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Tidbits, Admin Note, Markets & Rain Days Update 5/14/22

Highlights


USDA announced yesterday morning the sale of 132,000 mts of old crop soybeans to China.


USDA plans to issue WHIP+ payments to producers in June, for disaster losses in ‘20 & ‘21.


The Wheat Quality Council’s Hard Red Winter Wheat Tour will commence next week. Market expects very bullish news, which is already priced-in.


Yesterday was the last day of trading for the May CBOT contracts. The only traders with open positions on the last day of trading for any grain contract are the large grain houses.


There are two types of futures buyers on the last day of trading:

  1. Those that want to take delivery of the physical commodity.

  2. Those who are holding sold positions (short the market) and have to deliver the physical commodity, but decided they can’t or don’t want to deliver the physical commodity.


There are two types of sellers on the last day of trading:

  1. Those who have the physical commodity and want to get rid of some of it.

  2. Those with long (buy) futures positions who decided they do not want the physical commodity so to avoid delivery, they sell futures to offset (cancel out) their long (buy) position.


May corn ended the day down 19 cents.


May soybeans finished the day up 63 cents.


One of those indicates a bearish outlook for that commodity and one of those indicates a bullish outlook for the price of that commodity. Can you figure which is which?


 

Admin Note from Roger Wright


I have known for twenty years that the next generation of grain market advisors could not possibly continue my grain marketing consulting business without a website and fully embrace the use of Information Technology (IT), which I do not understand and find it very difficult to use.

It was a year ago we launched our website. It was a 15-year process because I could not communicate effectively with Information Technology (IT) people. I found a few IT people who were farmers or had farmer clients, but these IT people were simply too busy making money to build a website and teach me how to use it.

The older I got, the more urgent the need for a website became. I had four false starts in constructing a website the past six years. About four years ago, Olga began doing a lot of administration, weekly report work and teaching herself about technical analysis. Her work freed me to do more promotional work for our business. About 20 months ago, Olga told her son, Nick, how we had paid a web page builder to construct our website and, after four months, the project had stalled and was doomed to fail. Nick is a mathematician extraordinaire, and his best friend, Eugene, who is an IT engineer. Even though they had not much expirience with constructed a websites, together, they worked for months to build our website. I told them what I wanted the website to do or show and they would produce it. Nick and Eugene had to learn a great deal about grain marketing, farming, business marketing and website design to construct our website. The more they learned, the more they understood the need for and the value of the grain marketing education and the service I had been providing farmers for more than 40 years. Since they are in their mid-30’s, they saw the long term potential and were the perfect maturity and skill set to learn the business. By the way, we have had three Silicon Valley IT engineers tell us our website is top shelf. Olga and I welcomed Nick and Eugene to our business when the website went “live” a year ago. Olga’s daughter, Nata, has done a lot of research to assemble many of the historical fundamental charts over the past several years. I tried to phase out the full service aspect of our service so I could maximize the benefit of the website, but the need for the customized marketing service was just too great. One of my clients, Lance Donlon, had shown a remarkable talent for this grain marketing business. I asked him if he would be interested in providing the full service, customized market plan. He agreed and has not only provided the great service I expected he would, but he also has done much more for the business as a whole than Olga and I expected. I recruited two superb technicians. One is on hold until he finishes-up some other business enterprises. The other is The Tech Guy, who has worked hard for years to develop his craft. One of our clients happened to stumble across The Tech Guy’s work and realized I needed to talk to this technician. The Tech Guy had no idea how advanced his technical analysis skills were. He has lived in his own little world, worked very hard to develop his brand of technical analysis; he simply did not know how advanced his analytical skills were. We now have four people in their thirties and two people in their fifties, plus me, the Old Duffer, who has been doing the grain marketing consulting for a bit more than 42 years. I think I am in perfect health. Olga and I small square 50 acres of hay and sell it to horse people. It lets me pretend I am a farmer. None-the-less, I know I am not going to last another 40 years. Thus, my job now is to train the next generation of business and market consultants to continue this business and expand our client base so we never have to raise prices for our clients. Originally, when I went to the $500 a year email subscription business, my intentions were to not provide any customized service at all. But, I am weak. I just cannot refuse to explain or share an opinion with anyone who asks. As a result, I am getting less training done and not nearly enough marketing of our business. We want all of our clients to think paying Wright on the Market is the best $500 they spend every year. I want my legacy to be this next generation of market consultants to be providing a valuable service for another 40 years. While I will continue to do much of fundamental market analysis, the younger generation is progressively taking over most of the information gathering and organizing it to be presented to you as clearly. My role must change from being available to answer client’s questions to trainer and business promotion. We are going to add several new teaching tools, just like the Tech Guy’s stuff and the options discussion of the past two weeks. We are going to add a section called Olga’s Options in which I will share what Olga is doing with her options trading, why she is doing it, and track those options from start to finish as the futures market moves. I share how her profit and losses are calculated, her risk assessment and adjustments to changing market situations. This will be the most practical and detailed option training anyone has ever presented. There is nothing better than real numbers in real time to explain how things work. I want all our clients and prospective clients to know I am very proud of this next generation. They are all passionate about their work and truly want to provide a high quality service. Our business model is: If we take care of our clients, they will take care us. Lance called me this morning and told me he already recommended his clients sell some corn. I told him that was fine because he is one who has to earn his clients’ business another year. The email service is based solely on market outlook, whereas Lance takes that information and customizes it for each of his client’s needs, wants and desires. After the conversation with Lance, I started thinking out loud. Olga, being the good wife she is, agreed with every correct thing I said and disagreed with every incorrect thing I said. I was trying to figure out why Lance was so dead-set his clients needed to sell and I was rather nonchalant about it. Within a few minutes, it hit me like a ton of bricks. I could not type fast enough to recommend pricing corn. I will go into more detail about the reasoning, but I want all of you to know, Lance is not only passionate about his work, he has a brilliant mind tailor-made for this kind of work. All the other people in this organization are cut from the same cloth as Lance. I am truly blessed to have these folks in my life. I am sure they will do great things for you in the many decades to come.


 

Market Data


This morning:

Crude oil settled at $110.16, up $4.03

The dollar index settled at 104.47, down 0.38

July palm oil settled at 6,369 MYR, up 27. The contract high was made April, 29th at 7,229 MYR. Palm oil owns 36% and soybean oil owns 28% world market share.

December cotton settled at $127.99, up $0.32 per cwt. The contract high was made May, 4th at $129.91 per cwt. Cotton competes with soybeans and corn for acres.

July natural gas settled at $7.765, down 0.070. The contract high was made May, 6th at $9.052. Natural gas is the primary cost to manufacture nitrogen fertilizer.

July ULSD settled at $3.7608 per gallon, up 0.0245. The contract high was made May, 5th at $3.9282. ULSD stands for Ultra Low Sulfur Diesel.


 

Rain Days Update


The Western Corn Belt has 9 more rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 9 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