Matt Bennett Weekly Commentary 011920

I hope your week was excellent.  Mine was fairly crazy with a ton of learning, some speaking and plenty of travel.  I spoke close to home on Tuesday, then made the trek to speak at Kevin VanTrump’s conference FarmCon on Thursday in Kansas City.  My AgMarket.Net team was there and we were all going to fly to Nashville on Friday morning out of Kansas City.  The problem with that plan was this thing called an ice storm.  So…Bill, Jim, Brian and I piled in a SUV and drove to Nashville.  With the weather, it was slow-going for part of the trip and 10 hours later, we made it.  The main thing is getting there safely I know, and we’ll certainly have a story to tell…but it was an undertaking for sure.  The other thing that was tough for me on Friday is I missed my daughter Reese’s birthday.  I don’t miss birthdays, but this year we have our first company meeting in Nashville as it is in and around the ADMIS annual conference.  With all of our owners there, I decided to be present…but let them know with the conference always being at this time in the calendar, it could be my last! I hope your week is a good one…reach out if possible and let me know how you’re doing.

Hey Before I go any further, our team is going to be in Council Bluffs.  I want to personally invite you to this meeting. It will be a real chance to roll up your sleeves and learn some management tools. We would really like to meet you all. To sign up, go to this link: https://agmarket.net/its-profit-not-price/

//mbennett@AgMarket.Net

The corn and bean markets went on different paths this past week.  With plenty of fervor about the US/Chinese Phase I trade deal signing, many were wondering what kind of reaction the market might have.  The thought was we’d see a bump, but as I’ve said here and to everyone I’ve talked to, I figured we wouldn’t see any pop until we started shipping products.  Now, I didn’t expect a negative reaction, but that’s what we saw on Thursday…then on Friday, the corn market got back everything it lost a day earlier, while beans struggled to follow along.  The big reason for the rally was talk that China had bought 2-4 cargoes of corn from the US…which is a big deal indeed.  Beans lost some ground on the week, but corn was able to forge a rally, which seemed like a major win going home on Friday.  As far as the outside markets are concerned, a mostly negative contribution was felt as the Dollar was higher on Friday while crude was steady to a shade higher.  March crude closed up 31 cents at $58.84.  This was 16 cents off the highs and 53 off the lows of the day.

CORN – The corn market had a terrible day on Thursday…and most of the calls I received were from disgruntled clients who had been praying for a rally.  However, Friday was a reversal of fortunes as March corn started higher and kept working higher all day, closing up 13 ¾ cents at $3.89 ¼.  This was a quarter-penny off the high and 12 ½ cents off the low of the day.  On the week, the corn market rallied 3 ½ cents.  Seeing the market head to double-digit losses on Thursday was aggravating for sure…but we felt fairly good about cash corn rebounding due to the tightness we continue to see.  While the relationship between the cash market and futures isn’t what it used to be, it’s tough to ignore how strong basis is and continues to be in the middle of January.  Typically, this is a time of year when basis cools off as so many bushels are moving.  This year has been strange from the get-go though, and the only explanation when processors continue with solid bids is they’re not buying the corn they desire.  I continue to look at flat cash prices for corn as being supported while new-crop could struggle to put the same kind of rally together as long as we’re looking at such large acreage projections and the lack of a weather issue in South America.

DEMAND – Demand was solid on the week as exports were solidly higher than recent totals while corn usage for ethanol was huge.  Weekly export sales were 785k metric tons for this marketing year, up by over 600k from a week ago.  For next marketing year, 207k in sales were posted.  Overall sales were over 800k in excess of last week’s totals.  With China buying corn, exports could really ramp up, which would tighten our balance sheet significantly…let’s hope this is the case.  Corn usage for ethanol was up sharply at just over 110 million bushels, according to the Department of Energy’s EIA report.  This was an increase of over 3 ½ million bushels.  Basis continues to be strong, even as the market rallies…a good sign for sure.  My area saw basis option the March, which is status-quo on the week.  In Decatur, basis softened by 4 cents, moving to 14 over the March.  On the river in St. Louis, basis was also softer, moving as well to 14 over the March.

CASH CORN – Cash corn was higher on the week as futures were higher while most basis levels were steady to soft.  The interesting thing is even though posted bids softened in some areas, I heard of pushes here and there.  It seems like end-users are struggling to originate corn at a level they would like to see.  I’ve heard of free-dp in many areas…but we should be cautious to give up too much ownership as long as we feel good about the corn staying in condition.  Many producers I’ve talked to don’t think they’ll be able to keep much corn until summertime.  Given corn is coming out of the bin in many areas holding moisture and possessing a good chunk of fines, many producers want to get the corn out of their bin and let someone else worry about it.  Long story short, if a producer could keep 20% or so of their crop, I feel like it could potentially be great property this summer.

2020 CORN – December 2020 corn was also fairly volatile, but didn’t move on the week when it was all said and done.  Dec20 closed on Friday up 8 ¾ cents at $4.02 ¾.  This kept Dec20 prices at the same level as it was last week.  While we were all a bit worried about Dec20 corn going down to $3.94, I had a feeling we’d see $4 or something in that neighborhood for the month of February when we set crop insurance.  I could be wrong, but it would make sense corn would hold together until we secure these big acres the trade keeps talking about.  The main thing is to have a plan as we always talk about.  As I’ve said many times, I continue to urge clients and those who call for advice to have their costs figured and plugged into a profitability spreadsheet with projections on yield with acreages for 2020.  The webinar Channel recently had me put together won’t be available forever, but it sure helps address how to put a plan in place that is designed to maximize profit.  Let us know if you need help putting yours into place.  As always, don’t forget to use the AgMarket.Net app to see how your profitability is shaping up.  If you need help with a marketing plan for 2020, let us know and we’ll get you set up.  https://www.AgMarket.App/app/

What To Watch For –

On 2019 corn, my farm is 80% sold @ $4.30 basis March20.  Hold the rest for now

For 2020 CZ, up to 30% sold at $4.05.  Next target for me and my farm is $4.09.

 

BEANS – The bean market struggled to follow along with corn this week as the fact was sold after we’ve seen plenty of buying the rumor the last few weeks.  While beans didn’t lose the ground corn did on Thursday, they weren’t able to rally as much on Friday either.  On the close, March beans settled 5 ¾ cents higher at $9.29 ¾.  This was 3 ¾ cents off the high and 9 ¾ off the low.  On the week, beans were down 16 ¼ cents.  The beans market seems to be focused on the fact that there could only be so much export business to go around with what has happened to them with ASF this past year.  With US carry still projected at 475 million bushels and no big weather story out of South America, it’s tough to get the funds to go long.  Yes they’ve liquidated their short position for the most part, but taking the next step of going long is going to need more of a story to buy.  I’m neutral beans into spring, hoping we get a weather bounce from South America or a nice surprise on Chinese purchases.

DEMAND – Soybean export sales were well above totals from a week ago.  With net sales of 711k tons for old crop, sales were twice what we saw a week ago.  For new crop, no sales were recorded so overall levels were almost 350k tons more than a week ago levels.  As far as basis is concerned, there wasn’t much movement.  Local bids for me are 17 cents under the March, which is status-quo on the week.  Decatur’s basis for cash beans also were status-quo, staying at 8 over the March.  On the river, basis was quoted at 20 over the March, two cents improved from last week.  Bean basis is likely to remain solid if we continue to see futures drop…basis is solid indeed.

CASH BEANS – Cash bean bids were lower this past week.  With the basis staying consistent but not improving much, the futures losses hurt cash prices.  As I’ve said many times lately, we saw flat cash bean prices rally a dollar!  That is something we should certainly not ignore.  While there’s always the chance we could see China come in and buy a ton of beans and drive prices higher, the main thing we need to do is look at how much money we can make at these prices we already have.  With the January report behind us, we’re getting down to surprise purchases from China or inclement South American weather if we’re going to see any sort of rally come together.  Neither of those are something we can count on.

2020 BEANS – November 2020 beans lost quite a bit of ground as well this past week, following along with the nearby contracts.  To close the week, Nov ‘20 beans settled at $9.60 ½, up 4 ¼ cents on the day.  Nov20 beans lost 14 ¼ cents on the week, which stopped the 50-cent rally we’ve seen over the last several weeks.  I am still sitting at 25% sold for 2020 beans but always considering adding to sales.  Our target is still $9.83 to get another 10% sold…officially…but I’ll likely sell a few beans prior to planting even if we don’t get to that level.  Either way, we need to have a plan in place.  While bean prices are possibly not what you’re looking for, we have to understand what kind of down-side pressure we could see in the event we see a big South-American crop as well as big US acres.  Call if you want help with your 2020 marketing plan.  We’d be glad to help you get it put together.

As always, be sure to figure break-evens when deciding whether you want to make sales.  For figuring your break-evens, I recommend using the AgMarket.Net Profitability App https://www.agmarket.app/app/ to help you get a handle on your budgets and to set your marketing plan for 2019 or 2020.  We’d be glad to help, so be sure to reach out.

What To Watch For –

2019 – I am 70% sold/hedged (basis APH) at a board-based average price of $9.64SH.  I’ll consider selling more old beans with a rally to $9.55 Mar.

For 2020, I’m up to 25% sold at $9.63 average basis SX20.  I’d be willing to sell more on a rally to $9.83.

**For the strategies I talk about on here, please remember these are the tools I use for my farm.  These are not recommendations but merely a way for the reader to see how I approach marketing for my operation.  There are tons of good tools out there. For more information on markets, strategies and ways to set up a solid marketing plan, visit my website at https://AgMarket.Net

I hope you have a great week.  Please let us know if we can help you in any way.

Matt

217-273-1133 – Work

@chief321 – Twitter

mbennett@AgMarket.Net – E-mail

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