started!
2006 CORN
2006 we could see even more acres switched in 2006 if the rust spreads farther north into the Corn Belt.
BEANS
Exports are very strong and Asian rust in the Delta has
kept the bean market strong after harvest. South America’s crop is off to a
good start.
Although we are rumor driven now with the Asian rust
worries-- if South America grows another record crop, we will probably not have a
sustained rally. There is a gap on the charts from early September( May 5.96-6.24).
This will be our sell point for producers who LDP’d at harvest.
May futures gap is 6.00 - sell here
If you did not LDP you can sell cash beans for summer
delivery in this same gap area. If the market goes down due to a large South America
crop and farmer selling here, you may be able to pay-off your loan at a lower PCP.
2005 BEANS
Because we may see smaller acreage next year due to Asian Rust fears- we’ll only sell 10% at $6.00 and another 10% at $6.25.
HOGS
We have had another $5.00 run-up in hogs this past month. 400,000 plus daily kills
and still the market stays strong. Exports are great due to the weak dollar and
still no cattle exports. Remember what goes up will come down. Keep
hedging--profits are good!
We can do Fences in April.
Buy a $70 April Put - Sell a 78¢ call for $2. This will give us a
floor at 70 and a top at 78.00. Sell another 25% in May at 71.00
CATTLE
The final details in reopening our beef trade with Japan is taking a long time.
Another “inconclusive” BSE test last week worried the market but turned
out to be negative.
Protection of some sort-either futures or options is still
a must as prices could free fall if there is another BSE. The ten-year cycle could
top any time.
Feed Users
Fall is the best time to lock in for at least six months.
Buy all you can in the cash market before basis improves.
Remember to use only marketing tools that you fully understand and that you are aware of all the risks. Learn to use new tools by starting slow and gaining experience. The key is to have a Marketing Plan based on a sound cashflow marketing scenario with realistic price levels and then make sure you follow through! Again, this letter is meant to inform--not to solicit any marketing service or expertise. You, as a producer, must make your own marketing decisions and decide how to proceed with any of the scenarios presented. If you have any questions on these marketing strategies, please call Jan Asmus at Delta - 320-589-4345.