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BRIAN HOOPS

By Staff | Oct 3, 2014

More bushels yet

Private crop forecaster Lanworth has raised its nationwide corn yield estimate to 174.5 bushels per acre, 2.8 bushels per acre above USDA’s current forecast.

Lanworth’s nationwide soybean yield estimate is now at 47 bushels per acre, compared to USDA’s 46.6 bpa estimate.

Cash accounting

A proposal by the Senate Finance Committee will limit the use of the cash accounting method. Under the proposal, farmers and small businesses with receipts greater than $10 million would be forced to use the accrual method of accounting.

Cash accounting increases cash flow by allowing farmers to record income when they get paid and record expenses when they write a check.

American Farm Bureau Federation tax specialist Pat Wolff said moving away from that makes farm accounting more complicated, and takes away the farmer’s ability to spread out cash flow for farm management purposes.

Assets to debt ratio

USDA sais the rate of growth in farm assets, debt and equity is forecast to moderate this year, the result of an expected decline in net farm income, higher borrowing costs and moderation in the growth of farmland values.

The value of farm assets is expected to rise 2.3 percent this year, while farm sector debt is expected to increase 2.7 percent.

Even with the expected slowdown in asset growth, the farm sector’s financial position remains strong due to the historically low level of debt relative to assets and equity, USDA said.

CORN ANALYSIS

Corn closed the week 8.34 cents lower. Last week, private exporters announced sales of 107,188 metric tons of corn to Mexico and 110,000 mt of sorghum to an unknown destination.

Weekly export sales of corn showed corn sales of 33 million bushels.

In the weekly crop progress report, the USDA reported that 90 percent of the U.S. corn crop is dented compared to the five-year average of 92 percent.

As of Sept. 21, 42 percent of the corn is mature versus 54 percent.

Only 7 percent of the corn is harvested, which is below the five-year average of 15 percent this time of year. Corn harvest looks to continue to run behind normal.

Corn conditions were left unchanged at 74 percent good-to-excellent. Corn harvest is just beginning and corn prices have already nearly fallen to long term support.

The downside target is the weekly chart support of $2.75 to $3.

With huge yield results already trickling in, it is too early to anticipate a harvest low forming.

So far, RJ O’Brien has collected 158 corn yields from producers around the Midwest, averaging 230 bpa.

Strategy and outlook: Producers are 25 percent sold of the 2014/15 crop and own December puts on 75 percent of the crop.

They should exit puts at $3.

SOYBEANS ANALYSIS

Soybeans closed the week 47.5 cents lower.

Last week, private exporters reported sales of 115,000 mt of soybeans to China.

Weekly export sales of soybeans showed sales of 94 mb.

In the weekly crop progress report, USDA showed 45 percent of the nation’s soybeans are dropping leaves with the 2009-2013 average at 53 percent.

Only 3 percent of the soybeans had been harvested compared to 8 percent on average and 71 percent of the crop is in good-to-excellent condition, a drop of only 1 percent from last week.

The early stages of harvest are uncovering record large soybean yields.

While demand is starting to pick up, harvest lows are not due until Oct. 2, but lows should occur later this year due to the harvest running several weeks behind normal.

So far, RJO has collected 81 bean yields from producers around the Midwest, averaging 68 bpa.

Strategy and outlook: Producers are 25 percent sold of 2014/15 production. Producers own puts on 75 percent of the crop.

They should exit puts at $8.80.

This material has been prepared by a sales or trading employee or agent of Midwest Market Solutions and is, or is in the nature of, a solicitation. This material is not a research report prepared by Midwest Market Solution’s Research Department. 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 Midwest Market Solutions believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such.

Brian Hoops can be reached at (605) 660-1155.

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