Above: Oliver Sloup shares his take on today’s WASDE report with RFD-TV

Weekly Update from Ben Rand of Blue Line Futures, in Elwood Nebraska

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Well, it’s a bear market until its not.  In the same fashion, but in other commodities, it’s a bull market, until its not.  And its WASDE report day, even though you wouldn’t know it looking at charts.  So, call it a snoozer, which isn’t a good look for the bull who was looking for a surprise.  Not really even going to address the WASDE here since it was a non-event.  So, let’s do this movie style: “The Good, the Bad, and the Ugly.”

First the good.  CATTLE.  Fat cattle continue to march upward, and while feeders have slowed the roll (which we anticipated in last week’s commentary).  We need to straighten out this fat/feeder ratio anyways, so I like the price action.  For the technicians out there, the Live Cattle market has completed its Fibonacci 38.2% retracement at 187.033 today.  We now are eyeballing two overhead gaps, the first at 187.300 (which was nearly closed today with the market going to 187.500) and the other at 189.100.  Here is a peak at the April Live Cattle contract and the overhead gaps we need to be mindful of. 

Feeder cattle are still well supported.   I continue to watch that Oct24 Feeder/April25 Fat cattle spread. With Oct feeders trading that 271-275 area, and April Live at 194, that crush doesn’t work.  We need to see Live cattle do some heavy lifting, or these feeders need to back off.  I said it last week, and will say it again.  Backgrounders and Cow/Calf operators with calves to go in Q3 or Q4 need to put on some sort of protection.  Pick your flavor, futures, options or LRP.  In other news, I think the official herd rebuilding started Feb 2nd.  Why?  The cycle has started of producers looking at ways to produce more calves due to profitability in the feeder market.  That tells you all you need to know.

On to the Bad: CORN.  And this brings up the bear markets being bear markets, until they aren’t.  The WASDE tells us we have plenty.  The CIF corn bid isn’t healthy, the river cash bid is below the March board which is deeply troubling, and the millions of bushels on in the fringe acres will absolutely cap any upward movement in corn.  This is compounded by lack of farmer participation.  Which, in and of itself stinks, but the demand problem only compounds it.  Trying to pick bottoms here will teach you a very difficult lesson.  I’m all but done looking at old crop corn, because if you’ve held on to it until now, nothing I can say will convince you to manage that risk.  I sure do think CZ4 will revisit the 5 handle, and that needs to be looked at, and looked at hard.  And if you follow me on Twitter, I’ll restate a post from earlier this week:  When you feel it’s time to hedge some CZ4, probably need to look at doing some CZ5 & CZ6 too.  Btw, the south will start planting end of this month or beginning at next.

Wrapping up with the Ugly:  BEANS.  With SX4 closing at 1174.50, we are well below break evens for what I would guess to be 95% of US producers.  Gone are the rumors of Brazil doing 133mmt, and now most reputable analysts puts them between 147-150mmt.  With Argy at or near 50mmt, there will be no shortage of beans on the world stage.  The good news is they don’t seem to want to say sub-12 for long, so for those who are asking for a target to sell them, I hate to be this way, but 1250.00 SX4 is where you have to be active IMO. 

Your current averaging period prices for crop insurance are as follows:

Corn

Beans

About the Author

Contact Ben via email: BenRand@BlueLineFutures.com

Ben Rand is a Series 3 Commodity Broker, Series 30 Branch Manager and Licensed Insurance agent in over 20 states. Prior to his entrance into risk management, Ben was an Intelligence Collector for the department of defense and is fluent in Dari, Farsi and Arabic. Ben has held Commodity Broker and Branch manager positions within Cargill and now Blue Line Futures. During his time at Cargill, Ben also originated grain into various Cargill assets and their joint ventures across the western corn belt. Since 2014 Ben has filled several roles in Risk Management to include agent roles at his family-owned agency and The Home Agency. Ben has been committed to helping educate and provide risk management solutions for Livestock and Row Crop producers across the nation.

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