Kleist Comments

CLOSING AGS 2/25/14
CLOSING AGS 2/25/14

Cattle: Cash cattle last week: $144.-145.00 and $230-231.00 dressed North. On 49 boxed loads cut outs up. $.45(c) to up. $1.14(s) on light midday movement.

Comments: Well, coincidentally our mention of April hoggers bring spring PEDv’ers went over well with the market. Some bull spreading took away some bull-risk rather than an outright position apparently as well. More moderate gains in beef and higher hog futures kept the ball rolling.

Hogs: Interior hogs not well established. Pork cut outs fell $.71 on hams and loins.

Comments: $100.00 is just a number as April breaks through it with impunity. That is backgrounded by new highs in cash hogs this week and a firming, seemingly, pork trade. Oh and PEDv of course as mentioned earlier.

GRAINS & OILSEEDS:

Corn: Soybeans: Wheat: For get about corn and wheat for a bit. The main contention is on the old crop soybeans. In my addled mind, it’s a toss up between Brazilian weather and/or China manipulation. Yes, higher prices good for the producer but that’s not the issue. Let’s break it down, first being weather: my clients have some weather sources like all farmers should. One forecaster in particular was (maybe?) extreme— a 200 year drought in Brazil and the drought in California the precursor of a coming drought in the U.S. And yet, I have yet to read where Brazil WILL NOT have a record crop, and that the current impact is mainly on coffee then sugar. I do know of 1 port down for 2 weeks as mentioned but their are many other ports so a logistics problem; that there is some significant bean problems but the damage is not widespread and that Brazil’s Super highway of beans is getting congested and farmers have reportedly a lack of trucks ‘to move the record crop’; rains forecast this and next week on certain dry areas; drought/heat did reportedly kill a large number of poultry in certain areas; so hence/ergo/i.e./ that is the nut of the problem with the Brazil crop talk seems that serious crop losses are a secret. And there’s No corn fields in the vicinity of the drought? And for the U.S., translating today’s California drought and record cold temps in the mid west into a much larger spring/summer drought is an obvious stretch…one can say anything to get business. I might do this for hedgers: sell the rest of your cash beans and if needed will buy calls to ‘replace’ the crops sold.

Secondly as to China, I feel there is much more afoot than we know. All through this rally in the U.S. I did not see a major up move in China’s soybean futures while their meal and especially palm/soyoil did follow us. There’s more in my special soybean note earlier in the day as to their buying instead of cancelling beans this week but will not be repetitive

Maybe like Shakespeare said “me thinks thou protest too much” and there is a drought widespread in Brazil and China really needs those beans and a major drought is coming to our main grain areas. Corn and wheat doesn’t seem to believe it yet and if all above is true, both are severely under-priced.

Whew! Know you know why I am a chartist when I do not comprehend.

Kleist Comments

This is John Kleist, of Kleist Ag Consulting.
Questions? Email me: johnwkleist@sbcglobal.net

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