MORNING COMMENTS
Thursday Nov 13, 2008 Weather. www.qtweather.com
surge of cold air moves through the northern Plains and eastern
states over the next few days with a reinforcing shot of cool air
coming early next week and again late next week. Each weather
disturbance brings a little rain and snowfall across the Midwest,
but no major storm system is expected. The storm advertised
Wednesday for late next week has been greatly diminished..
The second week of the two-week forecast brings some warmer
air into areas east of the Rocky Mountains during the Nov. 23-25
period which brings rain and snowfall across the Midwest and
northern two-thirds of the Plains while restoring near normal
temperatures; with another bout of cooling in the eastern Midwest
and Atlantic Coast States, Nov. 27-28
The bottom line is that harvest activity will remain slow
across the northern half of the Midwest while “some”
progress will be made in lower parts of the region and in the
Delta and southeastern states – on a periodic basis.
Temperatures will be coolest through the next ten days and
then warming back to normal. Winter wheat will continue to
establish slowly and cotton harvesting will advance around
showers.
SMS Chicago Trades Yesterday:
Corn – no new trades.
Soybeans – no new trades.
Wheat – no new trades.
Energies – bot 1 mini-NG. FLAT
Livestock – lifted all hedges in Dec hogs.
Currencies – no new trades
Cotton – no new trades.
Rice – hedged 50% in March, now 100% hedged.
Equities – sold 1 mini Dow.
See yesterday’s position matrix for details---
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SMS MORNING COMMENTS
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MARKET COMMENTS: I have spent more time than I care to admit, reviewing, researching, analyzing the overall economic global
situation and discussing with those of whom I respect and either this is one heck of a “long term” buying opportunity, or like two years
ago when I mentioned repeatedly that if I was in error of the upside potential of commodities it would be to underestimate how high grains
could go, NOW I have the feeling that in my downside concerns that began with the June 30 crop report and analysis as well of falling
energy demand that began at $100 crude, I may have been underestimating how low commodities could retrace! So while it often looks
the most negative at the bottom, I am not sure we have seen all the “most negative” information, facts and reactions. Therefore for your
edification, I have the following observations for your consideration and debate:
The US Dollar (see daily and more importantly, monthly charts above) The question one has to ask is how the global situation is different
now than say back in 2001 and 2002 when we last saw a high priced dollar? I think without a doubt we in the US look A LOT better than the rest of
the world—Germany is in formal recession, 60% of China’s recent growth has been construction---construction of what now---factories that are not
needed???? Deleveraging and repatriation of currency back into the US from foreign investments, and paying off debt by countries or acquiring new
financing requires US Currency since for the most part world banking is figured in US Currency. There is a HUGE demand for US Dollars for either
a safe haven, or to re-finance current liabilities--- This is NOT good for US exports and especially US Commodities (Grains). Take a look at the
Monthly US Index Chart above--- we have a LONG ways to go yet!!!! We have seen a record rally in US $ recently and consider what corn prices
look like from the outside looking in--- i.e. $3 corn now looks like $3.50 corn to the importer due to currency adjustments. Get the point?
Equities: Consider that the Dow or any measure (index) of equities has already taken out the 2004 lows, whereas grains have not even
adjusted to 2006 lows---If the Dow closes below 8000 it spells more and greater problems. The wishy washy action by our US Treasure and
continuous negative reports out of equities suggest we are not done yet! Chicago CEO’s warned the major yesterday that huge layoffs are coming
yet the 4th qtr and well into 2009---this translates to less tax income to local cities, as well as states--- major, major financial problems exist and are
coming. Most merchandise stores are “deleveraging”, getting rid of inventory with little expectations of “stocking up” for a futures business upturn.
Psychology is negative and I doubt the new administration can do much to change that unless a massive change in attitude evolves to consider the
working population as much or more than the financial guys on Wall St. Banks aren’t even using the influx to make loans but rather look at
acquisitions--- I would be concerned now about the mid-level banks----those with exposure to cars, furniture, college loans, etc ---Cash is king and
most financial analysts realize or are about to realize it. Hopefully the Ag sector will as well.
Effects on Agriculture: It wasn’t that long ago when the livestock industry, as well as the food lobby was knocking on the door of the USDA to
open the CRP immediately to save them from themselves ---thank goodness for someone with sanity running the show in Washington DC!!! Think
what we would have the current Adm had done so??? The problem now is not high priced grains, but terrible risk management by end users, and
now a world public that may not be able to afford $90 cattle, $80 hogs, or will by E-85 at any price. Ethanol is on the skids and has not been reflected
yet by USDA—I suspect they are 250—400 mil bu off in their total usage for marketing year 2008/09 suggesting a carryover into Sept 1, 2009 at 1.5
bil-bu --- All the while have an expiring CRP base of acres being released naturally through expiring contracts.
Bottom Line: We have no choice but to be defensive---selling rallies lightly, and using sell stops at each new low in grains, equities
and other securities:
This copyrighted report is intended for the use of clients of SMS, Inc only and may not be reproduced or electronically transmitted to other companies or
individuals, in whole or in part, without the prior written permission of SMS, Inc, Strategic Marketing Services. The information contained herein has been taken
from trade and statistical services and other sources we believe are reliable. SMS, Inc. does not guarantee that such information is accurate or complete and it
should not be relied upon as such. Opinions expressed reflect judgments at this date and are subject to change without notice. There is risk of loss in trading futures
and options and is not suitable for all investors. Please carefully consider your financial condition prior to investing.
MORNING COMMENTS
3/9/2016
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NEWS: Three Wall Street analysts cut their earnings forecasts for Tyson Foods and one downgraded the stock following larger-thanexpected losses in its chicken segment, concerns about its debt status and news that Russia plans to cut chicken imports. J.P. Morgan
downgraded the stock rating to underweight from overweight, citing Russia's most recent move to cut chicken imports and the risk the
firm may breach a covenant on its loans if it doesn't renegotiate a credit agreement.
-The MSCI Asia Pacific Index dropped another 2.2% after losing 3.6% yesterday when the dollar rose 1.8% against the euro, reducing the appeal
of U.S. supplies. Take a look at symbol DRYS (Dry Shipping Stock) to see just how bad shipping biz really is.
-China’s soybean imports in October were at 2.13 mmt down 25% from a year earlier. They also exported 30,000 tons of corn in October, down
sharply from 210,000 tons a year earlier. This after a big Sept booking.
- India’s federal government has set an intervention price for soybeans equivalent to around $7.25 a bushel since their record crop size has
depressed prices.
-Indonesia’s government will not step in to mediate in disputes between Indonesian and Indian palm oil companies over the latter’s contract
defaults on palm oil shipments.
-Wilmar International Ltd., the world's biggest palm oil trader, said third-quarter profit more than doubled to a record as sales rose 67% mostly on
demand from China.
-Intrepid Potash Inc. fell 12% yesterday. The largest producer of the crop nutrient in the U.S. said it earned 66 cents a share instead of the
expected 73 cents in the third quarter.
-An estimated 700 funds may go out of business by the end of the year, an increase of 24% from 2007.
MARKET ADVICE:
CORN: We are short calls and long puts on 35% plus cash sales per position box above—End Users: covered 40% of
remaining 2008 needs, and 25% of 2009 (first qtr) at $4.08 –Hedge 10% of 2008 production shortly after the open and 10% of
2009 production in the 2009 July for 2008 production and 2009 Dec for 2009 production (I view suggested percentages as
minimum)
SOY COMPLEX: 40% cash sales! We lifted short calls or bought long futures last week against short calls to be basically flat---holding
60% basically unhedged. Short 10% of 2009 in $10 calls--- New Advice: Hedge 20% of 2008 inventory in Jan 09 futures and 15% of 2009
expected production in Nov 2009 futures--- Ideas are surfacing that we may see a big increase in acres for 2009 and we’ll need to have
more coverage
WHEAT: The weak sister due to worldwide supplies—We lifted 1/3 of short futures and long puts in 2009 (2008 also if you are still managing it, but
formally 2008 was gone long ago) –New Advice: Re-hedge the 1/3 we lifted in the July or Sept 2009 futures shortly after the open.
LIVESTOCK: Russia will cut its poultry import quotas by another 100,000 metric tons in 2009, making the total cut 300,000 tons,
according to The Moscow Times. A majority of Russia's poultry imports come directly from the United States. In 2008, the U.S. provided
870,000 metric tons of poultry to Russia, supplying most of the country's then 1.2 million metric ton quota. Zubkof also said the Russian
government is looking to cut quotas for imports of pork, but has not yet determined how large a cut is needed.
LIVE HOGS: 25%for 2009--- Exited LHZ hedges yesterday—no new advice for 2009
LIVE CATTLE: protection on 25% in puts for 2009. Hedge 25% of 2009 2nd , 3rd, qtr production in June LC shortly after the open. .
US $ Index—to the upside technically –see chart above –add one long US $ today on a .350 pullback or new highs after 1 pm whichever
comes first
Energy: we exited the long NG yesterday at a loss---no new ideas---specs can sell new lows after 11 am--Equities: Have one short Dow, or S&P as part of your risk management philosophy –using any 150—200 pt rally or new lows on sell stops
Cotton: Take profits on recent hedges and wait for a move back below 39.
Rice: Daily have turned short and support is breaking down. If you couldn’t get to 100% hedged yesterday, try to do it today.
SMS MORNING COMMENTS
3/9/2016
Page 4
This copyrighted report is intended for the use of clients of SMS, Inc only and may not be reproduced or electronically transmitted to other companies or
individuals, in whole or in part, without the prior written permission of SMS, Inc, Strategic Marketing Services. The information contained herein has been taken
from trade and statistical services and other sources we believe are reliable. SMS, Inc. does not guarantee that such information is accurate or complete and it
should not be relied upon as such. Opinions expressed reflect judgments at this date and are subject to change without notice. There is risk of loss in trading futures
and options and is not suitable for all investors. Please carefully consider your financial condition prior to investing.