Sunday Night call and Matt Bennett’s Weekly Comments 102019

 

And Now – Matt Bennett’s weekly commentary

 

It’s been a productive week around our place.  I sure hope you can say the same.  I realize the weather isn’t cooperating for everyone, and it appears we have more coming our way this weekend.  However, we were able to knock out a few hundred acres this week, getting us to less than 800 acres.  The biggest problem we’ll run into now is when the rest of it will be ready to go.  We’ve had issues getting the beans to test this past week.  With the days getting shorter and how cold it gets, especially overnight, we simply don’t have as many good hours to cut beans as we had a month ago.  The other problems we’re having that I’m sure many can identify with is finding dry corn to harvest.  I can’t dry on my farm…heck, it’s been a long time since we have had to even consider doing so.  So, getting our corn under 20% had been easy with the earlier May-planted corn.  However, the corn planted June 1st or after is still carrying 22-25% moisture.  For me, some elevators are charging 5 cents/point to dry!  So, we’ve tried to shop around a bit as we’d get eaten alive by drying costs if we have to pick much corn that wet.  My hope is this storm system isn’t carrying too much moisture and us letting some of this corn sit the last few days possibly takes a few points out of it.  As we all know though, we don’t get much for drying once October rolls around.  Thank you as always for the feedback.  Many of you sent yield reports this past week, with the general rule thinking corn was a mixed bag while bean reports were a bit disappointing.  Keep them coming!  mbennett@AgMarket.Net

Corn and beans both lost a little bit of ground this past week as conflicting reports on the US/China trade deal seemed to have the trade flustered. As I talked about last week, I was skeptical of any big promises as there was no signed agreement when the Chinese were at the White House.  With China now stating they won’t buy all of these agricultural products until the tariffs are lifted, it appears the ball is in President Trump’s court.  Are we for free trade or are we not?  I sure think we should be for free trade, but also feel strongly the trade imbalances of the past needed addressed.  We have to hope and pray this process has helped in that matter.  On the weather front, there’s plenty of ideas on just how much the frost/freeze/snow event last weekend impacted final production with one study out of the University of Nebraska indicating over 300 million bushels of corn could be lost.  The USDA announced a re-survey of North Dakota and Minnesota for harvested acres on the November report, but personally I feel it’s a bit premature.  Hopefully it helps shed light on the situation, but it’s looking more and more likely that we won’t know the true extent of 2019 production until the January report…IF we know then.  Heading into the weekend, outside markets were a mixed influence with a weak Dollar providing support while crude was off a shade.  On Friday, November crude was down 23 cents at $53.70.  This was 92 cents off the highs and 35 off the lows of the day.  Crude was down $1.21 on the week.

CORN – The corn market had a much quieter week with volume down a bit with no big news or report to digest.  Going into Friday, corn was close to flat on the week, but had a tough day, closing at $3.91, down 3 ¾ cents.  This was 4 ¾ cents off the high and a penny and a quarter off the low.  On the week, the corn market lost 6 ¾ cents on the week, stopping the 26 rally that had occurred over the last two weeks.  While harvest is running well behind the normal pace and weather refuses to cooperate in some areas, this past week the market didn’t seem too fazed.  When we went back over $4 on Sunday night’s trade and couldn’t break through resistance at $4.02, a person could certainly call this as a high for the time being.  In all honesty, harvest isn’t necessarily the time to expect a rally, but this year is anything but conventional, as we all know by now.  For those with likely insurance claims due to yield losses, corn staying as far away from $4 as possible isn’t a bad thing…but at the same time, I can’t imagine anyone complaining about a rally.  To get this corn market to push above and beyond some of the technical resistance levels, we need to feed this bull plenty.  IF the corn crop doesn’t get any smaller, don’t expect any sustained rally for now.  While I think the USDA’s usage numbers are off, we won’t likely find that out for some time…especially if they screw up like they did this past year and not reveal it until the September quarterly stocks report.  Barring some increase in short-term demand we are unaware of, expect choppy sideways trade as we try to get this crop harvested.

DEMAND – Demand wasn’t phenomenal by any means, but was better than a week ago on both exports and usage for ethanol.  Weekly export sales were 386 thousand metric tons for this marketing year, which is about 100k more than a week ago.  For next marketing year, just 100 tons were posted, so overall sales were again 100k more than a week ago.  Regardless, we need to see corn export sales pick up the pace, especially with our Dollar losing steam.  Corn usage for ethanol was up about a million bushels, coming in right at 97.5 million bushels, according to the Department of Energy’s EIA report.  I am hopeful we’ll see these numbers continue to improve, but with some plants going off-line in the recent few months due to lack of profitability, that may not happen.  As far as basis is concerned, there wasn’t much movement overall.  At 8 under the Dec, my area’s basis was unchanged.  In Decatur, basis widened by two cents, moving to a dime over the Dec.  On the river in St. Louis, basis was quoted at two cents over the Dec, which is a nickel better than last week and 14 better than two weeks ago!  It appears when futures slide a bit, some of these basis levels are improving.  I keep hearing producers talk about the lack of lines right here in the thick of harvest…basis tells me originators aren’t getting what they’d like to receive just yet.

CASH CORN – Cash corn had a week without much fanfare as values slid in many areas while staying steady in others due to basis gains.  In all honesty, a person should shop around a bit IF they’re looking to sell across the scale.  I’ve personally experienced a willingness to push for bushels and have heard from many of my clients similar experiences.  I saw an 8-cent push for some of my corn this past week, showing me just how concerned some of these buyers are.  As I’ve said for a awhile, I prefer selling the corn across the scale this fall on bushels that aren’t sold or able to be stored at home.  I like corn ownership, but not a big fan of commercial storage when most processors in my part of the world are bidding overs.  Most all of you have reported very strong basis, so I’d consider selling those bushels and re-owning with a call for a portion of what you’d pay to store.  Don’t forget at most elevators you’ll pay extra for drying and corn will be shrunk another percent for storage versus selling across the scale.  It adds up. Reach out if you would like help on marketing this crop.  We’d be glad to talk with you.

2020 CORN – December 2020 corn didn’t have a bad week by any means, holding its value much better than the nearby.  On Friday, Dec corn settled at $4.10 ¼, down a half-penny.  This was actually a gain on the week of a quarter-penny.  I remain at 10% sold but have a standing offer in to sell corn at $4.17.  I know many of you would like to sell corn at $4.15 to $4.20.  As I keep saying, look at the ratio from fertilizer costs to the price of corn.  The last couple of years we haven’t gotten to sell corn this early at this high of a price…and fertilizer costs are steady if not lower this fall.  I think locking in some of these attractive prices makes sense, even though I’m not bearish.  Use the profitability calculator or the AgMarket.net app to see how your profitability stacks up at these prices.   https://www.agmarket.app/app/

What To Watch For –

 

On 2019 corn, I’m 65% sold @ $4.28 basis Dec9.  New ’19 target will be at $4.04.

1st sale for 2020 CZ hit at $4.07 for 10%. Offer to sell another 10% at $4.17

BEANS – The bean market had a quiet week as well with volume not as stout as we’ve seen the last couple of weeks.  To close the week, November beans settled 2 ½ cents higher at $9.34.  This was 4 ½ cents off the high and 3 ½ off the low.  Nov beans lost just 2 cents on the week which cooled off the rally…but we’ve still gained over a half-dollar over the last three weeks.  While I’m not bearish beans…still a touch friendly to be honest, I’m of the opinion this nice rally shouldn’t be ignored.  With South American weather improving, it’s cooled off the rally we’ve seen, especially as questions remain on expected Chinese demand.  I believe strongly that the US bean crop is getting smaller, but again the true extent of that may not be known until January, given the type of harvest we’re seeing.  We’re way behind normal when it comes to harvest pace…so the USDA may not have near enough data to feel confident getting production dialed in…especially with the weather problems we’ve seen of late.  I’m not interested in making sales on my farm for the time being…but I’m 65% sold.  If you don’t have much sold, I’d sure consider getting some profit locked in.

DEMAND – Soybean export sales were rather large on the week once again, although sales were off from the previous two weeks.  With net sales of 1.6 million mt for old crop, we saw sales drop by about a half-million mt.  While that’s a big drop, those are some nice sales totals.  For new crop, just no sales were recorded so overall levels were over a half-million tons below a week ago.  For basis, some narrowing was the case once again.  Local bids for me are 30 under the Nov, which was a dime improved on the week!  Decatur’s basis for cash beans was 17 cents improved, moving to a nickel under the Nov!  On the river, basis was quoted at option the Nov, which narrowed by nine cents…and 26 over the last three weeks!  Bean basis has been impressive…and reflective of a changing situation as far as production expectations and carry-out levels are concerned.

CASH BEANS – Cash bean bids were higher on the week.  While the board dropped a couple of pennies, basis did all the work, which boosted bean prices once again.  It’s already paid to store those earlier harvested beans!  Heck, the first beans I harvested were to an elevator I had none sold to.  I stored them and their basis was 50 under with a minimum of 18 cents to store them until Jan 1.  Their basis has improved by 20 cents while the rally has added almost 50 cents.  While I’m not bearish, I may sell some.  Any time we can see a gain in value that stout, I argue it shouldn’t be ignored.  Yes, the trend is many times your friend…but a better friend to me is a guaranteed profit.  On beans getting harvested coming up, a person needs to make sure they know where they can make money with current cash values.  I’m more likely to store some beans on the farm with carry out to July still 42 cents, but I’d also be tempted to simply sell some beans with many areas in this part of the world posting $9+ prices.  Let me know once again if you would like some help with a plan…we’d be glad to assist you.

2020 BEANS – We had an up week for November 2020 beans.  On Friday, Nov ‘20 beans settled at $9.72 ¾, up 2 ¼ cents.  Nov20 beans rallied 2 cents this past week…and over 32 cents in the past three weeks.  I am 15% hedged at this point…and will sell another 10% if we get to $9.83.  We got awfully close this past week.  I sure like selling beans this close to $10…and get the feeling we may be fortunate enough to sell some beans above that magic level if this 2019 crop continues to get smaller.  As always, the name of the game is profit…if you can lock some in, I’d consider doing so.

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 Profitability Calculator on 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 –

My targets for cash beans are $9.30 & $9.57 basis the Nov.  I’d have offers in now to take advantage of any rally unfolding.

I am 60% sold/hedged (basis APH) at a board-based average price of $9.46SX for 2019.

For 2020, I got my first 15% sale on at $9.60 SX20

**For the strategies I talk about on here, please remember these are the tools I use for my farm.  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 we can help you in any way.

Matt

217-273-1133 – Work

@chief321 – Twitter

mbennett@AgMarket.Net – E-mail

 

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