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Highlights, Full Service, Markets & Rain Days Update 8/1/22

Highlights


Olexii Vadatursky revived grain export and river bulk transport industries for Ukraine after the collapse of the Soviet Union in 1991. He supported medics amid the recent pandemic. Olexii and his wife were killed Sunday morning by a targeted Russian missile strike while sleeping in their home in the port city Mykolaiv. All grain people in Eastern Europe had great respect for Olexii as he made grain farming in Ukraine profitable again for the first time since 1914. What impact his death will have on Ukraine’s grain exports is unknown.

The Ag Minister of Ukraine predicts autumn seedings will be 30-60% less than last year, which was 9 million hectares (22.2 million acres of wheat, barley, rapeseeds, rye).

The Danube River is where Ukraine’s grain is received by trucks and rail west of Ukraine’s Black Sea Ports. Sunday morning, a pilot boat hit a mine and the channel is now partially blocked by the pilot boat.

BRICS is an international trade organization with five members: Brazil, Russia, India, China, South Africa. Algeria wants to join BRICS and has met almost all the conditions for acceptance. Algeria seeks to avoid "bipolar trade conflicts." Don't we all? The President of the BRICS said Saudi Arabia, Egypt, Turkey, Argentina and Iran announced plans to join the BRICS earlier this year. This has no immediate importance to North American grain farmers, but the more members BRICS has, the more favorable their trade agreements will become with each other and non-member countries will have more difficulty selling anything to its members.

 

Roger’s Comments:


Our full service program matches the grain market outlook with the individual circumstances of each specific operation and it includes a lot of education on market tools. Lance Donlon is our primary Full Service Guy.

The information below is what Lance has recommended his clients do for those who are comfortable with all the marketing tools, which most are not, but they are learning and progressively using marketing tools they never used before.

This information is where Lance would like all his clients to be at this time. Remember, his purpose is to maximize profitability of cash grain production and minimize market and financial risk. He uses futures and options to manage risk, not speculate for profit, fun and games.

This information is not a solicitation for more full service clients as Lance will be soon reach his limit because one on one education and risk management takes a lot of time, but if you are interested give Lance a call: 563 880 5526. We do want you $500 clients the first opportunity to hire Lance before he gets fully booked with new-to-us clients.

Most of you $500 a year clients would greatly benefit with the full service. How many bushels of corn did you sell at $7.50+ May 13 to 18th? What have you done to mitigate the risk on the bushels you did not price? December corn is 60 cents off last week’s low… That is a bunch of money, but December corn is still $1.36 below $7.50… that is a bunch more money.

Here is Lance’s specifics:

Corn sales progress math using 100,000 bushels producing farmer:

May 13th: sell Dec corn HTA @ 7.54 10-20% of production

For the book: 20,000 sold at @7.54

June 3rd: sell Dec Corn HTA @ 7.12 to get sold to 50% level

For 10 days Dec corn traded above 7.12 and traded to 7.49¼ on June 17th.

For the book: 30,000 bushels sold @7.12

On June 3rd: Buy Dec 7.00 puts for .50 cents. This order would have been filled on June 7-9 and June 13-17

I told clients that asked how much to price, go up to 25% of production

For the book: 25,000 bushels covered with $7.00 puts

Also, June 3: Write (sell option before you buy the option) the same number of Dec 7.50 corn calls as purchased puts from June 8-17 this order could be filled with .68 cents the high on June 17.

The income from the calls offsets the cost of the $7.00 puts bought for 50 cents a bushel.

For the book: 25,000 bushels of December puts paid in full or surplus by these December $7.50 written calls

July 6: Buy back the Dec written calls at .15 cents .50-.15 cents= .35 profit on 25,000 Bushels. Profit $8,750

July 22: Sell the Dec put $7.00 put at $1.44 which was bought for 50 cents = .94 cents profit on 25,000 bushels is $23,500

Two suggested option trades:

July 22: Buy Oct 5.40 puts for lower side protection cost .18 cents on 25,000 bushels

Note: This put might expire worthless. But if I would not have taken profit on the Dec $7 put, the income would have been 41 cents less.

July 23: Write the $5.20 Dec put for 25 to 28 cents; then buy the $6.80 Dec call for .33-.36 cents.

Put sold @ .25, now at .20 Call bought @ .34, now worth .51

 

The map of 24 hour ending yesterday morning:

Roger thinks the weather outlook for the next two weeks justify higher soybeans. But there is no doubt the variance of forecasts has expanded to more extreme hot and dry to cooler with some light rain. Did you notice Nick and Eugene reported one more rain day in the Western Corn Belt two days ago? Did you notice they reported 6 more days of rain in the Western Corn Belt yesterday morning? When the rains came to the Eastern Corn Belt and some to Western Corn Belt about a month ago, the first indication of a change in the weather was Nick's and Eugene's days of rain. They update that rain day information while you and I are sleeping. That data is the most up-to-date rain or no rain forecast you are ever going to have when you wake up in the morning.


 

Market Data


This morning:

Crude oil is at $97.76, down $0.86

The dollar index is at 105.67, down 0.23

December palm oil is at 4,152 MYR, down 193. The contract high was made April, 29th at 6,384 MYR. Palm oil owns 36% and soybean oil owns 28% world market share.

December cotton is at $94.76, down $1.98 per cwt. The contract high was made May, 17th at $133.79 per cwt. Cotton competes with soybeans and corn for acres.

December natural gas is at $8.101, down 0.273. The contract high was made June, 8th at $9.675. Natural gas is the primary cost to manufacture nitrogen fertilizer.

December ULSD is at $3.3547 per gallon, down 0.0485. The contract high was made June, 17th at $4.0719. ULSD stands for Ultra Low Sulfur Diesel.

September Dow Futures is at 32,786, down 79. The lifetime high is 36,832 on January 5th, 2022.


 

Rain Days Update


The Western Corn Belt has 4 more rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 4 more rain daysthan yesterday.


The 6 to 10 day forecast updated every day at: https://www.cpc.ncep.noaa.gov/products/predictions/610day/

Explanation of Rain Days


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