"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Tuesday, August 12, 2014

USDA Report Day

Finally - the big day we grain traders have been waiting for has arrived. As expected with these reports, the market response was immediate and it was furious, especially in the bean complex. USDA left the total acreage number, both planted and harvested unchanged from last month's numbers. Those were at 84.8 million and 84.1 million respectively. Compare that to last year's numbers of 76.5 million planted and 75.9 harvested.

The big factor, as far as the market was concerned, is that they raised the output number from 45.2 bushels per acre last month to 45.4 bushels. That kicked the production number up to 3.816 billion bushels from last month's 3.80 billion.

They left the import number the same at 15 million bushels bringing the total supply, adding in the 140 million bushel carryover, to 3.971 billion bushels. That is up from 3.955 billion in the July report. With crushings and exports remaining unchanged from July, the projected carryover is jumping to a whopping 430 million bushels, more than 3X last year's carryover.

As I have been mentioning this past week, the crushers, or whomever it has been, who have been playing the game with the August bean contract and jamming the price higher, are winning the battle at the expense of losing the war for the farmers who have been watching the price action in that particular month and been led to believe that higher bean prices are just down the road.

Today's USDA numbers did nothing to discredit the notion that this year's bean harvest is going to be producing a huge amount of beans. There is nothing in this report as far as the beans go that would give those looking for higher prices down the road the least bit of consolation. I wonder how many farmers have hedged any expected bean production at this point?

The corn has been a bit different. USDA left both planted and harvested acreage the same as the July report, 91.6 million planted with 83.8 harvested. They did however raise the expected yield from 165.3 bushels per acre to 167.4. I think there was a bit of disappointment that the number was not nearer the 170 bushels that some private advisory services were forecasting. USDA tends to be conservative however and we are therefore going to have to wait until we get closer to the actual harvest and start seeing some actual results before they will push that number higher. Personally I will not be surprised to see the number work higher as the combines roll, especially if the current weather forecasts hold and allow this record crop of some 14.032 billion bushels to finish up without any stress. While the market may have been looking for a higher yield number, and while bulls are trying to talk up the miss in expectations as bullish for the market, it is hard to find anything bullish about a crop of over 14 billion bushels.

I can see buying coming into the corn market as some try to force a bottom based off today's USDA number but I am doubtful that this is anything more than a lull in the coming storm.

USDA did manage to add another 50 million bushels for feed usage, up from 5.2 billion bushels, but frankly I am at a loss to explain that. The cattle herd has been shrinking and the hog herd has been hit by the PED virus knocking its numbers down considerably. Perhaps they are basing this increase in usage on producers feeding a larger quantity of the corn to bring their animals to heavier weights, something that has been occurring with the hogs for certain. With the cattle industry moving away from Zilmax, it could be USDA is also trying to allow for increased corn feeding there as well. We'll have to see how that works out.

Either way, they did show a 25 million bushel increase in projected exports which combined with increases in the other categories bumped up total demand to 13.435 billion bushels from 13.335 billion last month. The result was an increase in total carryover to 1.808 billion bushels compared to last month's projection of 1.801 billion.

To provide a bit of perspective, the past marketing year's carryover is currently projected to be 1.181 billion bushels.

When I look at these numbers for both the beans and the corn, I am growing increasingly concerned about the storage capacity for what is going to be a massive harvest. I can only hope that some farmers have gotten some downside protection on their expected production as I can easily envision a situation in which the supply is going to overwhelm the ability to store it.

A brief comment on the tragic passing of Robin Williams. I grew up watching him and laughing at his incredible wit and rapid-fire ability to roll off one barrage of comic laughs after another without even seeming to need a pause to collect himself. To say that he was talented, is an understatement. He was a once-in-a-generation gift to us all!

 How very sad that a man who could make millions laugh and forget about their own problems for the moment, could have been suffering with his own sadness and inner demons to the point where he would take his own life. In watching interviews of him speaking about the joy he received from watching his children grow, it struck me that they are now deprived of a man who deeply loved them. Not only that, but he tragically deprived himself of their love towards him.

That the form of depression from which he was suffering, could overwhelm such a kind and compassionate man and bring him to the place where he would lose sight of the love of those children and the joy they brought him, as it swallowed him up in its own black hole, is something that should give us all pause to reflect upon. There are so many hurting people in this world, some of which are perhaps very close by to us. A friend, a neighbor, a family member - maybe all they need is a kind word reaffirming what they mean to us or how we appreciate them and value them. It is easy to become wrapped up in our own little worlds to the point where we are senseless to the pain and hurts of others.

I have said it on occasion here that there is more to life than the movements of prices on the computer screen. I sincerely mean that. We do what we do because we want to be able to provide for our families and to have sufficient means left over to help those who might be in need. Life is too short as it is; living it so that we have no regrets on our death bed might perhaps make us all soberly reflect on those things that endure.

I just yesterday learned that a friend of mine has been diagnosed with Stage 4 lung cancer. He is 52 years old, married with children. In talking with him, he told me that he tried to take good care of himself so that he could live a long life. He never smoked, exercised, was not around harmful fumes, etc., and yet he somehow came down with this dreaded disease. Now he has been told he has perhaps 15-18 months to live.

Events like these tend to put things into their real perspective. Markets are what they are and those of us who make our livings live and breathe in them. But after all is said and done, they mean little in the scheme of eternity. What matters is a man's character. One can be wildly successful at trading or investing or whatever, but are those the things that will occupy our thoughts on our death beds? I think not.

Thank you for allowing me the opportunity to just give voice to some thoughts about these things.


  1. Re Robin Williams: Thank you, Dan, for so respectfully voicing what many of us are feeling when trying to make sense of this event. Suicide may be the single best example of the always-present possibility of catastrophic failure of our common human condition. It is indeed the black hole from which nothing escapes.

    1. Rico;

      Thank for the kind words.

      I think you summed it up very well. We are flawed at best.

      So many suffer from severe depression.

      I used to struggle with it until I heard the gospel of Christ and realized that there was a purpose and meaning to this sometimes seemingly purposeless life.

      If all that we hope for is to be found only in this life, how sad is that because this life is always a mixed state of affairs - it does seem as if our blessings come mixed with some degree of sadness and disappointment and grief do they not? At least that seems to be the destiny of most of us.

    2. Dan thanks for your thoughts here on Williams. It is often times only after a tragic death such as his that makes one think about the really important things in life. There is freedom and grace in knowing Christ that the dark forces would rather us humans not think about... Unfortunately for Williams and his many loving family and fans and these dark forces prevailed in a moment of despair. And as you so say, life is too short as it is.


  2. A Word on Bo Polny.

    I have noticed there have been more than a few remarks on this blog and elsewhere regarding Mr. Polny’s call for $2K Gold by the end of this year 2014. It may be a ridiculous forecast but one thing is for sure; it has got people talking. And that is precisely the idea isn’t it? Create a buzz and drive attention to yourself for the purposes of growing your subscribership. We may not like to admit it but we are All driven by self-interest. It is human nature.

    Personally, I like the strategy because it is a Big gamble. It is ballsy, risky and I believe you Should take Big risks in your life because you only get one ride on this planet. I find it very hard to believe that Gold can reach such price dimensions by the end of this year but who knows as human history shows that human behavior can be very Unpredictable at certain times.

    If the call fails which it more than likely will statistically Bo will become a laughing stock and disappear into the abyss probably to be never heard from again (I hope). But here is the thing and this really cannot be ignored. If something big occurs (geopolitically probably) this upcoming fall season to get Gold to blast off Mr. Polny will come off as a genius and all of his attackers will then look like idiots. We should All be humble enough to know that we cannot predict black swan type events but if we call for one and bet on one and it hits the payoffs can be tremendous. Polny would then receive world-wide recognition and I am sure his net worth would improve considerably as a result of this spectacular forecast.

    Mr. Polny, I like your balls, good luck.

    1. Your post on Dr. Bo has forced me to post. Even if gold hits $2000, he is full of shit. All his turn date calls and prices have been wrong since I first heard of him last year. He called a bottom last year of $1,321 in May, and bragged about it. Gold tumbled to 1,179 in June. He then bragged about how he nailed the bottom of $1,179 in June. He manipulates his calls to fit every top and bottom. Even if gold hits $2,000 before the end of the year, I hope he just goes away. If it doesn't, I guarantee he will make some call that will fit the chart. He's a menace. As Herbert so eloquently put it yesterday, Why the hell would anyone pay $13,000 when he makes all his calls public.

      Trader Dan: We have had our differences in the past, but I want to compliment you on your thoughts regarding Robin Williams, and the human condition in general. Well said. Robin, R.I.P.

    2. All these prognosticators stating price / time predict8ons with certainty that are making money off failed predictions and lying about their trackrecords are just parasitic hustlers.

      Good words on Robin Williams indeed.

    3. Bobbo;

      Thank you very much....


    4. No words for me to say, Dan, but lots of thoughts evoked by your observations

  3. Great write-up Dan. I had NHL last year and am stronger than Ever now! Live for the Day!

    1. Bob;

      I am very glad to hear that the treatment is helping you and that you are improving!

      Indeed - Carpe Diem, for we have no guarantee that we will see tomorrow.

  4. Bob, Bo is just a kid with 10 years or so in the mkts. If you go over to kwn, you will see another pathetic interview with Dines. Look how much bullshit about his background that King had to print before he put his knee pads on to interview MR Dines. What a joke! But of course they are all 45 year vets of the mkts, billionaires, consultants to the world and all that, right? You have to always remember that letter writers do not sell subscriptions by being bland or calling for sideways and interesting mkts. To the moon baby, to the moon

  5. Bo Polny will go the same way as Lars Lindstrom.

    Into obscurity.

    Two years from now he will be forgotten.

    "Hey what happened to that guy?"

  6. Re: Friend diagnosed with Stage 4 Cancer

    Oxygen is the mortal enemy of cancer, as Nobel prize winner Dr. Otto Warburg determined in his research in Germany prior to WWII. Conventional cancer treatments do harm to the body's natural immune system. The key to overcoming cancer is to pursue a form of therapy that oxygenates the body. There any several modalities available besides radiation and chemo.

    1. weluvfattyacids;

      Thanks for that very interesting info....


    2. People interested in a consolidated set of links around what (I think) fattyacids is talking about should check out ketonutrition.org which is the site run by Dr. Dom D'Agostino who is one of the leading researchers in this area. Combating cancer with a combination of a ketogenic diet (which substantially deprives a cancer of glycogen, which is what many, not all, cancers use for fuel) and oxygen related therapy has some compelling research to back it up and appears to be getting more mainstream scientific interest. A good part of it is that the ketogenic diet (ketones apparently have an anti-cancer affect as well) is something almost anyone can do fairly easily.

    3. Vincent;

      Very interesting site... thanks!

  7. The "Mother of All Depressions" is finally upon us.

    In the grains and energy complex.

    Gotta hand it to the "Central Planners", who have created the "goldilocks" economic environment.


    - Middle East Geopolitical storms cause oil prices to plunge.

    - World record drought conditions cause the grains complex to crash

    - Unprecedented printing and unlimited fiat causes interest rates to tumble to 45-year lows.

    - Meager economic growth can cause stock market rallies to exceed 5 years in duration and over a 200% gain.

    I mean really, it doesn't get any better or more amazing than that.

    We are now living through the "Gilded Age" of finance, no doubt about it.

    1. What worries me is what awaits us on the other side when reality returns.

  8. Dan:

    On you insightful commentary today you state:
    "I am growing increasingly concerned about the storage capacity for what is going to be a massive harvest."
    What are the implications of a shortage of storage capacity in a year with a banner corn and bean harvest? Could it potentially exacerbate a downside movement in prices come harvest time?

    1. trinity trader;

      If there is indeed a shortage of storage capacity, prices will tend to weaken because the big grain buyers will have no where to put the grain they buy as they will not be able to move it out fast enough to vacate the storage as needed. I am under the impression that there are still stores of on-farm old crop which also need to be moved. plus we have an issue with sufficient rail cars because so many cars are now being used for the fracking industry.

      corn looks like they are trying to force a bottom in the market so one has to respect the technicals but I do not think we have seen the last when it comes to increasing the size of this year's crop. No matter how one slices and dices it, a 14 + billion crop is mammoth.


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