I hope things are running smooth around your place. Around ours, we’re soaked…and I mean saturated, flooded, call it what you want. On Thursday, the system coming up from the south literally parked over us and we received right at 5 inches of rain. As I write on Saturday morning, it’s raining…and we’ve had about 6.5 for the week. Yeah, we have enough to get us to fill some pods…so I shouldn’t complain. We are certainly going to lose all of our ponds and some of the river-bottom ground, but it is what it is at this point. We got home from Georgia with two vehicles…that was a little different than all riding in one, but we made it work. Between bathroom breaks we likely could have rode horseback and made it home quicker, but it was an experience for sure. The kids had a great time…and on Friday, maybe one of the neatest experiences they’ve had in awhile. A good friend of mine who worked with Channel, Hilary Sirles had invited our family many times to see their orchard in Southern Illinois just south of Carbondale. We visited and going in the kids weren’t necessarily thrilled about visiting an orchard…but wow, what an operation. These guys ship produce all over the place and had about 80 people working on their 800-acre farm. I highly recommend visiting them if you’re ever going up or down I57. Last thing…the peaches are incredible. I’m not trying to do a commercial here, but they really have some great stuff. On the farm front, keep the updates coming. I appreciate all the feedback. firstname.lastname@example.org
The corn and bean markets both struggled to get anything going this past week. With huge demand of late for beans and the crop essentially needing a few more weeks of good weather, it seems traders are skeptical to get too down on bean prices just yet but we certainly aren’t seeing enough buying to keep us from moving lower. The corn market on the other hand is struggling with what the trade seems to think is a big yield that gets bigger every day. While we had excellent demand news for corn on the week, it couldn’t stem the tide and prices continued to falter. The weather overall had plenty of rain for enough of the country…especially with the lack of extreme heat. Outside markets weren’t providing much direction either way this past week. The US Dollar continued its recent weakness with the September contract settling at 93.32, down 1.06 for the week…but the Dollar made a new low for the move on Friday then settled higher…could be a low in place for the time being. The DOW was essentially unchanged on the week, setting on Friday at 26,319…up 3 points on a weekly basis. August crude oil was down on the week, settling on Friday up 35 cents at $40.27…down $1.02 for the week.
CORN – The corn market had a rough week, with buyers staying on the sidelines. September corn settled up a quarter of a penny at $3.16 to close the week. This was a penny and a half off both the high low of the day. On the week, Sep corn lost 10 ¼ cents. This corn market received great news on the export front later in the week as China was in again purchasing a chunk of corn…the biggest sale ever recorded at almost two million tons! This got the market excited right? No, it barely raised an eyebrow and we saw the slow grind lower continue. It’s made for a tough market to navigate…especially as cash bushels aren’t getting the benefit of a better basis. There is simply too much corn out there. Do I think there is a chance for a rally? Yeah, I actually do…call me crazy if you want. I’m not saying we’ll go sharply higher, but in all honesty, everyone in and around the corn market is thinking we’ll move lower. I could see a bounce in here when people least expect it. Given the weak performance of the Dollar and the general theme of inflation that’s taken hold of several commodities, it’s not out of the realm to see corn bouncing 5-10%. A person has to stay super flexible in the environment we’re in and not get too many eggs in one basket. Have a plan, keep offers in place and stay on our toes as making big marketing mistakes in a year like 2020 could be devastating.
DEMAND – Demand was again pretty good overall this past week. Exports were off while corn usage for ethanol continues to impress. Weekly export sales for this marketing year were a net cancellation of 29k tons, which was about 250k tons smaller than a week ago. Net sales of 639k tons were posted for next marketing year, so overall sales were a million and a half tons smaller than a week ago. Corn usage for ethanol was back at it, increasing for the 12th week out of the last 13. With 96 million bushels of corn usage, we were up sharply from a week ago, according to the Department of Energy’s EIA report. Posted basis was heading the wrong way. My local basis was status-quo, posting a bid 9 under the Sep. In Decatur, basis widened three cents, posting 12 over the Sep. On the river in St. Louis, basis widened 14 cents, with a posted bid of 17 over the Sep.
CASH CORN – Cash corn values were lower on the week. We didn’t get any help from basis while the board continued to drop. To be honest, at this stage of the game, it’s up to the producer to see how they want to play it going into fall. I know some may be tempted to hold over corn, but given a big harvest, it’s not likely the best decision. I’d be tempted to move the corn and focus on new-crop…as we’re likely going to get squeezed out of these bushels. While I could see waiting a week or two to see if we can get a weather pop out of the pod-fill time for beans, I’m not sure it will happen. I do see the chance for an inflationary tone to continue to develop, but I’m not sure the timing on that will work for a producer with old bushels. As always, have a plan and do your best to execute it as we are about to run out of time.
2020 CORN – December 2020 corn once again couldn’t get anyone interested in buying and we moved lower yet this past week. CZ20 closed on Friday at $3.27, down a quarter-penny on the day. On the week, Dec was down 8 cents. Dec is now 61 cents below the spring price. Being this far below the spring insurance price again makes for a tough marketing environment. One thing is for certain…don’t make a sale down here and expect to collect crop insurance as we have no idea how the market will trade between now and the end of October. I know many have said to me that ‘corn can’t rally’…well, when enough of us get to saying that, we’ll see a rally. Also…and this isn’t very scientific, but what most producers would get a greater benefit from right now is the markets moving sharply lower, given crop insurance and the PLC program. That’s part of why I think corn will stay supported…and seeing us sell 2 million tons of corn to China this past week is one of the things that will help support us. I’m not bullish by any means but simply urging you to understand we don’t want to get too many eggs in one basket when we’re this far below the spring insurance price. Please call if you need any advice on how to tackle this thing. Again, we have to know what prices work for us, so plug your numbers into the AgMarket app. If you need help setting up your plan for 2020, it’s never too late to get ahold of us. https://www.agmarket.app/app/
What To Watch For –
On 2019 corn, my farm is 90% sold @ $4.20 basis Sep20. New ’19 target ***must consider local basis.
For 2020 CZ, up to 30% sold at $4.05. Next target for me and my farm is $3.65.
Strategies I’ve employed or considered.
Straight hedge – Dec ’19 corn @ $4.06 then $4.18, $4.39, $4.59, $4.72, $3.90 & $3.40(90% total)
Buy July20 $4.40 put:sell July20 $5.40 c & July $3.80 p for .10-took 44 cents profit**
Straight hedge of Dec20 at $4.07, then $4.05, then $4.04 (30%) Offer on another 10% at $3.50
*Buy $3.45 June put & sell $3.90 Dec call for even money to protect cash bushels-rolled to $3.10
*put at a 20 cent profit** Sold $3.10 for a nickel, loss of three cents – net gain 17 cents
Bought Sep $3.20 call, sold Dec $2.80 put and $4 call for 7 cents total – insurance play
Sold Dec $3.30 put and call for 33 cents then bought $3.05 put for 2 cents.
Sold Dec20 corn and bought July21 corn for 19 cents
**lifted these positions**
BEANS – The bean market had a quiet, unfulfilling week with buyers on the sidelines. For Friday’s close, August beans were up 5 ¾ cents, settling at $8.97 ½. This close was a penny and three-quarters off the high and 4 cents off the low. On the week, August beans were down 7 ¼ cents. I’ve been thinking this bean market would come up on a crossroads any day here. While a 7-cent weekly drop isn’t the end of the world, I’m afraid we may struggle to rally given the size of this bean crop. I know it isn’t in the bin just yet, but given the forecast and conditions, I think it’s safe to say the trade is expecting a 50+ bu/acre bean crop. Given huge demand of late, notably from the Chinese, a person would think a rally was in order…but weather and crop size is going to be what carries the most weight this time of year. I’m still hopeful we get another run out of beans, but it could be tough if the weather stays good through August.
DEMAND – Soybean export sales overall were enormous this past week. With net sales of 258 million metric tons for old crop, sales were off by less than 100k tons. For new crop, 3.344 million tons were recorded so overall levels were up by almost a million mt. We keep seeing good sales announcements, so my thought is exports will get adjusted on the next USDA report…which will help keep the balance sheet from getting too burdensome IF we see a huge crop this fall as I am assuming. As far as basis is concerned, I didn’t see any movement at the places I monitor. Local bids for me are unchanged at 15 under the Nov. Decatur’s basis for cash beans widened by two pennies, posting a nickel over the Nov. On the river, basis was posted at 31 over the August, which was two cents wider.
CASH BEANS – Cash bean bids were off for the week. Given basis getting wider in places as we moved the markets a bit lower, we can only assume cash prices will remain stagnant. Harvest is knocking on our door, so processors know beans will be showing up any time. With plenty of beans on hand to get to harvest, I doubt we’ll see much in the way of a basis pop…unless it would be around a river terminal. With export business picking up and basis at river terminals staying respectable, we know there’s good demand…it’s just the calendar and harvest that will likely keep a lid on prices. I’m again down to 15% of old bushels left to sell. I’m assuming I’ll sell them in the next week or two. My current offer was at $9.25, but I’m going to move them if we see Nov beans back up over $9…with bids going off the Nov for me, that’s what I’m basing it off of. With resistance up around $9.08, $9 seems ‘good enough’ to me…and I know it’s a round figure, but they are gambling bushels after all. It’s all subject to change.
2020 BEANS – November 2020 beans had a boring week as well. On Friday, Nov ‘20 beans settled at $8.92 ½, up 4 ¼ cents. Nov20 beans lost 6 ¾ cents on the week. Nov beans are now 25 cents under the spring insurance price. If you were following along, I sold some beans this past week. We sold another 10% at $9. As I looked at how the yields I’m currently expecting affected my break-even price for beans, it seemed like a no-brainer to sell some. We still have 60% to sell if need be, but with a solid average, I’m ok sitting here for a bit. Again, going into the fall, once you have a better idea of yields is a great time to use these tools we talk about…know what you need for your situation this fall and get a plan in place. While I preach this stuff all the time, I have to admit it surprised me a bit how much lower my break-even was with my yields adjusted. Let me know if I can be of help.
As always, be sure to figure break-evens when deciding whether you want to make sales. For figuring your break-evens, I recommend using either 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 –
I am 85% sold/hedged (basis APH) at a board-based average price of $9.40 SQ for 2019.
For 2020, I’m up to 40% sold at $9.40 average basis SX20. I’ll sell another 10% on a rally to $9.25.
Strategies I’ve employed or considered.
*Options tool – Nov ’19 beans. Buy $9.20 put, sell $8.20 put & $10.20 call-sold @ .59 profit**
*Floor on Nov ’19 beans-Buy $9.00 put, sell $7.90 put & $9.90 call @ 22 cents-sold @ 40 cents**
*Straight hedge of Nov ’19 beans at $9.58 filled – bought back @ $8.42 for profit of $1.12**
*Put in an offer for a straight hedge of Nov ’19 beans at $8.80 filled, bought back – $8.69**
*Sell July @ $9.54 beans straight hedge – bought back @ $8.21 for profit of $1.33**
*Hedged old beans at Aug $9.25 and will now lift the hedge at $8.50 for profit of 75 cents**
Straight hedge of 40% for Nov 2020 beans at $9.60, $9.68 & $9.00. New offer $9.25
**Lifted these positions**
**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.
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