Monday August 12, 2013
The USDA shocked corn traders once again in their monthly crop report. The USDA lowered yield estimates from 156.4 to 154.4 bushels per acre. Traders were actually expecting an increase in the yield. Production of corn estimates was obviously lowered, but demand was lowered as well. The net result calls for ending stocks to be 122 million bushels lower than last month's estimate. Ending stocks are estimated at 1.837 million bushels, which is still well above this year's ending stocks of 719 million.
The report was a bit of a shocker, but corn prices didn't scream higher today. They had a decent gain of about 11 cents and also posted a technical reversal on the charts. It will be interesting to see if the market can work higher from here and this marks a short-term bottom. The bottom line, however, is that this is still a large crop and ending stocks of 1.837 million bushels is going to pressure prices. Professional traders will be looking for opportunities to sell. The $5.10 area might be a a good area to sell if the market gets there. The one outstanding issue that could support prices is the lack of rain this month in the midwest.
Wednesday July 31, 2013
The price of silver dipped to nearly $18 an ounce, before rallying to the current price of just under $20. Silver has dropped more than $30 from the high near $50 a couple years ago and we may be near a strong area of value in this metal.
The cost of production for gold is around $1,200 an ounce and that could set a floor for the precious metals. That number is debatable, but still a good estimate of an all-in cost. Silver has fallen more on a percentage basis than the other metals and it could get the most traction if we have hit a bottom in the complex.
The best way to invest in silver is to buy the silver etf - SLV. I, along with many other investors, also like to buy the physical metal. The best bet is to buy the 1-ounce silver American Eagles produced by the US Mint. There is a but of sticker shock here, as you have to pay about $5 to $6 above the spot price of silver.
It will cost about $25 to $26 a coin on Ebay, which includes shipping. You can find some better offers through some dealers if you buy large quantities, but Ebay is probably your best bet overall.
Monday July 22, 2013
The grain markets typically move in sync, but the stories are diverging a little for corn and soybeans. Corn continues to falter and is trading below $5 on the December contract. The weather has been fairly tame, expect for a little heat recently. It looks like corn will get through pollination in good shape and we should still see lower prices yet.
The soybean market is holding up better, as supply tightness in the near term is helping the market. The old crop beans are still much stronger than new crop. We've recently seen some minor weather problems for soybeans, but it might be a matter of time before we see lower prices on this market too. Unless the weather is bad enough to cause some major crop losses in soybeans over the next month, supplies will grow and prices will probably fall.
Sunday July 14, 2013
Corn prices bounced early last week, but that was a clear opportunity to sell. Corn is moving into the key pollination phase and there are little weather threats on the horizon.
If corn can make it through pollination in mid-July without any major heat or stress, corn prices are likely to head lower. The chances are solid yields are very high without weather problems and the odds favor lower prices.
We saw a similar setup last year, but the summer brought a major heat wave and the corn crop suffered large losses. If you're a bull, you can't keep hoping for extreme weather to save you. The chances of that happening are getting slimmer each day. Corn may have a hard time trading back above $5 this year if July and August weather is relatively benign.