I hope you’ve had a great, relaxing weekend. My weekend has gone pretty good as I am writing this on Saturday morning. This past week we decided to roll the dice. Given a wet forecast, it may not have seemed like a smart idea to plant corn on Tuesday and Wednesday. However, we checked some of our ground on Monday and felt we could at least work ground on Tuesday…as some of our land was ‘greening up’. A guy who works with us, Shawn, got after it first thing Tuesday and the ground worked like a dream. So, I made the decision I’d at least plant that field. I’m sure you know where this is headed. Given we had about 500 acres of corn to plant and all of it worked great, we just planted it all. Now…we were supposed to start getting rain Wednesday night. We got .3 on Thursday, then another .1 on Friday morning. I’m sitting at .4 for the event so far…and the original forecast was for 2-4 inches. I’m hopeful we don’t get a toad-strangler tonight and tomorrow as we still have another solid chance at rain. For my farm, we have river-bottom beans to plant and likely some spotting in on both corn and beans…hopefully, that’s all I have left. I know several of you got quite a bit more rain than I did…particularly in northern Illinois. This is two years in a row of a pretty tough situation. From that area up to North Dakota, I’ve heard several talk about a decent chunk of Prevent Plant this year. While it won’t be anything like last year, there will be a fair bit again here in 2020. I appreciate all of the feedback. Keep it coming if you want to let me know how your area is doing. email@example.com
Th corn market held its ground while beans lost on the week. With more chatter from Washington on the relationship with the Chinese, traders are fearful the Phase I trade deal is on shaky ground. Given the thought this could essentially bail us out of a portion of our huge stocks, it’s tough to not be concerned. The highly anticipated May WASDE report was uneventful and given how negative many assumed it would be, that was a win. Weather in South America has evened out with enough moisture to get by for crops in most of Brazil and Argentina. If it wasn’t for the continued weakness in the Brazilian Real, there’s no doubt it would help our commodities gain some footing. As far as outside markets are concerned, the US Dollar rallied again this past week, settling on Friday at 100.43, up .66 on the week. The DOW struggled on the week, giving back some gains from the last couple of weeks. With a close on Friday down 17 points at 23,517, the market lost 769 points. June crude oil again showed strength, settling on Friday at $29.65, up $2.03. This was 27 cents off the highs and $2.41 off the lows of the day. June crude rallied $5.02 on the week and over $12.50 the last three weeks.
CORN – The corn market didn’t have a great deal of movement on the week…which is interesting given it was report week. July corn settled up a penny and three-quarters on Friday at $3.19 ¼. This was a penny and a quarter off the high and 2 ½ cents off the low. On the week, July corn was unchanged. While many of us thought we’d see May corn struggle heading into delivery, it went out quietly. With selling drying up as the lead month couldn’t break through $3, a person could make a case for a rally coming up given seasonal rallies often happen in the May-July timeframe. However, buyers are on the sidelines, evidenced by a huge fund short of 220k contracts. Given the demand destruction over the last two months, I can see the hesitancy to buy corn, but at the same time, demand seems to be bouncing back nicely. With cheap prices, we generally see strong demand, and the USDA assumed just that on their report Tuesday. Given how strong they see demand, one must remember moving forward that a big crop will likely produce a huge carry-out number…as the assumptions for huge demand increases are already factored in. We need Chinese business…and in all reality, a bit of a crop scare/failure might not be the end of the world. Regardless, know what your plan is and be ready to act. 2020 isn’t the type of year we can make big marketing mistakes in my humble opinion.
DEMAND – Demand was strong this past week. This past week exports were quite impressive. Weekly export sales were 1.07 million tons, which was over 300k tons more than a week ago. 554k tons were posted for this next marketing year, so overall sales were up by almost 800k tons and well ahead of the pace needed to reach USDAs export goal. Corn usage for ethanol continued its recovery. With right at 63 million bushels of corn usage, we were 2 mb above last week’s corn usage and 10 mb higher than two weeks ago, according to the Department of Energy’s EIA report. Basis showed some improvement on the week. My area saw basis a nickel improved with a bid 17 under the July. In Decatur, basis improved by 9 cents, posting a nickel over the July. On the river in St. Louis, basis improved a nickel, posting 25 over the July.
CASH CORN – Cash corn values were steady to improved on the week. With basis improving in most areas, it appears cash movement isn’t what processors are looking for. While the board didn’t do anything, the improvement in basis was nice to see. With a ton of old corn left to price, I’d be cautious as to look for a huge basis push, but in areas where ethanol plants are opening back up, there’s no doubt we could see better basis than we’ve been seeing. Producers must know what price level they’re looking for. As I’ve said many times, the bushels at home would be the last to go for me…but all bushels need a plan and some offers in. While I personally don’t see as much down-side for the next few weeks, a producer with a ton of bushels must weigh their risks as our markets are always capable of surprising us.
2020 CORN – December 2020 corn lost a little ground this past week. CZ20 closed on Friday at $3.32, up a quarter of a penny on the day. On the week, Dec was down 3 ¾ cents. Dec is 56 cents below the spring price. I keep talking about insurance…as 85% of the spring price is $3.30, and 90% is $3.50. I feel like any sort of rally here in 2020 should be participated in for those with more aggressive insurance policies. The down-side risk is quite limited given how far below the spring price we continue to be. I’m not too interested in making sales at this point given how low we are. However, some feel we could slide to $2.50 by harvest. While a move like that is always possible, I wouldn’t see it happening until we verify a huge crop and lackluster demand. Regardless, there’s no doubt that we must prepare ourselves for whatever the market might offer us. As always, we have to be ready and know what prices work for us, so plug your numbers into the the AgMarket app. Doing so will help you quantify your situation…and simplify your marketing plan. 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 80% sold @ $4.30 basis May20. Hold for 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 $4.09. – Strategies I’ve employed or considered. Straight hedge of Dec ’19 corn at $4.06 then $4.18, $4.39, $4.59, $4.72 & $3.90(65% total).
BEANS – The bean market lost some ground on the week. At the close Friday, July beans were up a penny and a half at $8.38 ½. This close was 4 ½ cents off the high and 2 off the low. On the week, July beans were down 12 ½ cents. With more exports seeming to hit the wire every day, one would think a rally could ensue, but buyers remain on the sidelines. IF the Chinese continue to buy US beans, I’d assume we’d see those buyers show up, but as I said earlier, people are skeptical. A big crop from South America will offer headwinds as well as talk of US acreage possibly increasing. However, the supply and demand balance sheet is certainly snug enough to produce a rally on any sign of production issues in 2020. I’d hate to say I’m bullish but I’m certainly supportive beans for now. I am looking for a bit of a rally to unfold and for that reason I’m going to be fairly patient with regards to bean sales of any sort. As always, know what you’ll do if we get a rally…and have some offers in place. It sure is easier than doing it all on the fly.
DEMAND – Soybean export sales were big again this past week. With net sales of 655k tons for old crop, sales were essentially the same as we saw a week ago. For new crop, 440k tons were recorded so overall levels were around 275k tons higher than what we saw last week. If soybean exports continue like they have lately, we could get back some of the loss in exports the USDA showed on the May balance sheet. As far as basis is concerned, little movement was noted. Local bids for me are 19 under the July, which was status-quo. Decatur’s basis for cash beans was also the same, staying at three over the July. On the river, basis was posted at 32 over the July, which was a couple of cents improved.
CASH BEANS – Cash bean bids were soft on the week as the board losses weren’t offset with any sort of gain with regards to basis. I haven’t changed my mind on old beans for some time. I don’t like selling them down here, but I know everyone’s situation is different at the same time. It’s always a gamble on trying to figure out timing for selling crops…especially beans. This year is no different. IF the Chinese keep buying, I’d want to own beans. IF the don’t…I’m not sure we see much movement, barring a major weather problem either in the US or to finish the South American growing season. I like owning beans right now though, as again we’re entering a time of year when a rally is more likely. Given the lack of a weather premium…in my opinion anyway…I’d think we could see some uptick in bean prices over the next few weeks. If you base your decisions on your farm’s profitability, it won’t lead you wrong. Let us know if you need any help.
2020 BEANS – November 2020 beans had a down week as well. On Friday, Nov ‘20 beans settled at $8.45 ½, up a penny and three-quarters. Nov20 beans lost a dime on the week. Nov beans are now 72 cents under the spring insurance price. As with cash beans, I am not interested in selling at these prices. I look for some sort of a rally…and have to think we make another run at $9 with any luck. As I’ve talked about lately, buying a courage call isn’t a bad idea. If you are also looking for a rally before selling much, it might make sense to have a short-dated call in place…something you can buy for 10-15 cents at most. On a rally, it gives you some gumption to go ahead and make the sale…thus, why they call it a courage call. Again I’m not selling beans right now…but I am positive of what my marketing plan is…and what levels I am interested in furthering sales. Get some offers in if at all possible. Let me know if you have questions on how to approach your plan. I’d be glad to 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 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. http://www.channel.com/Markets/Pages/Profitability-Calculator.aspx
What To Watch For – I am 70% sold/hedged (basis APH) at a board-based average price of $9.64SH for 2019. I’ll consider selling more old beans with a rally to $9.00 May. 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 $9.40.
**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 me know if I can help you in any way.
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