I hope your weekend has been great so far. As I write Saturday morning, we have plenty going on. Our 15-year-old Reese is taking her first flight alone this morning as she’s going to see her big sister. We had promised she’d get to go see our oldest down in Georgia back on Reese’s birthday in January…when CV hit, we didn’t know how that would all transpire. We got the ticket as things were looking better all the time…then, as we all know, this virus deal has ramped up big-time of late. We are going to go ahead and send her down, but I’d be lying if I didn’t say I’m a little apprehensive. While I’m not too worried personally about the virus, something about having one of our kids traveling while this is all going on seems odd. That and Atlanta’s airport is huge…but if you haven’t had one of your kids fly alone before, they give you the option of buying a pass to take her to the gate and have someone pick her up at the gate…so it’s safe to say she won’t get lost. Here in Illinois, I’m hearing from several people south of me about how dry it’s gotten. Yes, we’ve been blessed with enough rainfall for now…and forecasted to get more this weekend. However, for those missing the rains, given the markets, it’s been a rough couple of weeks. One thing that also makes me worry a bit is having to have our dicamba sprayed by this past week. A couple of our river-bottom fields were too wet to spray…and a couple of our other late fields that got sprayed didn’t have the rows filled just yet. I sure hope we’re not dealing with a ton of weeds this fall. Going back in and spraying late is always an option but not my favorite by any means. Keep the communication coming…I sure hope you get all the rain you need. firstname.lastname@example.org
The corn and bean markets pretty much stunk it up this past week. The corn market especially got hammered, posting the worst week we’ve seen in some time. With a good chunk of the corn-belt getting rain over the last week, some pressure was warranted. However, the resurgence of ‘covid-19’ seems to have the market in a tizzy. While I think that’s interesting to say the least…with all we’ve learned about this virus, it’s pretty tough to fight city hall. On the US/China front, plenty of angst is still reported with the Chinese actually requesting the soybeans they buy from us be guaranteed to be ‘covid-19 free’. Anyway…outside markets didn’t help much this past week. The US Dollar moved lower early in the week then rallied back close to the previous week’s close. Closing up .016 on Friday, we settled the September contract at 97.404, down .13 for the week. The DOW didn’t have a great week, moving lower as we got closer to the weekend. Closing down 370 points on Friday, the settle of 24,950 was off over 500 points on the week. July crude oil was also off on the week, settling on Friday down 23 cents at $38.49. Crude lost $1.26 on the week.
CORN – The corn market got donkey-punched this past week. On Friday, July corn settled down a quarter-penny at $3.17. This was 2 ¾ cents off the high and 3 ½ cents off the low. On the week, July corn lost 15 ½ cents. Corn literally had very little life this week. While old corn held up better than new, sellers were active. The funds were back to about 290k short positions…but that was as of Tuesday’s close. The number is likely to be well over 300k this next week, depending on Tuesday’s USDA Report. With most traders seeing stocks a little smaller than a year ago, keep in mind we raised a billion less bushels of corn in 2019…yes, demand has been impacted, but I feel like we could see a supportive surprise on quarterly stocks. For acreage, our official guess was 94.95 million or a drop of 2 million from intentions. I’m not sure acreage has the ability to do as much as the stocks this year, so if you’re a praying for something…make it lower stocks! 😊 I really thought corn had a rally in it…and it still might, but covid-19 could make it tough on any of our commodities to rally this summer. Let’s hope it starts to fade again very soon. Until then, it makes it tough to get too bulled up, especially with what is perceived to be a mammoth crop on the way.
DEMAND – Demand was mixed this past week. Exports again weren’t impressive but corn usage for ethanol continues its ascension. Weekly export sales were 462k tons, which was 100k tons bigger than a week ago. Net sales of 77k tons were posted for next marketing year, so overall sales were essentially the same as they were a week ago. Corn usage for ethanol continues to grow and is back to about 85% of where we were on production. With just under 91.2 million bushels of corn usage, we were over 5 million bushels above last week’s corn usage and 38 mb higher than the marketing-year low…and we’ve now had more corn usage for eight straight weeks….according to the Department of Energy’s EIA report. I predict that run is close to being over as covid-19 might scare a few off from coming back on-line. Posted basis is now mostly off the Sep as July gets ready to go off the board but basis was quiet otherwise. My local basis narrowed two cents with a bid 8 under the Sep. In Decatur, basis was status-quo, posting 13 over the Sep. On the river in St. Louis, basis improved 4 cents, posting 27 over the July as they haven’t made the switch just yet.
CASH CORN – Cash corn values didn’t improve by any means this past week. With basis contracts versus the July coming due, the producer has been backed in a corner again. I believe without this stinking virus, we’d see cash levels hold steady even as we are producing what most in the market see as a big corn crop. Basis levels have been strong of late, indicating slow farmer selling possibly…but also maybe there isn’t as much corn out there as previously thought. If I had corn in the bin yet, I’d have a plan for sure…but would be looking to clean out most of my bushels on any rally. Maybe we get one around this report? Yes, your good quality corn could be worth some money this summer, but if the whole corn complex gets weak, it may take one heck of a basis to get you back to where you want to be. Sometimes a person has to cut their losses on those bushels…and while I wanted $3.40 to clean things up, I’m not sure at this point it’s going to happen. Let’s see how this week goes and hope for good news.
2020 CORN – December 2020 corn was the dud of the show this past week. CZ20 closed on Friday at $3.25 ¼, down 2 ¾ cents. On the week, Dec was down 20 cents. Dec is now 63 cents below the spring price! What does this mean? Anyone with 85% or above on crop revenue coverage will have a claim if their production this fall is at their APH or even a little above. I struggle to sell more in this area, but at the same time, I may do so. The reason is this corn market is technically susceptible…and fundamentally, by all means you can make the case for lower prices. You better be darn sure the production you’re figuring on is something you can count on and are properly managing risk IF you choose to get aggressive on sales this low. Will $3 hold Dec corn? IF we see a 180+ yield, probably not. However, I don’t see some of us picking 250 bushel corn this fall and collecting insurance…so while I see prices getting beat up before fall, we likely see a rally at some point, especially heading into October. Call me crazy. With my farm being at 30% sold at $4.05 basis the Dec, I still want to make another 10% sale at $3.65…maybe even $3.40 or $3.50 now? Once again, marketing corn in 2020 has been super tough…don’t beat yourself up over it. 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 80% sold @ $4.30 basis May20. New ’19 target $3.40***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 of Dec ’19 corn at $4.06 then $4.18, $4.39, $4.59, $4.72 & $3.90(80% 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 $3.65 *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 **lifted these positions**
BEANS – The bean market had a quiet week as compared to the corn market but also lost ground. At the close Friday, July beans were down 4 ¼ cents at $8.65. This close was 6 ¾ cents off the high and 2 ¼ off the low. On the week, July beans were down 11 ½ cents. After four weeks of higher closes, we stopped the streak. Given good weather overall and a weak corn market, it wasn’t hard to fathom beans struggling to rally. While the Chinese are still in buying US beans, the big question as we continue to keep this trade war alive is whether all those beans will get shipped. I’m not bearish beans in and of themselves…but the stark reality is IF we slow this economy down again, it could be tough to see beans rally. Tuesday’s report is slated to not show much fanfare on stocks but there certainly is some questions on acreage. With the average trade guess close to 85 million acres…which is where my team pegged our guess…it would inject more cushion on production if we would have some weather issues later in the summer. Again, I’m not bearish…but certainly concerned about the macro outlook. Keep your offers in…and we’ll re-evaluate after Tuesday’s report.
DEMAND – Soybean export sales were up for old-crop from a week ago, keeping stout demand intact. With net sales of 602 million metric tons for old crop, sales were up about 65k tons. For new crop, 561k tons were recorded so overall levels were down due to lower new-crop sales. These totals continue to impress. As far as basis is concerned, some bids moved to versus the Aug which is trading at a nickel discount to July. Local bids for me are now 15 under the August, which would be a nickel wider than a week ago. Decatur’s basis for cash beans was also a nickel wider, at 7 over the August. On the river, basis was posted at 34 over the July, which was status-quo.
CASH BEANS – Cash bean bids were off on the week. With the board drop and some basis weakening, prices deflated a bit. Lately though we’d seen the board and basis adding value to prices…and I know a fair amount of beans moved on the strength. This likely added to some of the pressure the market experienced. At this stage, I still think beans have a chance to see some life. While I’m a little concerned due to what we see going on with this virus resurgence…and how our government will respond…my hope is this too shall pass and soon. My thoughts on this bean market haven’t changed much…but we need to see the report and how the economy responds to what is going on from a ‘shut-down’ standpoint. Re-ownership of sold bushels still makes sense to me on a limited-risk basis. Be sure and get ahold of us if you want some advice on how to put something like that together.
2020 BEANS – November 2020 beans had a more challenging week than the nearby. On Friday, Nov ‘20 beans settled at $8.61 ¼, down 7 cents. Nov20 beans lost 19 ½ cents on the week. Nov beans are now 56 cents under the spring insurance price. While I’m less confident than before that we’ll see Nov back at $9.17…the spring price, if things stabilize, I’d think we’d have a good shot. Again, I’ll be selling on strength and not waiting around to get to that price. If we can get a run to the $9 areas, I’ll be ready to move…but those who need money this fall should consider at what price levels they’d be willing to move some…even if it isn’t up at $9. With any weather in August, I think you see a rally well over $9, but if this ‘good overall’ weather continues, that could be a tall task. With the 2020 bean crop going into the ground fairly early, yield potential is likely quite robust. Have some sort of plan in place…know what you’re going to do whether we get a rally or not. Also, feel free to call if you need help with your plan.
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. 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 sell another 15% of my old beans with a rally to $9.00 July. For 2020, I’m up to 25% sold at $9.63 average basis SX20. I’ll sell another 5% on a rally to $9.00. 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 15% for Nov 2020 beans at $9.60 & 10% at $9.68. Offer in at $9.83 **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 me know if I can help you in any way.
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