"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


Monday, November 10, 2014

USDA Supply/Demand Report Day

The much anticipated USDA report hit the wires this AM and as usual, has touched off an enormous flurry of algorithmic activity.

As far as the soybean market goes, pre-report expectations were very accurate this time around. Most analysts expected a slight bump higher in the yield per acre number which would boost the final crop size somewhat but keep it below the 4 billion bushel number.

The total production number, on a yield of 47.5 bushels, is expected to be 3.958 billion bushels. That is slightly higher than last month's number of 3.927 billion.

USDA bumped up the crush 10 million bushels and exports by 20 million bushels, in response no doubt to the torrid export pace that we have seen thus far.

They thus managed to find another enough demand to offset the pop in supply leaving the expected carryover at 450 millions bushels, exactly unchanged from last month's number.

It is however, 5X larger than the ending stocks of the 2013-2014 marketing year which USDA left unchanged at 92 million bushels.

The corn is what took many by surprise as USDA lowered the yield from 174.2 bushels to 173.4. That took the total production down slightly to what is still a record 14.407 billion bushels from the previous month's 14.475 bushels. That is a drop of 68 million bushels.

They did kick corn used for ethanol up 25 million bushels as ethanol producers have been having a field day with this cheap corn.

Ending stocks thus were reduced down to 2.008 billion bushels compared to last month's 2.081 billion bushels. Last year's marketing year carryover was 1.236 billion to give you some perspective. Thus we are a bit shy of having twice the corn left over this marketing year than we had last year.

Corn bulls are getting all giddy over the number but it is difficult for me to get too excited about a record corn crop and a carryover of this size, especially given the very weak export numbers we have been getting of late. Maybe end users will decide to buy now based off of this report but that remains unclear.

The question will be what are farmers going to do now that the market has rallied some 60 cents ahead of this report and are slightly higher now after the report? Unless we get a demand surge from somewhere, we are certainly not going to be running out of corn anytime soon.

Early price action in response to the report is some weakness in the beans, notably in the meal, and some strength in the corn. I am unsure what percentage of this is spread unwinding. There are HUGE numbers of spreads that are being lifted or implemented right now and that activity if causing some fairly widespread volatility.

We will have to see how the dust settles today after some of the big commercial firms have had some time to go through the numbers and digest them. Right now it is all machine driven action.


  1. funds still buying corn, betting on smaller 2nd crop in Brazil and 2015 acreage cuts in US. '15 soy to corn ratio is 2.42:1.

    watching nov 15 soybeans, if it can hold the 10.00 round number.

    if basis or spreads don't show the soymeal problem is over, then dip buyers are expected on that 92 current ending bean number.

    Dan highlighted the gold number was it 1152 the fib of 681-1923 range. somebody would buy that with a stop right under the 1150 (option strike)


  2. One of these Websites is not like the others

    1. Keith Weiner at Monetary Metals

    " The silver cobasis (i.e. scarcity) pulled back with the dollar. In gold, fundamental buying (i.e. metal) is pushing up the price. In silver, it may be a bit more biased towards speculative buying (i.e. paper).

    It is telling that in Friday’s rally, gold went up more than silver. Also, silver ended the week down from the week before.The fundamental price of this metal now has a 14 handle on it."

    2. An online Bullion Dealer

    I have bought from these guys before, and they are both reputable an reliable. Koos Jansen now works for them.

    On their website, make sure you switch to US$ and then enter a plausibly large order for Silver bars: lets go for 100 kg for starters; its ok, because the order is not firm until they take your payment details, so its safe to play around. Lets go for those nice reliable Perth Mint Kilobars that Bron Sucheki produces - at US$570 each that is a premium of 12.5% over live spot (or just under $2 oz).

    They will quote you 100 kg at $2/oz over spot, they will sell you 100 kg at $2 /oz over spot and they will deliver (or warehouse) you $100 kg at $2 /oz over spot. There IS no shortage of Silver, there IS no hefty premium for bulk Silver

    3. The Silver Market in Crisis

    " on Monday and Tuesday and stories of “sell outs” started to swirl. By Wednesday morning, we found out that premiums jumped again and many products were going “wait list” of 2-3 weeks..... $15 Siver you say? Too bad, you can’t have any! You can’t have any because there is none to be had! ... available. In fact, this was the case by close of business Wednesday. Most all products saw their premiums rise and wait times go out to 3-4 weeks, “indefinitely” in the case of the U.S. mint"

    Personally, I find it hard to reconcile 2 of these websites with the third: which version do you represents the most authentic version of current reality? If you are uncertain, or concerned that Silver may be moving from West to East in order to fulfill insatiable Chinese demand, maybe this video will help you reach a conclusion http://m.youtube.com/watch?v=CXK0h9JRVto

    1. Actually, the hysterical idiot #3 is wrong. By a futures contract at the spot price anytime you feel like it, and take delivery. It's not hard, but you have to buy 5K ounces

    2. He claims that you can't do that because of what he asserts is 100:1 leverage and that COMEX is "mathematically certain" to default. As it is, COMEX inventories are very high, but I suppose be would claim this is all made up of "paper promises"

      Take a look at that video link and tell me what you think: I was impressed

  3. We are now relishing in the "Gilded Age" for investment markets.


    - Stocks continue their run to world record highs

    - Stunning collapses in energy prices continue unabated, still near 3-year lows

    - Food input prices crumbling with grains, meats in decline, lots of volatility but still lower prices over time.

    - Interest rates still at rock bottom levels, waffling around 40-year lows.

    I don't recall any other time in history where so many things were going so well for the consumer.

    1. Interest rates are at 500 year lows in places like Holland.

    2. You obviously don't do the family grocery shopping do you Mark?

  4. Thanks Dan.

    Large Russian gold miner on the brink...


    1. Gold miners are the tip of the iceberg. Even mighty FCX is trying to reduce its debt burden in a commodity bear market--just as the rest of the equity universe is levering up to buy back shares in a 0% rate environment:


    2. I have only just discovered this video channel, and I am already in love with it


      This thread is about softs and I feel guilty sidetracking it, but somebody pointed out that in 2004 Silver was at $5 and Gold was at $450 and the Miners were making profits then, so have production costs REALLY increased 3 fold since then?

  5. Estimated #Cattle slaughter 108,000 today vs 108,000 head last year. (Just for fun) Dec cattle were trading 132-133 last year at this time.

    boy wheat is thin, look at that buying closed ZW +4.5 ...
    Soybeans post double-digit losses & corn comes off highs; corn up 2, beans dn 12, meal dn 9.1, wheat up 4, KC up 6, MN up 8.

    earlier CL and the GSCI both pivoted off approach to 20-day MA's. TLT JJC also drop away from 20dsma touch.

    it's all king dollar, quite the eur/usd drop away from the 1.25 round number.


  6. One popular mining company with operations in Africa now about to join the 99 cent club after hitting $9/share in 2006 when gold was at $600.

    Does that mean the mining shares are anticipating gold at $600 or lower?

  7. OK, if Dan will continue to have patience with me, I am going to try another "Spot the Difference" puzzle

    Given the following statement, who do you think knows what they are talking about, and who is lying for effect? -

    "“There was a comment I noted somewhere last week from Mark Bristow, who is a very successful CEO of Rangold Resources. He said something to the effect that the gold price was going down because there was an oversupply of gold. I don’t know what the hell he is smoking because everything I am looking at shows there isn’t an oversupply of gold. If anything it’s probably as physically tight as it’s been at any time.

    Sometimes it’s obvious that people say things that are obviously not truthful, and I don’t know why they do it."

    a. The CEO of Rangold Resources for the past 20 years http://en.m.wikipedia.org/wiki/Mark_Bristow_(businessman)


    b. An Equities Analyst cum Pension Manager who now works for Sprott Asset Management?


    answers on a postcard please

  8. ...and here comes $1150 gold and an eventual test and breach of $1140 to a new low.

  9. Comments dominated by gold even on threads that have nothing to do with gold.

  10. Oil and gold just getting grounded and pounded today. Huge weakness.

    CRB Index about to crack to new lows.

    1. Mark, you need to add nicknames for Ray Dalio, John Hussman, Bill Gross, and Mad Max Keiser

  11. being distainful of the long bond futures US-ZB below the 142-00 former peak paid off again, as the big supply due this week has only just begun. (10yr & 30yr auctions on deck)

    china had poor econ numbers and so were those out of europe in the early a.m. , which could be why the GSCI reversed so strongly. or was it just king dollar!

    SPX has gone from flat on the year to up +10% in 3.5 weeks... cuing up the floyd: welcome welcome welcome to the machine!

    DX the 30 year chart is making the rounds, drawing a line from 145 in 1985 thru the 122 in 2002 comes right here to 88 currently.. breakout or fakeout.


  12. wow lean hogs HE is that a saucer bottom and now the cold weather has talk of PED surfacing. HE seasonal this minute is bullish how bout ham what am for thanksgiving!

    Wheat global ending stocks came in slightly
    above expectations at a at a comfortable 192.9 mmt as consumption was lowered by 1.4mmt. wheat is selling for less around the world with the low euro and low ruble making wheat lower still.

  13. "USDA trims bin-busting U.S. corn crop, raises soybeans again"

    Mon Nov 10, 2014 3:58pm EST
    By Ros Krasny

    WASHINGTON, Nov 10 (Reuters) - The 2014 U.S. corn crop, while still a record, will be slightly below recent market expectations according to government data released on Monday, giving a boost to beaten-down corn prices, while soybean production continues to rise.

    CBOT corn futures closed up 0.5 percent on the bullishly construed data, with wheat futures also up 0.5 percent. Soybean futures dropped 1.2 percent on the projected larger crop.

    The U.S. Department of Agriculture trimmed its corn crop estimate to 14.407 billion bushels from 14.475 billion in October, and lowered ending stocks to 2.008 billion bushels from 2.081 billion. Traders had leaned toward higher estimates...(cont.)

    "USDA: Mexico Buys 5.12 Million Bushels of Corn"
    Published on: Nov 10, 2014

    Private exporters reported Mexico bought 5.12 million bushels of U.S. corn for the 2014/2015 crop year, USDA said on Monday.
    The marketing year for corn began Sept. 1.

    Mexico is a leading buyer of U.S. corn and USDA weekly data last week showed it had outstanding sales of 135.33 million bushels of 2014/2015 corn as Oct. 30.

    Exporters are required to report to USDA any export sales activity of 100,000 tons or more of one commodity made in one day or quantities totaling 200,000 tons or more in any reporting period, except 20,000 tons for soybean oil, made in one day to one destination by the following business day.


  14. "Ukraines Currency Plunges As Ceasefire Fears Grow"

    KIEV/DONETSK Ukraine - Ukraine's currency lost nearly 5 percent of its value on Monday after a weekend that saw the heaviest shelling in a month hit the main rebel stronghold in the east and signs that Moscow had dispatched troops and tanks to reinforce separatists...(cont.)


    1. DarkPurpleHaze; Let the Germans and Russians figure out what the hell to do over there. Their GDP is about 10% of California, so let the miserable main street media blather on an on.

    2. I find large currency valuation movements oddly interesting but I do hear what you're saying about Ukraine's size.

      If you're a Ukrainian citizen do you try and hold USD or EUR if possible while your currency is getting pummeled? Is holding the RUB a good option for any Ukrainian? Probably not.

  15. DPH

    thats not because of Russian tanks - its because the IMF foreclosed and liquidated this lot last Wednesday night


    The Emperor may now have no Gold, but at least Gazprom gets paid and Germany keeps the lights on


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