Weekly Grain Update – December 18, 2017

 

12/18/17

USDA Report

The USDA released its December crop report last Tuesday, and it adjusted several items on the supply and demand tables.  On corn, the bright spot was a 50 M bu increase in corn used in ethanol production.  Last weeks ethanol production was the second largest on record as the relative lower cost of corn is stimulating additional usage.  Although true, the ethanol industry is struggling with slimmer margins than in the past.  Current ethanol margins were 6 cents per gallon last week, and the average conversion rate now is one bushel of corn will produce 2.82 gallons of ethanol.  The USDA left exports unchanged at 1.925 B bu.  Even though corn exports have really been struggling as of late, there are signs that this situation could be changing.  Last week, the US did sell one cargo unit of corn to China, and Morocco and Mexico have also been recent buyers.  As corn makes new lows, our corn becomes more and more competitive on the world stage.  When the dust settled, corn ending stocks were reduced by 50 M bu down to 2.437 B bu.  Even though we are moving in the right direction, this is still a huge amount of corn that will continue to weigh on the market.

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CHS elects directors at 2017 CHS Annual Meeting

CHS owners elected three new board members and re-elected five others to the CHS Board at the 2017 CHS Annual Meeting Dec. 7-8. The three new board members were (l. to r.): front – Scott Cordes, Wanamingo, Minn., Tracy Jones, Kirkland, Ill., and Russ Kehl, Quincy, Wash.; back – Perry Meyer, New Ulm, Minn., Edward Malesich, Dillon, Mont., Jon Erickson, Minot, N.D., Dan Schurr, LeClaire, Iowa, and C.J. Blew, Castleton, Kan.

With a pledge and priority to strengthen relationships in 2018, CHS kicked off its annual cooperative meeting in Minneapolis, Minn., on Dec. 7. The two-day annual meeting was filled with networking, educational sessions, board and management reports, and director elections.

“Strengthen and grow: These words represent so much more than an annual meeting theme. This is a priority that we have. It captures how we will operate our company moving forward,” said CHS Board Chairman Dan Schurr, an Iowa farmer, during the general session.

With approximately 2,200 owners in attendance, Jay Debertin, CHS president and CEO, promised that strengthen and grow, which has been a focus of CHS for 85 years, will continue to be the cooperative’s focus for a long time to come – just as it has been the driving force behind local cooperatives.

The business meeting featured regional caucuses; board, financial and management reports; and company governance with an open question-and-answer session.

In conjunction with the 2017 CHS Annual Meeting, 110 young producers, nominated by cooperative partners in 11 states, attended the CHS New Leaders Forum. Both crop and livestock operations were represented with nearly half (44 percent) managing more than 2,000 acres. Two participants already serve on local cooperative boards and 85 percent of the others expressed interest in serving on a local board in the future.

CHS New Leader Forum participants had the opportunity to network with other future ag leaders, learn about and practice strategies for effective leadership and communication, and learn more about CHS and related businesses.

Find pictures from the 2017 CHS Annual Meeting on the CHS Flickr page, watch video featuring local cooperatives, and read the 2017 CHS Annual Report.

2017 officer slate elected

CHS owners elected farmers from Illinois, Minnesota and Washington, and re-elected five other farmers to serve terms as directors of the CHS Board. CHS directors must be full-time farmers or ranchers to be eligible for election to the 17-member board.

Newly elected Director Scott Cordes of Wanamingo, Minn., succeeds Curt Eischens of Minneota, Minn., who had served on the board since 1990. With his brother and nephew, Cordes operates a 1,000-acre corn and soybean farm. He received his bachelor’s degree in agricultural economics from the University of Minnesota and previously served as the president of CHS Hedging.

Newly elected Director Tracy Jones of Kirkland, Ill., succeeds Greg Kruger of Eleva, Wis., who had served on the board since 2008. Jones, who operates a corn, soybean and wheat farm, and also finishes 1,400 head of feedlot cattle annually, has been chairman of the CHS Elburn Producer Board since 2011.

Newly elected Director Russ Kehl of Quincy, Wash., fills the final year of a three-year term previously held by David Bielenberg, who resigned in June 2017. Kehl raises potatoes, dry beans and other crops on a 12,000-acre farm. A director for CHS Connell Grain (now CHS SunBasin Growers) since 2004, Kehl also operates a dry bean processing facility and cow-calf operation.

Re-elected were C.J. Blew, Castleton, Kan.; Jon Erickson, Minot, N.D.; Edward Malesich, Dillon, Mont.; Perry Meyer, New Ulm, Minn., and Dan Schurr, LeClaire, Iowa.

Following the annual meeting, the CHS Board re-elected Schurr to a one-year term as chairman. Other directors selected as officers for 2018 were:

  • J. Blew, first vice chairman
  • David Johnsrud, Starbuck, Minn., secretary-treasurer
  • Jon Erickson, second vice chairman
  • Steve Riegel, Ford, Kan., assistant secretary-treasurer

Stay Warm This Winter: Propane Tank Maintenance

Some people love it, others may not, but the truth of the matter is that winter is on its way!  Stay warm this winter by keeping these tips in mind as it relates to your propane tank.

  • Keep a path from your driveway to your propane tank clear and free of snow. Failure to do so will impact our delivery team’s ability to fill your propane tank. We want to ensure you have heat all winter, but we need your help to ensure we can access it. We recommend clearing a path after each snowfall and whenever drifting occurs, to keep the path accessible for propane delivery trucks.
  • Keep your tank free from deep snow coverage. Propane tanks that are covered in deep snow are at greater risk for leaks, as the fittings, joints, and even the whole tank (with deep snowfall) can shift due to the weight of the snow.  Snow-covered tanks can also prevent any leaking gas from escaping, causing a dangerous gas build-up.  The snow also impacts how well your tank operates, as heavy cover can cause improper vaporization.  Stay safe and keep your propane system fully functioning by periodically brushing the tank off this winter.
  • Ensure safe practices when clearing snow. Keep safety top of mind around your propane tank this winter—be sure to exercise care when using heavy equipment to move snow, and use a broom (rather than a shovel) to clear snow from the tank to avoid puncturing the tank.
  • As always, if you smell gas, leave the area immediately! Avoid flames and sparks—don’t turn on light switches, and wait to use your cell phone until you are away from the area.  If it is safe to do so, turn off the main gas supply valve on the tank; then, report the leak, using a phone from a safe distance away from the leak.

If you have any questions regarding your propane service or are looking to lock in winter heating gallons, please give our office a call at 1-866-455-7200

The Importance of Drift Reduction Agents

Cenex® Winterized Premium Diesel Fuels

 

It is time to start thinking about winter diesel fuel. Cenex® Winterized Premium Diesel product line offers broad coverage to meet the unique needs of your equipment – from moderate temperatures to extreme winter cold and everything in between.

Our full line up of Cenex Winterized Premium Diesel Fuels includes:

Cenex Wintermaster® Winterized Premium Diesel is formulated with an operability of –30° F and a typical cold filter plugging point (CFPP) of –55° F. Cenex Wintermaster is specifically formulated for the demands of diesel powered equipment in the most extreme winter conditions.

Cenex Roadmaster XL® and Ruby Fieldmaster® Seasonally Enhanced Premium Diesel Fuels are formulated for moderate climates and provide outstanding shoulder season flexibility. Cenex Seasonally Enhanced Premium Diesel Fuels deliver a typical cold filter plugging point (CFPP) of -25° F.

#1 Diesel Fuel with Cenex Premium Diesel Fuel Additive is used to blend down your Cenex Premium Diesel Fuel tanks during transition from summer to fall/winter, helping ensure additives remain at proper levels. Ideal for blending down bulk tanks, retail fueling site tanks and customer storage tanks.

Contact your CHS Larsen Co-op energy team for more information.

Content courtesy of Cenex Refined Fuels & Lubricants

BASF declares Force Majeure for Vitamin A and E and several Carotenoids

 

“The vitamin marketplace has become a volatile place. Supplies of Vitamin E and A have become short causing a sharp spike in pricing. This article outlines the event that has led to the shortage in the market. Outlook for the next several months until the pipeline is filled again is high and increased pricing for vitamin items. For questions regarding your ration and some techniques we are using to ensure economic feeding strategies please feel free to contact the mill or your sales representative.”

Dustin Millard, Feed Department Manager 

BASF declares Force Majeure for Vitamin A and E and several Carotenoids
  • Plant shutdown after fire in Citral plant
  • Restart of downstream plants after scheduled maintenance not possible

Ludwigshafen, Germany, November 10, 2017 – On October 31, a fire occurred during the startup of the Citral plant in Ludwigshafen. Consequently, BASF had to shut down the plant and had to declare Force Majeure for its Citral and Isoprenol based aroma ingredients.

BASF’s Vitamin A and E plants are currently also shut down for scheduled, routine maintenance. The company will only be able to restart these plants once supply of Citral is re-established and the corresponding intermediates for Vitamin A and E become available.

As the cleaning process, follow-up inspection, repair and restart of the Citral plant will take several weeks, BASF is forced to extend the Force Majeure to Vitamin A and E and, in consequence, to several Carotenoid products.

The impact of the Force Majeure situation as well as the effects for customers resulting therefrom are being evaluated at the moment. Meanwhile, BASF is implementing measures to limit the consequences of the situation.

BASF will continuously inform its customers about the development and the details regarding the supply capability of the affected products.

Original Source: BASF News Release

Weekly Grain Update – December 12, 2017

 

12/12/17

The USDA will be out with its December monthly crop report on Tuesday at 11 am.  As the old saying goes, “big crops generally get bigger,” there is a decent chance that both corn and bean carryouts could grow slightly after the numbers are released.  Why?  Because our exports are lagging the original projections from the USDA of 1.925 B bu of corn exports and 2.25 B bu of bean exports.  When the grain does not leave the country, its starts to stack up in the interior.  The Chinese have been aggressive buyers of US beans, and we have made recent corn trades with Mexico and possibly the Chinese as well.  However, the current low price of corn and beans are starting to stimulate demand, and we are getting to the time of year where Brazil can no longer be the lowest cost world supplier of corn.  The second best option is the US and I expect the corn export pace to ramp up considerably next month.

One item that might offset the lagging exports is the huge quantity of corn being used for ethanol this year.  For several years, the amount of corn used for ethanol production was at the 5.0 B bu level and it stayed relatively constant.  However, as the world becomes more comfortable using the 15% ethanol blend in their gasoline for their cars, or burning E85 which is 85% corn ethanol, the amount of corn consumed by the ethanol industry has grown in recent years.  In 2016 we used 5.224 B bu of corn for ethanol, in 2017 we used 5.439, and this year I believe it will be over 5.5 B bu when the dust settles.  This increase in ethanol production will offset the lagging exports to a degree and might leave corn ending stocks unchanged.  We will all find out at 11 am today what the government’s opinion is on these categories.

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New Application Requirements

There have been changes in the applicator requirements if you are applying any of the new formulations of dicamba to RR2 Xtend soybeans.  These products currently include Xtendimax, FeXapan, and Engenia.  You must hold a restrictive use applicator license to purchase and apply these products.  In addition all applicators must attend an annual group 4 herbicide specific training prior to using these products.  We will be keep you informed of training opportunities, so please contact us if you require additional information.

By Mike Weiss, CHS Technical Agronomist 

Weekly Grain Update – December 5, 2017

Soybean Influences

The market is becoming very concerned about the weather in Argentina.  Brazil was plagued with wet weather several weeks ago, but that situation has improved.  Argentina is dry, and the market is adding risk premium due to this situation.  The world is counting on a large bean harvest from Argentina.  If this dry weather continues, the world bean carryout could be cut quite significantly.  However, it is early in their growing season, and there is time for the situation to improve.  Friday was the first day of the month and the funds decided to buy bean futures and add to their existing long bean position.  On Monday, they continued to buy bean futures and pushed beans higher through the day.  It is normal for beans to rally during the Thanksgiving holiday, so the strength in beans was not unexpected.

It is interesting to see that even though beans and wheat rallied significantly on Monday, corn could do very little amongst the strength in the other grains.  Corn is still being weighed down by the huge carryover of roughly 2.5 B Bu.  In addition, corn is struggling to rally as there are a huge amount of farmer sell orders just above the market.  Any attempt for corn to rally and these orders squash any rally attempt.  The farmer generally sold his beans for cash flow at harvest, but is storing his corn in any where possible.  Our US corn exports are also struggling to keep pace, and it is very likely that the USDA will need to lower corn exports by approximately 100 M bu on the next Monthly Crop Report on December 12.  If this happens, we could see corn carryout be raised by this same amount to nearly 2.6 B Bu, a truly huge amount of excess corn.

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Weekly Grain Update – November 29, 2017

In A Carry Market

As most of you are now done, or almost done with harvest, I would like to take a minute and start looking at new crop levels for next harvest of 2018.  It is no secret that we are in a carry market with huge amounts of corn and bean carryouts each year.  There is a large quantity of farmer selling orders above the market, and any market rally attempt is quickly stalled by selling orders from the country.  I don’t see this changing anytime soon, especially in the corn market.  The farmer is undersold on corn in a large way, and the market knows this.  This situation creates huge board carries.  This means the market heavily discounts the front end, but rewards the producer for locking in deferred values now.  My guess is that cash corn will stay close to the $3.00 level over time, but the carry will slowly grind out of the market over time.  What do I mean by this?  Let’s go back two months ago.  The cash price for corn delivered into Readfield for July 2018 delivery was roughly a 50 cent premium over the cash price.  Today, this premium has been reduced to only 27 cents.  If we wait another month, it will likely drop to 20 cents, and until we eventually get to almost even money.  The point is that the market is willing to pay you a premium if you are willing to step up and write a contract to lock these premiums in.  However, you only get these premiums if you contract the grain.  If you do nothing, once we get to July, the cash price of corn will be the same as it is today, roughly $3.00, and that entire 50 cent premium has just vanished over time.  This is a text book definition of big carry markets and how the carry gets “ground out” as we move through the crop year.  Big premiums are available for those who take the time, create a plan, and are willing to forward contract their grain.  One cannot receive this big premium by waiting until July 1, and selling cash at that point, but forward contracting those levels NOW for delivery THEN.

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