Weekly Grain Update – June 15, 2018


The Massive Selloff Continues.  USDA Confirms Large Old Crop Stocks, But Smaller New Crop Stocks On The Horizon.

The USDA released its June crop report on Tuesday and confirmed large old crop stocks, but significantly less new crop stocks.  In the corn market, the USDA increased old crop corn exports by 75 M bu up to 2.3 B bu for old crop.  We have seen a consistent amount corn being exported out of the Gulf each week, and these numbers have remained higher than normal for quite some time.  When the dust settled, old crop corn ending stocks were reduced by 80 M bu down to 2.102 B bu.  On new crop corn, the USDA reduced feed usage by 25 M bu down to 5.35 B bu.  The end result is a corn carryout for next year at 1.577 B bu.  As you can see, the corn carryout is substantially less next year than the current year.  The market is concerned about this sharp reduction in carryout for next year.  However, the crop is off to a wonderful start, the weather is non threatening at the moment, and there is a real probability that the old crop carryover could grow in size if the weather holds.

On beans, the crush margins has been very good as of late, mainly supported by the decent price of bean meal.  The USDA increased bean crush on old crop by 25 M bu up to 2.015 B bu.  When the dust settled, old crop bean ending stocks dropped 25 M bu down to 505 M bu.  In new crop beans, the USDA is using 89 M acres and a yield of 48.5 bpa.  They pegged next year’s bean ending stocks at 385 M bu, significantly tighter than old crop.  Just like corn, the old crop supplies remain plentiful while the new crop supplies are considerably less.

In the wheat market, the USDA made a small adjustment to old crop exports, and cut them by 10 M bu down to 900 M bu.  This pushed old crop ending stocks up to 1.08 B bu.  On new crop, they increased exports by 25 M bu to 950 M bu and this took ending stocks down to 946 M bu.  Both crop years have ending stocks close to 1 B bu and this leaves the market relatively comfortable.  Although true, there are concerns of lower yields around the world due to drought conditions in the EU, Black Sea, and in Canada.  Even though the US’s supplies remain decent, the rest of the world does not have the same luxury.

The market made a high on the Tuesday after Memorial Day and since then, it has been significantly pounded lower like I have never seen before.  All grains, no matter the significant tightness for next year, have all been pushed lower to levels that no one ever thought possible.  Many in the grain trade are shocked by this massive lower movement of grain futures since Memorial Day, and still cannot believe it has happened.  The fundamentals for next year clearly do not justify such a move, and we still have at least a 60 day period where the weather can easily change the final outcome on yields.  Since Memorial Day, Dec ’18 corn has dropped 46 cents, Nov ’18 beans have dropped a whopping $1.25, and July ’18 wheat has dropped 59 cents.  I have never witnessed anything like this in my 25 years in this business.  The funds had a decent size long position across the board and have been blown out of their entire long position, and now are likely short.  This is a massive amount of grain that has been sold in the last 2 weeks, adding more and more selling pressure to the market.

Additionally, the charts look terrible.  We have systematically blown through at least 3 different support levels on the way down, going through them like nothing was there.  What is concerning, is that we have not stopped going down yet!  As I look at each chart, we have not bounced off of any support level yet.  We now have new crop cash corn at Readfield at $3.42, new crop beans at $8.60, and new wheat at $4.40.  New beans into Readfield traded $9.91 just a few days ago!  This is something for the record books.  For all of you who took our advice and sold new crop bushels earlier in the year, congratulations.  You have saved your farm.  For those of you who were bullish and decided to stick your head in the sand over the last 3 weeks while trying to plant your crop, and now don’t have enough new bushels sold, we have some serious work to do.  Grain futures will bounce.  The questions is when, and from what level.

Why did this sell-off happen?  Let’s go over the list:

  • Although late, the entire corn and bean crop was planted in the Corn Belt.
  • Planting conditions were good, and plant populations are great. This will push yields higher.
  • So far, we have had adequate rain in the majority of the Corn Belt.
  • Heat units are accumulating nicely, and the heat is allowing the crops to catch up.
  • Soybeans were planted much earlier than normal, and final yields should be higher than normal if the weather holds.
  • The funds have sold massive amounts of their spec positions from one of significant length to now being short. All of this selling pushed futures lower each day.
  • The market is incredibly nervous about the potential tariffs between the US and China, Canada, and Mexico. The Trump Administration will make a decision today, June 15th, whether to enact its first tariffs with China on $50 B worth of goods.  The funds and specs do not want to trade grain with this outside influence, so they got out over the last 2 weeks.
  • NAFTA – It looks like an agreement will not be made with Mexico and Canada.
  • North Korea – Will this agreement hold? Are they playing us?
  • The lack of China buying US beans over the last 2 months. They have virtually stopped buying our beans.  If the tariffs get enacted today, the Chinese will do everything not to buy our beans.  This is the real reason beans have fallen by $1.25 in the last 2 weeks.  The bean market is in real trouble if the Chinese don’t buy our beans.

For those of you who now find themselves in a very uncomfortable position, the time is to be truthful with yourself, be honest, and allow us to help you work through this.  We want to help and can work with you to put a plan in place to dig yourself out of this hole.  This is not a time to sit back and be complacent.  Your farm and livelihood could easily be at stake.  Our team can easily sit down and help you put a marketing plan together to help salvage your business.

What Are The Charts Telling Us?

Here are the support and resistance levels for cash and new crop grains.  These are all futures levels as traded at Chicago:

Cash Corn – July 18 Corn Futures – Support at $3.50, Resistance at $3.62, Place Targets at $3.60

New Corn – Dec 18 Corn Futures – Support at $3.79, Resistance at $3.87, Place Targets at $3.85

Cash Beans – July 18 Bean Futures – Support at $9.00, Resistance at $9.26, Place Targets at $9.15

New Beans – Nov 18 Bean Futures – Support at $9.23, Resistance at $9.39, Place Targets at $9.35

New Wheat – July 18 Wheat Futures – Support at $4.86, Resistance at $5.03, Place Targets at $4.97

To see where grain futures are currently trading, please click here.

Targets Produce Success and Protection For Your Farm

Before long, weather markets will push the market around like a yoyo and produce unprecedented volatility.  However, volatility can be your friend if you have a solid marketing plan and know how much and at what price you feel comfortable selling when the right opportunities present themselves.  If you are not working with one of our grain originators today, please give us a call.  We will gladly sit down with you to create a plan and help you protect your farm.  For a list of our grain originators and the one closest to you, please click here.  These types of volatile markets are a grain marketer’s dream.  The volatility present selling opportunities that are very short lived.  For the disciplined marketer, who knows exactly what commodity he needs to sell and at what level, this is a perfect scenario.  You simply place target orders in our system and at 3 am in the morning next Thursday while China makes an announcement when we are all sleeping, the markets ramps up, hits your target, locks in your contract price, all automatically while you are in bed.  How fantastic is that!  I encourage all of you to start using our online target system.  Its free, easy, and will protect your farm.  Please click here for more information.

New Arrive Delayed Price Rates have Been Reduced

We have reduced our Delayed Price rates for new arrive corn and beans into Readfield and Center Valley.  These rates are for new arrive bushels only, and the rate will be in effect until Oct 1st 2018 when new crop storage rates will go into effect.  The new Delayed Price rate is now 60 days FREE, and then 3 cents flat per month thereafter.

Condo Space For Sale (aka Long Term Storage Agreement)

The co-op does have 3,000 bu of condo space to sell.  If interested, you can find more information on our web site, or click here.  Please call the number listed and talk to Todd.  He will inform you of all the details and who is selling their Condo Space.  In the future, this site on our web page will be updated with buyers and sellers of Condo space for our co-op.  If you own Condo space and would like to sell, or if you would like to buy Condo space, please let us know and we can post your information for you.  We want to make this a useful site to trade Condo Space.

As always, if I can help you with anything, please call me at the grain office in Readfield at 920-667-4955, ext 2 or send me an email at marcus.cordonnier@chsinc.com.

Marcus Cordonnier

Awards 13 $1,000 Scholarships

CHS Larsen Cooperative is proud to announce that they have awarded $13,000 in scholarships. This is the eighteenth year they have offered a scholarship program for their customers; already helping over 264 students. CHS Larsen Cooperative’s trade territory has expanded and they have felt the need to return support to the communities that help support their cooperative.

$1,000 Scholarship Winners

CHS Larsen Cooperative offered this scholarship to graduating high school seniors and currently enrolled post high school education. The 13 students that received the 2018 scholarship are as follows: Bailey Adams of Stevens Point, parents are Larry and Lisa Adams; Jenna Breitenfeldt of Wausau East, parents are Wayne and Lori Breitenfeldt; Jason Ebert of Clintonville, parents Tim and Crystal Ebert; Madeline Egan of Omro, parents are John and Sheri Egan; Paige Hein of Seymour, parents are Joe and Beth Hein; Kelsey Potratz of Omro, parents Wes and Lorie Potratz; Sarah Rohm of Seymour, parents are Keith and Paula Rohm; Megan Schuh of Freedom, parents are Brent and Carrie Schuh; Zachary Sievert of Pulaski, parents are Rod and Ann Sievert; Brett Van Dyck of Appleton, parent Andy and Laurie Van Dyck; Matt Verhasselt of Freedom, parents are Mike and Marney Verhasselt; Jacob Viergutz of Clintonville, parents are David and Connie Viergutz, and Colin Wussow of Bonduel, parents are Ron and Nicolle Wussow.

Apply for 2019 Scholarships Today

The criteria and 2019 application is on the website CHSLarsenCooperative.com. The deadline for the CHS Larsen Cooperative scholarship is March 15, 2019. Visit the website to apply for next year or call 1-800-924-6677.

CHS Larsen Cooperative is proud to support our local youth. It pays to invest in our local future industry leaders.

Why It’s a Great Idea to Lock in Propane


As we approach the contracting, pre-pay, budget season for propane, it’s a good idea to look at why proactive options are a great way to take the guesswork out of your future LP needs. By contracting/locking in your future propane needs for the upcoming heating or crop drying season, you have the peace of mind of knowing you have the propane you will need for the fall and winter of 2018/2019.

Over the last five years, we have seen extreme volatility in propane prices. Remember when prices were over $5.00 a gallon? Did you know inventories in season with heavy usage periods have caused prices to spike and supplies to be stretched during the extreme cold periods of winter–I think the weather folks use the term “Polar Vortex” instead of Alberta Clipper now? Just last winter, inventories of LP in the upper Midwest were well below the 5 year average mark, which caused some propane suppliers to go to forced allocation/maximum delivery gallons of 200 gallons per stop. Because CHS Larsen Co-op Supports propane contracting, pre-pay, budget, and summer fill programs so heavily, we lock-in propane gallons during the summer with our suppliers so you, our customers, don’t need to worry come fall and winter.

Most of our competitors will buy propane gallons in season on the open market, which could be a problem if non-contracted gallons are scarce and expensive. At CHS Larsen Co-op, we lock-in these needed gallons by purchasing futures propane contracts for in-season heating and crop drying needs. As one of our customers, when you lock-in propane gallons you have the advantage of knowing you will have the propane you need, when you need it, at the agreed upon price–no hassle, no worries, no guesswork of wondering how high propane prices will go when the cold arrives.

Last year we saw propane prices surge past $2.00 a gallon during the extended cold weather periods in January and early February.  CHS Larsen Co-op customers that locked in propane at a substantially lower price during the summer contracting period of 2017 did not have to be concerned about surging LP prices or supply/inventory issues. Looking forward at the 2018/2019 heating and crop drying season, we once again face lower propane inventories at this point in time due to heavy and growing exporting of US product to expanding world markets. This demand is not just heating needs but mainly for manufacturing needs as propane is a major component of many finished products. This scenario, just like last year, leads us to believe we will see cost of propane jump up during the cold months/heating season. The best way to combat this future price increase is to contract your needed gallons this summer and to take advantage of the CHS Larsen summer fill program so you do not have to worry about your heating needs for this winter.

CHS Larsen Co-op is just a phone call away. We are here to take the uncertainty and guesswork away in helping you lock-in your propane needs.

By Todd Plath, Certified Energy Specialist

Start the New Season with a New Grease

As you prepare for working in the fields, don’t forget about grease. Your equipment depends on grease for protection from intense friction that ultimately leads to the breakdown and improper operation of your machinery. That’s why choosing the right grease is one of the most important preparations for the busy, high-pressure planting season.

New formulations, better performance 
When you buy Cenex® grease this spring, you may notice it looks different than it did last year. Don’t worry, this change in appearance is intentional to make a better-quality grease. Plus, when creating its new grease formulations, Cenex asked for feedback from farmers and used this to direct changes.  

Cenex greases, including BLUE GARD+™ and ML 365®, have been reformulated to meet higher quality standards. You may notice the greases have a lighter color. This change is due in part to replacing sulfur in the original formula with calcium carbonate to improve performance under high-moisture conditions. 

These new grease formulations stay in place longer, creating a reliable layer around critical equipment parts. This in turn protects your equipment from rust and corrosion and is better suited for temperature fluctuations throughout the changing of the seasons. 

Remember these grease best practices   
New formulations will only help if you’re using the greases properly. Now is a great time to revisit best practices for choosing a grease.

1. Analyze your needs. Not all greases are created equal. Allow time to reflect on what you need your grease to do and what conditions it will encounter, including temperature and moisture level. Be sure to talk through your needs with your local Cenex dealer for expert advice. 

2. Check compatibility. Many types of grease will not work effectively on top of each other, so if you’re changing greases, don’t just combine it with existing greases. To ensure compatibility and consistency down the line, take a photo of your current grease’s packaging and use this when talking with your Cenex dealer about greases. 

3. Read the directions. Be sure to read the directions for your grease gun carefully. Some models come with anti-debris filters that can restrict flow if the wrong cartridge is used. 

As the seasons change, so should your operational practices. By taking time now to ensure best practices are in place, you’ll save yourself time and money down the road. To help determine which grease suits your equipment needs, contact one of our Energy Specialists to help you decided what works best for you. 

 Originally posted on Cenexperts Blog 

Encourage your cooperative to apply for Seeds for Stewardship matching grants

Seeds for Stewardship matching grant
Spring and warmer weather are upon us. It’s a great time to plant the seed of community support and grow pride in your community by encouraging your local cooperative to apply for a Seeds for Stewardship matching grant. Since Seeds for Stewardship began in early 2017, CHS has partnered with more than 70 local cooperatives on more than 100 projects in rural communities. Your cooperative could be next!


Maximize Your Yield With Foliar Nutrition

CHS Larsen Co-op joins the fight against rural hunger

Shana Shepard, Energy Customer Service Rep, delivered to the New London Community Cupboard, Kim Ebert.

CHS Larsen Cooperative joined CHS locations across the country in fighting rural hunger with the cooperative’s annual CHS Harvest for Hunger food, funds and grain drive. The annual campaign gathered more than $540,000 and 215,000 pounds of food to fight hunger in rural America.


Weekly Grain Update – May 30, 2018


After A Nice Rally, Bearish Factors Line Up

The grain markets witnessed a tremendous run up in price last week after the productive meeting with the Chinese chief negotiator last week.  Now, the market wants to see some results of this meeting before taking the market any higher.  Trade volume was light towards the end of last week, and this allowed the bulls to easily push the market to new highs without much resistance.  As the market opened Monday night after the long Memorial Day weekend, the bullish mentality began to change.  Tuesday was a bearish day on many levels.  The market opened up strong Monday night and made new highs, only to trade lower and close lower, and some markets closed below the previous day’s lows.  This is the definition of a key reversal, and many grain markets witnessed this on Tuesday.  Technically, this is a bearish signal that might send grain futures lower for a significant amount of time.


Weekly Grain Update – May 23, 2018

Trade War Avoided.  Bean Planting Much Ahead of Average. Corn Planting Almost Complete.

The big news this week is that a trade war between the US and China has been avoided.  The Chinese head negotiator spent all last week at the White House trying to hammer out a deal between the two countries.  Many of the details are not yet worked out or known at this point.  However, progress has been made, and an outright trade war will not occur.  It appears each side is working through the negotiating process, both giving in and taking, in order to reach a compromise.  The issue with the US is the huge trade imbalance with China.  President Trump is very committed to getting the US back to a more even trade balance with China.  A big trade imbalance is when the US buys more products from China than China buys from the US.  The current trade imbalance is roughly $600 B annually, and this process will try and get this reduced over time.  Obviously, the US needs China to buy grain from us as well as many other manufactured goods.  Frankly, China needs our soybeans in order to satisfy all of their needs.  China is still buying all of their beans from Brazil, and have practically stopped buying any beans from the US in the last 6 weeks.  Each week, we patiently wait for news that China has purchased more beans from us, but this has not happened recently.  This news that a potential trade war has been avoided is a huge deal to the bean market as it signals that China will once again start buying our beans.  Now, we must sit back and patiently wait to see the Chinese finally buy our beans once again.

The market is in full anticipation mode since Monday.  News started to surface on Friday that a trade war with China has been avoided.  As expected, the funds purchased grain futures on this news and pushed all grains higher over the last few sessions.  If China starts to buy US beans again, this is supportive to the grains and the bean market.  So far, the market has ramped up in anticipation of more Chinese purchases, but we have not yet seen any real activity.  I get the sense that we have now pushed grain futures as high as we can go until we see the actual Chinese buying occur.  At the end of the day, this buying is what must occur, not rumors that it will occur.  Time will tell.  Stay tuned.


Monthly Energy Market Update – May 23, 2018

Well, spring is finally here, and so are four year high fuel prices. Gasoline is reaching almost $3, just in time to kick off the official driving season.

Why the high prices you ask?  It’s simple, all energy products are valued off of supply and demand.  The more supply you have the lower the value, while higher demand and low supply give you higher values.

Geopolitical unrest in the Middle East are causing production interruptions, as well as complete shutdowns of oil fields. Most recently, Venezuela, who is our 4th biggest importer has really caused some problems. They are having major financial woes, the country is practically bankrupt.  In addition to their financial crisis over the past year, they recently had their presidential election.  This election was deemed to be a shameful scam.  The current president Nicolas Maduiro won again, with 66+% of the votes.  Basically, it sounds like ole Nick had a bunch of his oppositions supporters thrown in jail for odd reasons; non-of which seems legit!  I guess he has enough of them locked up, that it actually tipped the scales into Maduiro’s favor and with regards to the vote count.  I just don’t get it…I mean…woohoo- I cheated to become the leader of a crummy, financially ruined country that owes other countries so much money that we are running the risk of being sold, to another country. Apparently, to celebrate his recent victory—he plans on liquidating the few “riches” the country has left by selling them.  Personally, I like to celebrate things with cake, specifically Cheesecake!

OPEC has seen great success with production cuts.  They may be a little too successful, taking crude oil from the huge glut we saw two years ago, to what I believe now, is almost a shortage.   It has gotten to the point now, where pure greed has taken over, this is definitely not a good thing.

Asia has exactly the opposite problem that Venezuela has.  They are booming economically, and are creating huge problems for us on the propane side of things.  They are willing to pay $0.20 over the actual value of propane.  This has caused record high exports, and now we are again seeing a shortages here in the U.S.  So, when we should be seeing a decrease in propane prices, we are seeing this odd springtime boom….not normal.

Looking back over the past year, crude oil is 30% higher than last year at this time. With crude oil being the leader, all of our commodities are following that path, with diesel fuel seeing a 27% hike, gasoline is low man only realizing a 20% increase and propane is a steady 26% higher.

So to sum things up, the energy market seems to be a bit out of control right now, with certain commodities acting like they don’t even know what time of year it is (propane).  Unfortunately, my crystal ball is in the shop getting overhauled, so I cannot predict when these bullish markets will back off, but what I can tell you is this -> The consumer sector can only handle so much.  If the prices get too out of control and maintain for too long, people will start to cut back.  We will cut back on driving, find more economical ways of farming, and we will even cut back in the grocery store.  This all has a significant effect on the energy markets.  When that times comes, I think we will see a swift collapse.  But how soon will this happen?  I guess we will have to wait for my crystal ball to get back from the repair shop to find out…

By Kim Leisner, Energy Sales Manager

© 2018 CHS Inc.