Bower Trading Market Strategy Report: The Lull Before the Storm

Apr 23, 2017 37

Bower Trading Market Strategy Report: The Lull Before the Storm

Jim Bower

If you are looking for dynamic market action, you are not going to find it in the agricultural markets, says Jim Bower, with Bower Trading, “The commodity index is down at levels we have not seen for 6 to 8 months.”  He added that much of the big speculative funds are in the stock market at the present time and not in commodities.

Bower states that it would not take much, either on the production side or the demand side, to generate some market action, “The funds are heavily short wheat and also short the corn market. While they have been long soybeans, they have reduced those positions significantly. There is fuel for a fire.” He urged producers and investors to keep a close watch on the news,  especially the weather, “Weather is the one thing that can change the supply side  very very quickly.”

Bower remains a fan of the sell and defend market strategy, “That involves selling the cash and defending it with some kind of strategy on paper including written options or bull spreads.”

For more information, contact Bower Trading at 800-533-8045 or www.bowertrading.com.

This material has been prepared by a sales or trading employee or agent of Bower Trading Inc and is, or is in the nature of, a solicitation. This material is not a research report prepared by Bower Trading Inc. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

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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 Bower Trading Inc believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

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Farm Lending Continues to Moderate

Apr 23, 2017 48
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Lending activity at agricultural banks across the country continued to decline in the first quarter of 2017. A report from the Federal Reserve Bank of Kansas City says economic conditions in the farm sector are still weak, so borrowers and lenders have worked together to make adjustments in financing agricultural production across America. Ag lenders are making more adjustments to loan terms because of heightened risk in the ag sector. For example, the report says revenues from agricultural production are expected to decline again in 2017. Farm incomes from corn, soybeans, wheat, and cattle, are expected to drop by five percent compared to 2016. Some producers are making adjustments in the cost of their inputs when they can. The reduced amount of producer spending likely has contributed to reductions in the volume of new farm loans. The overall volume of non-real estate farm loans in the first quarter of this year dropped 16 percent from 2016.

The Survey of Terms of Bank Lending to Farmers showed the decrease in the first quarter as the sixth consecutive year-over-year decline in the volume of new non-real estate farm loans and followed a significant drop in the fourth quarter of 2016.

Source: NAFB News Service

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Surviving Earth Day

Apr 23, 2017 49

Since you are reading this and it is past April 22, that means you survived another Earth Day.  But, how many more Earth Days can we survive? Many of the envirowacks who have made Earth Day a high holy day like to tell us that unless we change the way we live, the end is near. Highly exaggerated fears about pollution, global warming, chemicals, genetic engineering, and the like have become the focus of Earth Day rhetoric.  In addition, attacks on science, technology, and big business have polluted Earth Day. “Passion and zeal routinely trump science, and provability takes a back seat to plausibility,” write Henry Miller and Jeff Stier,  fellows at Stanford University and The National Center for Public Policy Research, respectively. In recent years, agriculture has found itself in the spotlight of the Earth Day debate.

Earth Day is controlled, for the most part, by an organization called the Earth Day Network. It determines the theme, coordinates the activities, and provides much of the talking points for participating groups and the media.  The 2017 theme was “Environmental & Climate Literacy.” Yet much of what was promoted was anything but real understanding of the environment.  Instead of a genuine concern for nature, many of those stumping on Earth Day share opposition to environmentally friendly advances in science and technology, such as agricultural biotechnology and renewable fuel.

Mainstream media coverage of Earth Day is equally as distorted and one-sided.  Time, for example, in a story on “3 Easy Ways to Make a Difference on Earth Day,” suggested, in all seriousness, that we should all stop eating meat. “Widespread adoption of vegetarianism would slash greenhouse gas emissions by nearly two-thirds.”  In a fear-mongering story by CNN on how climate change will impact the corn industry, CNN concluded, “The bottom line: Experts can’t know for sure what the future holds for America’s corn industry.”   Wow — that is real environmental literacy.

In the beginning, Earth Day was a touchy-feely, consciousness-raising, New Age experience, and today it still retains much of that focus. This has always made it hard for agriculture to get much positive press.  This year, however, with the major advances in soil health being seen on farms, the agriculture message is resonating with those who like to toss the terms “natural” and “sustainability” around. The growing use of cover crops and soil testing is a story that gets noticed during Earth Day. The use of precision technology which helps farmers minimize environmental impacts is more problematic for the nature worshipers because it involves science and technology.

The ethanol story is another stumbling block for the Earth Day crowd.  A decade of facts have proven the food vs. fuel argument wrong, and a recent USDA study indicated that ethanol production is becoming even more beneficial for the environment than before, with a 43% reduction in greenhouse gases over gasoline. Yet, the barefoot environmentalists have rejected ethanol in favor of the inefficient and unreliable wind and solar sources.

As long as Earth Day focuses on emotional romanticism about nature and dismisses the role of science and technology in protecting and even improving our world,  it is a threat to agriculture and to food security.

By Gary Truitt

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Renewable Fuels Standard Heads to Court

Apr 23, 2017 26
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The Environmental Protection Agency will be in Washington, D.C. Circuit Court starting Monday, as the court hears oral challenges to the 2014-2016 Renewable Fuels Standard Volumes. The RFS has supporters and detractors in both major political parties, so this case represents a rare nonpartisan issue for the EPA. The agency will have to defend itself against accusations that it set volumes for conventional biofuels, cellulosic biofuels, and biomass biodiesel too high or too low, depending on who is speaking at the time in the courtroom. The EPA will need to defend its waiver to set the conventional biofuel requirements below congressionally-set levels. The EPA will also argue it is under no obligation to change who must comply with the program.

EPA’s positions in this case maximize administrative flexibility for the agency, something that EPA Administrator Scott Pruitt likely wants to preserve. The Morning Energy Report also stressed that this is not an issue that began when Donald Trump was elected as it has been a debate for years.

Source: NAFB News Service

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Ryan Martin’s Indiana Ag Forecast for April 24, 2017

Apr 23, 2017 23
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We have gotten lucky in the Hoosier state! After a weekend that saw our potential rain event move farther south, we are going to continue to see dry weather through Wednesday! Temps will be climbing and this should promote good drying and excellent field work chances over the state.

Our first chance of rain this week hits Wednesday night and Thursday. Rains move through, but are not too impressive at this point. We like showers at .25”-.75” rates for the Wednesday night-Thursday period, with coverage at 80%. A second wave of showers may threaten southern Indiana Thursday night, but at this point we think that batch may miss to the south…time will tell.

However, our good luck comes to an end this weekend and early next week. A powerful front sweeps through the state Saturday with 1-2” rains and coverage at 100%. Lingering showers pop up on Sunday. Then a second strong front hits for Monday the 1st bringing .5”1.5” rains and coverage at 80%. So…over the span of 3 days we can see 1-3” of rain over most of the state, and in the span of 5 days (to include this first system this Thursday) that total pushes to likely 1.5”-4”. Stronger thunderstorms sitting over the same area could even bump that range. In any case, that will slow field work down in a hurry! But…if you need a silver lining…look at it this way…at least we are not in central IL. The map above shows potential rain totals through next Monday. Notice some areas of IL are between 6” and 8”???

We should be dry next Tuesday FWIW…but another minor wave is on the way for next Wednesday, the 3rd, starting mostly in the afternoon. That wave could bring another .25”-.5” with 60% coverage.

In the extended window, another system is likely around the 6th with up to half an inch of moisture, and another closer to the 10th. So…go as hard as you can as fast as you can the next several days…it’s a gift!

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Ryan Martin’s Indiana Ag Forecast for April 21, 2017

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Highly variable weather across the Hoosier state today, as one front pushes off to the east and we gear up for another significant system to rise up out of the southwest. We think that most of the state today, at least from US 50 northward, will be dry, as clouds and sun mix it up. However, closer to the OH River, clouds hold firmer, and we actually cannot rule out some scattered lingering action, thanks to our approaching weekend event.

A strong low exits the central plains later today and overspreads the MO valley. Rains associated with this circulation will begin to push into SW Indiana in earnest overnight tonight through tomorrow. Models still are in some disagreement as to how far north the heaviest rains go, but we believe that most of the action from tonight through the weekend will be from I-70 southward, and the farther south you go, the higher rain totals can be. Rains can linger in some light and scattered form through midday Sunday. Rain totals from tonight through the weekend will be .25”-1.25” from I-70 southward, .05-.25” from I-70 to US 24, and north of US 24 – little to no rain.

We should be dry from Sunday afternoon on through Monday and Tuesday as clearing skies come in behind the weekend system. Temps may pull back a bit but will be normal to above to start the week. Clouds will start to build later Tuesday afternoon.

A quick moving front sweeps through Tuesday night through mid-morning Wednesday. This front has .25”-.66” rain potential with coverage at 80% of the state. This should be seen mostly as a nice, gentle rain…except for the fact that it may interrupt desires to be in the field. An almost immediate move back to sunshine for the balance of Wednesday will be in the cards.

24 hours late, we have a warm front lifting across the state that will trigger some light rains from Thursday afternoon into Thursday night. Rain totals look to be a few hundredths of an inch up to .25” with coverage at about 40%. The rains have the best chance north of I-70. Areas south of I-70 likely stay rain free. However, behind the warm front, we see strong south winds kick up for Friday that will promote some drying, but will likely be too strong for some type of fieldwork. We expect winds next Friday and Saturday to average 12-25mph out of the south at the least.

A strong cold front looks to move in to finish off the 10-day period next Sunday the 30th and it will roll on through the 1st of May. Rains with this front can still be strong…with potential of .25”-1.5” and coverage at 90%.

In the extended window, we still have two systems to watch, although we now think that the first system, around the 3rd into the 4th, will be relatively minor. It sweeps through quickly…likely 12 hours or less, and has rain totals of no more than .1”-.4”. Coverage will be around 70% of the state. The second system, farther out in the extended window, around the 5th into the 6th, has more moisture with it…rains of .25”-1”. However, currently, it looks like it may want to track more south…bringing rains to the OH River valley, but missing a large part of the state. Right now, we would put coverage at no better than about 35%.

There is no fall off in temps through the next two weeks. We see temps near to above normal, with no major cold. However, the active precipitation pattern likely keeps a lid on excessive heat as well, as temps for the most part average 2-8 degrees above normal into mid may.

Active Weather Continues into Mid May

Apr 20, 2017 55
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Active weather continues

Monday’s crop progress report showed Indiana corn planting four percent completed and that number will surely grow in the next report as farmers grabbed opportunities to plant this week. But a round of rain Wednesday and Thursday, including marble sized hail west of Kokomo and almost an inch and a half of rain in Clinton County stalled field work in many locations. In the new HAT planting forecast chief meteorologist Ryan Martin says there will be a few more planting windows from now through mid-May, but you need to be ready for them.

“I think we’ve got a very active pattern continuing,” he said. “If I’ve seen anything in the way my forecast has evolved over the past week, I’m not looking for as much heavy rain, but you take some of the heavy rain out of one system and all of a sudden you put in another one in the middle of what should have been a 4-day dry window. For example, we’ve got the system moving across the Corn Belt this weekend that’s going to give everybody some pretty good rain, then I had been looking for about four days of dryness to start off next week. I’ve had to narrow that down to two.”

Tuesday night into Wednesday more rain is possible, light rain this time. Thursday night through midday Friday the northern third of Indiana might get a quarter to half inch of rain. But that’s not all Martin is worried about. Wind could factor in as well.

“Because a lot of cover crops still need sprayed and we have some burndown that’s behind in spots. We’ve seen these systems as they’re coming in get a little bit stronger. Every time you see a stronger low it doesn’t matter how much precipitation is with it, if the low is strong you’ve got good strong winds with it. Notice this as we went back through the Thursday time frame, very gusty winds over most of the state. There is a strong frontal boundary complex that comes through this weekend and it probably gives us some good strong north to northwest breezes as we kick off Monday.

Some weather systems will carry heavy winds, others not so much. But overall, spraying could be difficult in the coming weeks. The planting forecast is online Saturday, and it can be delivered to your email inbox by signing up at www.hoosieragtoday.com, brought to you by Seed Consultants and Kokomo Grain.

No Reason to Rush

Apr 20, 2017 102
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Don’t get impatient

David Cosgray

Fieldwork and planting progress was good early this week, but rain over much of the state on Thursday brought that activity to a standstill.  DuPont Pioneer agronomist David Cosgray reminds producers it is still early in the season, “The worst thing we can do is plant into a wet seed bed where we kind of mud it in.”  He said most growers can get their entire crop planted in 10-14 days, so there is no reason to rush at this point, “As soon as you start to mud in a crop, you open yourself up to yield loss and sidewall compaction.”

With a warm winter behind us, Cosgray is concerned about heavy insect pressure this growing season, “I am concerned about some European corn borer issues. I am also very worried about western bean cut worm infestation, especially in northern counties.” He said these insects can burrow down into lighter soils and overwinter very nicely.

Listen to the complete DuPont Pioneer agronomy update under the crops tab on this website.

Indiana Corn Marketing Council Awards Purdue Students Assistantships

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Purdue University graduate student Sarah Mueller is researching ways to increase nitrogen fertilizer efficiency through the timing of nitrogen application. (Photo courtesy of Purdue Agricultural Agronomy)

As part of its goal to promote research into the corn industry, the Indiana Corn Marketing Council (ICMC) has awarded two $25,000 assistantships to Purdue University students in the Department of Agronomy. Each year, ICMC awards the funding to two Purdue graduate students, one studying for a master’s degree and one for a doctoral degree. The funding supports an annual stipend and attendance at professional meetings.

Sarah Mueller, who is pursuing her doctorate’s degree, has earned the assistantship for a third year. She is continuing her research with Tony Vyn, professor of agronomy. Their research into corn cropping systems focuses on increasing nitrogen fertilizer efficiency through the timing of nitrogen application.

“When conducting on-farm experiments, compiling research and analyzing data, I try to keep in mind how this research will impact the end user and the importance of putting the results into the hands of those who will use it,” Mueller said.

Jennifer Woodyard, who is pursuing her master’s degree and assists Eileen Kladivko, professor of agronomy, also received a $25,000 assistantship from the Indiana corn checkoff.

Woodyard’s research is specific to soil biology. She is currently examining popular cover crop treatments and their effect on soil health. Working with farmer collaborators, her project area covers 23 sites across Indiana.

“I come from a farming family and I understand the importance of research to producers. This award makes it possible to pursue my degree and continue research specific to soil biology and improving crop yield,” Woodyard said.

Marshall Martin, senior associate director of agricultural research and assistant dean in the College of Agriculture, is the liaison to the Indiana Corn Marketing Council. “Investment in the education of future research scientists or leaders ensures productivity for corn producers and the industry by providing the latest information and research in genetics, agronomy, disease management, insect management, and improving soil health with cover crops and marketing,” Martin said.

“The Indiana corn checkoff provides funding for these assistantships as a way to encourage students to pursue careers in research pertaining to the corn industry,” said David Gottbrath, president of Indiana Corn Marketing Council and a farmer from Pekin. “It is an investment of farmer dollars to ensure we have the best talent working not only to improve corn production practices but also find new uses

Australia and New Zealand Dairy Leaders Would Support U.S. WTO Action on Canada

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Healthy Holstein dairy cows feed at a farm in central Washington in this December, 24, 2003 file photo. REUTERS/Jeff Green/Files

Dairy industry leaders from Australia and New Zealand say they would support the U.S. in potential World Trade Organization action against Canada. Leaders from both nations say they would support President Donald Trump if he included the WTO in a trade dispute over a milk pricing scheme by Canada that is harming U.S. dairy farmers. U.S. dairy groups say the issue will hurt the entire U.S. dairy industry. In Wisconsin this week, President Trump said that the existing rules were unfair. New Zealand Trade Minister Todd McClay told Reuters in an email his government was assessing the “WTO-consistency” of Canada’s dairy industry policy and had raised concern with the Canadian government. Malcolm Bailey, chairman of the Dairy Companies Association of New Zealand, said his organization was working with his foreign ministry to gather information for a possible WTO complaint.

The dairy industry in the European Union, which has two-thirds of Canada’s cheese import allocation, signed a letter last September along with Australian, New Zealand, U.S., and Mexican peers, demanding the start of a WTO dispute, as well.

Source: NAFB News Service