Posts By: Anne Moore

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.

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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.

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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

Choosing the Perfect Fuel Company—For You

Choosing a new fuel supplier after you have had a long standing relationship with your current supplier can be extremely stressful.  Stressful, but sometimes a necessary part of your business process.  Has your business model grown or changed in some way?  Is your supplier still fulfilling all of your current needs?  What are your top priorities when choosing a new fuel supplier?  I know we all immediately turn to the price of the product- but what if Supplier A was lower in price than Supplier B; but with Supplier A you were constantly running out of product or you were never able to contact the company representative when you had questions or needed assistance?  Supplier B is always available, they had a system in place that allowed them to know the amount of fuel in your tank(s) at all times?  Would you pay a little extra for excellent service and a premium product?

Business Owners’ Fuel Concerns

Having many conversations with local business owners I have encountered many of the same questions & concerns.  Below, I have listed five major concerns that seem to weigh heavy on business owners minds.

  1. I can’t afford to run out of fuel, how will I be sure that my tanks will be full?
  2. What happens if I have a fuel related breakdown?
  3. Who do I call if I have a problem after normal business hours?
  4. How will I know if I am making the right decision to lock in pricing or buy off the open market?
  5. Can I buy all of my energy products from the same supplier, rather than dealing with different companies for each product (ex: oil/grease or propane or fuel).
Providing Solutions for Your Concerns

At CHS Larsen Cooperative, we are invested in our customers’ best interests; so, we have addressed these major concerns.

  1. We have a monitored tank system for both propane and fuel tanks, which ensures you will always have fuel when you need it. This keeps you operating efficiently and making money!
  2. Fuel related issues? Not a problem, CHS Larsen Co-op with Cenex offers the Total Protection Plan (TPP) which is one of the best equipment warranties on the market. How do you qualify?  Just use our fuel and oil products!
  3. Your Energy Specialist are always available to assist with questions, concerns or operational issues, as well as an emergency phone number where our customer service representatives are available at all times; Day or Night / Weekend or Holidays. We are here for you.
  4. Our Energy Specialists are always aware of the ever changing market conditions and share this information with our customers daily. They are able to give you all of the information you need to make the best buying decision for your business.
  5. CHS Larsen Cooperative offers a complete line of Cenex fuel, Cenex oil & grease as well as propane. Imagine, one invoice for all of your fuel needs!  Your bookkeeper will thank you.
We are Here for You

We have a fully staffed service department that is available for repairs as minor as a diesel pump change out; to larger jobs like hooking up your new grain dryer system with propane.

As you can see, we care about our customers and their success.  After all, your success is our success.  As your business grows, we want to grow with you.  Wouldn’t you rather buy your energy products from a partner that is invested in your future, rather than buying from just another fuel company?

by Kim Leisner, Energy Sales Manager

5 Considerations for Effectively Applying Herbicides

Propane Safety on the Job

Whether you’re deciding where to place the tank or how to protect it during a storm, proper propane use is critical to fueling busy projects.

Propane can be found on job sites year-round, keeping workers warm and powering tools and equipment. And just as with any fuel or material for construction, following code and manufacturers’ instructions is key to ensuring workers stay safe and are productive. Your propane supplier can help you pick the right type of tank for each application and correctly size, place, and use it. But construction sites are busy places and change is always happening. That means you need to know the rules, too.

Below are six tips to help you and your site crew keep proper propane use top of mind.

Weekly Grain Update – May 17, 2018

5/17/18

Corn & Bean Planting Progress Increases Rapidly.  China Negotiations Continue.

The USDA came out with it’s monthly crop report last Thursday and gave the industry its first look of the ‘18/19 grain supply and demand picture.  As we will see, there is very little room for error in the corn market and it offered a tighter bean picture than most traders thought.  Let’s look at the details.

In the corn market, the USDA did not make any changes to this year’s supply and demand table, and left this year’s corn carryout at 2.18 B bu.  The market was a little surprised that the export number was not raised, and the corn used for ethanol was not raised, to reduce the carryout this year.  We continue to have the cheapest corn in the world, and exports remain high.  However, these numbers indicate that we still have a huge amount of old corn in the country, and we will not run out anytime soon.

Next year’s corn crop is a different story.  The USDA pegged the ‘18/19 corn carryout at only 1.68 B bu, which is a huge drop from one year to the next.  They used 88.0 M acres with an average yield of 174 bpa.  Even though the big reduction in carryout stocks from this year to next, the market was expecting a lower carryout number from the USDA for next year.  We expect exports and ethanol to continue to be strong users of corn next year, but the real key is to get all of the corn acres planted in the next 2 weeks.  Most of the Corn Belt has their corn crop mostly planted and is in good shape.  However, we continue to have problems in northern IA, southern MN, SD, and WI.  These acres continue to struggle with wet conditions and are having a difficult time getting their corn planted.  However, this week’s weather will be a huge factor in how much corn will get planted.  Locally, they have pushed the rain off until Monday, which is huge.  As I speak, almost everyone locally is planting corn on their drier fields.  If the rain holds off until Monday, a massive amount of corn will be planted locally by Monday.  With the very warm soils, this corn should germinate very quickly and explode out of the ground with very good populations which should create better yields.

So, there is very little wiggle room for the corn market next year.  Ultimately, mother nature will decide how much corn will get planted in the areas listed above.  We all know the farmer can plant more corn acres in one day than any time in recent history, so even if the conditions are not perfect, many will figure out a way to get the corn crop planted.  What the market does not want to see happen is a bunch of corn acres in the north not get planted to corn but to beans instead.  This will cause an already tight corn scenario for next year to get even tighter, and a soft bean scenario to get even softer.  All of this will be determined in the next 2 weeks.

That being said, you can sense that the market is getting more comfortable with the corn market each day that it does not rain.  The USDA pegged the corn planting progress Monday night at 62% planted with the 5 year average at 63%.  After a slow start, we are now caught up.  Additionally, we are over 50% and on the downhill slide.  As I said before, once we pass the 50% mark on corn planting, the market starts to get more and more comfortable and starts to take the risk premium out of the corn market for planting problems.  You can see this happening this week in the corn market.  The forecast is now clear for the majority of the Corn Belt until this weekend, and the market is getting less and less worried each day that we will have a problem.  The risk premium is being taken out of the market, and down we come.  With Dec ’18 corn futures now at $4.20, I cannot see a scenario developing that would justify Dec corn over $4.50.  The corn crop will pollinate around July 15th on average, so a hot period during this time will cause a rally.  If we start to have dry conditions in the Midwest during July, this will support futures as well.  However, I don’t see a scenario where we can justify Dec corn over $4.50.  Frankly, a simple and easy way for you to protect your farm and take advantage of a summer rally is to sell 15% of your corn crop at every nickel increment of Dec ’18 futures, starting at $4.20 all the way to $4.50.  This is simple, easy, and will protect your farm and allow you to lock in premiums as the market rallies on any weather issue this summer.

The bean market is a little different.  The USDA increased crush on old crop by 20 M bu and this was the only change to the old crop bean supply and demand table.  This year’s bean carryout dropped by this 20 M bu down to 530 M bu.  This is still a huge amount of old crop beans.  The USDA did not change their old crop bean export number and left it at 2.065 B bu.  The big risk for the bean complex is what the future holds for our trading relationship with China.  Will the 25% tariffs be enacted?  Will the US and China be able to get a new deal hammered out?  Will the Chinese buy any more old beans?  Will the boats already on their way to China with beans be able to be unloaded in China or will they be diverted away to other countries?  Will China buy a huge amount of October beans from the US like they normally have been?  If not, will this create a huge inability for the US to ship beans out of the Gulf while we are harvesting beans this fall?  And the questions go on and on and on….  So many questions, and very few answers.  The fact is that China’s delegation is in Washington this week through Saturday to pound out a new deal with the US.  However, very little news is coming out of the meetings.  Each day that no deal is announced, the market is getting very nervous that no deal will be made.  If no deal is made, the bean market has a huge problem on its hands.  The above export projection won’t mean anything.  Next year’s export numbers won’t be right.  The fact of the matter is that if we cannot ship beans to China this fall, our bean market is terribly overpriced.

The USDA pegged the ‘18/19 carryout at only 415 M bu and the market dismissed this projection almost immediately.  The USDA is using only 89 M acres with a yield of only 48.5 bpa.  The USDA pegged the bean planting progress at 35% on Monday night, and the 5 year average is only 26%.  This means that the US farmer is planting beans much earlier than normal this year at a much faster rate than in the past.  All of this should correspond to bigger yields this fall, and pushes forward the pod filling stage from August to LH July.  Thus, we very likely could have corn pollination and bean pod filling at the same time this year during LH July.  Make no mistake, the weather during LH July this year will be critical as both corn and beans will be affected.  So all of this proactivity in bean planting will cause more bean acres to get planted, especially if there are some northern acres that cannot plant corn and plant beans instead.  This means that instead of 89 M acres of beans, the total could be closer to 91 M acres.  The market also disagrees with the yield of 48.5 bpa.  Most traders feel that this should be closer to 50 bpa with the early bean planting.

So, if you plant the bean crop earlier, you gain more bean acres from the north that cannot plant corn, you gain yield due to the early bean planting, and now you have the potential for exports on both old and new crop to crash if we cannot get a deal pounded out with China, what do you think will happen to the carryout numbers that the USDA put out?  Will they stay at 530 M bu and 415 M bu?  I think not.  The path of least resistance is for these numbers to grow, and possibly quite significantly.  And if this happens, this puts a huge amount of lower pressure on bean futures.  We have already started to see this happen.  Nov ’18 bean futures made a high of $10.60 earlier in the year and are now trading at $10.15 or 45 cent lower.  The path of least resistance is lower in the bean market and possibly significantly lower.

A possible silver lining is an increase in crush which can help offset these increases in production or losses from exports.  The current bean crush margin is just huge at over $2.00 per bushel.  If these crush margins are not an absolute record, they are very close, and they have been stout for many weeks led by the strength in bean meal.  When the processor or makes big money, this will cause the basis to firm on old beans, especially since the farmer is planting and not delivering beans to him.  The beans used in crush will continue to grow.  However, the biggest factor in determining the price of beans is if we get a deal pounded out with China.  Frankly, the bean complex will patiently sit and wait until we know what will happen.  But make no mistake, the decision will impact bean prices either one way or the other.  Talk about gambling.  This is a high stakes poker tournament with the banker sitting right beside you watching your every move.  Sometimes taking your money off the table and selling beans now is the best option for your farm, so you can sleep at night, and a lot less risky.

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.

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 $3.94, Resistance at $4.08, Place Targets at $4.05

New Corn – Dec 18 Corn Futures – Support at $4.12, Resistance at $4.23, Place Targets at $4.20

Cash Beans – July 18 Bean Futures – Support at $9.94, Resistance at $10.27, Place Targets at $10.17

New Beans – Nov 18 Bean Futures – Support at $9.97, Resistance at $10.25, Place Targets at $10.16

New Wheat – July 18 Wheat Futures – Support at $4.86, Resistance at $5.10, Place Targets at $5.05

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

Have You Sold Enough New Beans Yet?  Make Values Even Better With Cash Plus Contracts

I can build a solid case why beans will move lower in the coming weeks as more acres get planted and less corn.  In addition, the bean planting window is not nearly as tight as the optimum corn planting window.  If you still have new beans to sell, please check out our Cash Plus Contracts.  We can add a premium to your new crop bean sales price in exchange for an offer to sell more new beans if November Bean futures close above a certain level on Oct 24th.  These contracts will allow you to sell new beans today with a 22 cent premium added to the new crop cash price in exchange for an offer to sell the same quantity of new crop bean futures around $10.50 if on Oct 24th, the November bean futures close at or above this level.  If futures close below this level, you get to keep this entire premium, and you don’t have any other obligation.  So it is a win-win for you.  You get to keep the 22 cent premium paid to you on top of the current new crop bean price, and if on Oct 24th, depending on what November bean futures trade at the close on this date, you might be able to keep this entire premium free and clear.  The worst case is that you would have the same bushel commitment in another new crop sale where November futures were locked in at the $10.50 level.  Taking off the basis of 69 cents under the November futures for delivery into Readfield, which is our current posted new crop bean basis, you would have a new crop bean contract at 10.50 – 69 = $9.81  The worst case is that you would have another set of new beans sold at $9.81 for Oct / Nov ’18 delivery into Readfield or Center Valley.  This is a great price considering our posted new crop price is at $9.44 or so today.  Please check this out.  We have been writing many of these contracts as of late, and they work really well.

Condo Corner

The co-op did trade 5,000 bu of Condo space this week.  I won’t disclose the patrons or the prices, but we were able to put two buyers and a seller together and completed the transaction.  This was done by information placed on our web site.  Do you own Condo space and wish to sell it?  Are you interested in buying Condo space?  If so, this is the right place.  Condo Storage is also known as our Long Term Storage Agreement.  We have listed this on our web site.  If you are interested, please 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

Weekly Grain Update – May 9, 2018

5/9/18

USDA Report On Thursday.  US Corn Planting Makes Good Progress.

The USDA will be out with its monthly crop report on Thursday morning at 11 am.  This report will include the first estimate for the 18/19 crop that is being planted now.  The market expects next year’s corn ending stocks to shrink from the current 2.18 B Bu down to 1.75 B Bu or so for next year.  This is the reason why the corn market is being so sensitive to the late corn planting this year.  As I have said many times, once corn carryout drops much below 2.0 B Bu, the corn market gets uncomfortable and when this happens, the market puts additional risk premium in the market to encourage more production from the farmer.

On beans, the current carryout is 550 M bu and the market is expecting roughly the same number for next year’s carryout.  Again, any bean number over 400 M bu or so puts the market in comfort mode, so we have more than enough beans this year and next year.  Bean planting is off to a really good start and is not lagging like corn.  So the likelihood that we will have a bean problem seems to be diminishing by the day.  This is a big reason why we witnessed a big sell off on Monday.  After weeks of adding length to their already long futures position, the funds decided to reduce their length, especially after a huge weekend of corn and bean planting.

We all need to be anticipating a “curve ball” from the USDA on Thursday to shake up the markets and for you to take advantage of it.  On corn, if the USDA pegs next year’s carryout below 1.7 B bu, this will be extremely supportive to corn futures.  All of you need to in position to take advantage of this situation if this occurs with target orders working to sell cash or new crop bushels for this fall if the market pops higher on Thursday.  Personally, I would have working targets in the system to sell both cash and new crop corn at 5 to 10 cents higher, entered prior to 10:30 Thursday morning, and let them work all day Thursday.  Again, it is simply amazing how much these electronic markets can gyrate in a few seconds time.  The opportunity to sell a nice pop could be here for 3 seconds right after 11 am when the report is released, and then gone.  The only way you could have taken advantage of this opportunity is to have a resting target order in the system working PRIOR to the report.

On beans, unfortunately, the surprise could be bearish, and not supportive to prices.  The surprise could be a much bigger carryout to next year’s bean crop than this year.  If next year’s number grows considerably larger than 500 M bu up to 6 or 700 M bu, this will weigh on cash, this year’s new crop levels as well as new crop ’19 levels as well.  On thing about the bean market, when it moves, it moves in a big way, usually 2-3 times what corn does.  It will not be out of the question to see a 30 cent move on beans on Thursday.  I just hope it is up and not down.  Again, targets work well in this situation, and encourage all of you to use them and put many out there for the slim chance beans could explode higher.  Let them work for you and make money for you.  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.

We have made great progress in planting corn as of late.  The USDA pegged the average US corn planting at 39% Monday evening vs 44% on average.  IL planted 42% of their corn crop last week and now have 74% of their corn in the ground.  IA was 40% complete vs 48% on average.  The market is concerned about the lack of corn planting in the northwest portions of the Corn Belt (MN, SD, ND).  MN is only 9% complete vs 44% on average.  If this situation persists, it should be supportive for corn and bearish for beans as these acres will be switched to beans and make the corn complex tighter and continue to make the bean complex more flush with beans.  This being said, the market believes that a great amount of corn acres were planted on Sunday and Monday at are not included in this total.  With the huge size of modern planters and planting speeds, it is just incredible how many acres of corn can be planted in a single day.  Going forward, getting an accurate estimate each Monday is a challenge for the USDA as the volumes get larger and larger, and planting windows get smaller and smaller.  Thus, the market feels these numbers are understated, and the average corn planting volumes will be right at average next week as we hit the May 15th date on the calendar, when it should be wrapping up.

On beans, the USDA pegged the average at 15% vs 13% on average.  IL was 29% done vs 12% on average.  Thus, bean planting is not behind and is actually ahead of normal.  There is a push this year to get more beans planted earlier than in the past to improve yields.  More and more farmers are planting beans and corn at the same time.  If there is a yield advantage, the farmer will do anything to get it this year as many are struggling financially to cover all of their costs.  Getting the bean crop planted early will also allow them to hit a premium bean market in their area.  Many times, the bean processor will put a big premium on early delivery beans into the plant to encourage the farmer to start cutting beans.  Early beans will be able to be sold for more money, and the yield boost will also add a layer of profitability as well.

Locally, we are struggling to get our crop planted on time.  The wet and cool conditions have pushed everything back 2 weeks.  Areas to the south towards Oshkosh have not turned a wheel yet.  If we get no rain, these areas will go by Friday.  Areas to the north of New London to Clintonville are starting to go.  The sandy areas to the west are going as well.  We just need the rain to hold off for 2 weeks to allow us to get the corn planted.

The other big news event continues to be the potential trade disruption with beans sold to China.  Last week, the US sent a team to China to help pound out a new deal.  Both parties agreed to keep talking, but nothing concrete was established.  Next week, the Chinese delegation will be visiting the US to continue talks.  Approximately 6 weeks ago, China placed a 25% tariff on beans purchased from the US making the internal Chinese bean buyer penalized for using US beans.  Since then, the amount of beans sold to China has virtually stopped in their tracks.  Brazil is now supplying nearly all of the beans to China even though they are paying a heathy premium for those Brazilian beans.  The Chinese buyer will not buy any more US beans until a deal gets worked out with the US.  In the process of negotiation, the US has demanded that US ag exports not be penalized.  However, no agreement is finalized yet, and it remains to be seen how all of this will work out.

Make no mistake.  The market is very concerned about this issue.  China has been a huge buyer of US beans and if they stop buying our beans, this will have wide and lasting results on our bean market.  China also buys many new crop beans during October from us.  If this stops, this will have a huge impact on our harvest operations and market values during this fall for grain elevators and shippers.  Unfortunately, there are many questions, and not many answers at this point.  From your point of view, your biggest concern should be if an agreement is not made with China.  All of a sudden, beans could start stacking up in this country like we have never seen before.  We already have a huge bean carryout, and bean planting is now ahead of schedule.  If a deal cannot be pounded out, the US will be floating on beans, and harvest values will plummet.  Again, the path of least resistance on beans could very likely be much lower in value.  Is your farm correctly positioned for this potential lower move?  Please click here to see where our new crop prices are at.  If you would like to sit down with one of our grain originators to set up a marketing plan, please click here.  We would be glad to sit down with you and set up a plan.

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 $3.99, Resistance at $4.08, Place Targets at $4.05

New Corn – Dec 18 Corn Futures – Support at $4.15, Resistance at $4.22, Place Targets at $4.20

Cash Beans – July 18 Bean Futures – Support at $10.10, Resistance at $10.34, Place Targets at $10.30

New Beans – Nov 18 Bean Futures – Support at $10.16, Resistance at $10.32, Place Targets at $10.28

New Wheat – July 18 Wheat Futures – Support at $5.06, Resistance at $5.38, Place Targets at $5.28

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

Condo Corner

Do you own Condo space and wish to sell it?  Are you interested in buying Condo space?  If so, this is the right place.  Condo Storage is also known as our Long Term Storage Agreement.  We have listed this on our web site.  If you are interested, please 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.

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.

We have also updated our web site with the grain storage options that we offer at the Co-op.  Please click here to see what storage options exist for our patrons, and to see what option is the best fit for you.  Many of you have interest in using Delayed Price as an economical way to store your grain.  However, many of our patrons have had questions regarding Delayed Price and how it is different compared to Open Storage.  We have created an information sheet that compares Delayed Price to Open Storage, and lists every advantage and disadvantage of the program.  I encourage all patrons to read this and it is very informative and will help you to understand our program.  Please click here to see this comparison of Delayed Price to Open Storage.

Still Own Old CORN?  Tired Of Paying Storage?  Check Out Our Cash Plus Contracts

Do you still own old corn in the bin or on Delayed Price at the elevator?  Do you need the money now and tired of paying storage?  Please consider our Cash Plus contracts.  These contracts will allow you to sell corn today with a 13 cent premium added to the cash price in exchange for an offer to sell new crop corn futures around $4.40 if on Nov 14th, the December ’18 corn futures close at or above this level.  If futures close below this level, you get to keep this entire premium, and you don’t have any other obligation.  So it is a win-win for you.  You get to keep the 13 cent premium paid to you NOW on top of the cash price, you stop the storage charges, if hauling from the bin you get to haul them now, you create cash flow now, and if on Nov 14th, depending on what December corn futures trade, you might be able to keep this entire premium free and clear.  The worst case is that you would have the same bushel commitment in a new crop offer where December corn futures were locked in at the $4.40 level.  Taking off the basis of 40 cents under the December futures for delivery into Readfield, you would have a new crop corn contract at 4.40 – 40 = $4.00  The worst case is that you would have new corn sold at $4.00 for Oct / Nov ’18 delivery into Readfield or Center Valley.  This is a great price considering our posted new crop price is at $3.78 or so today.  Please check this out.  We have been writing many of these contracts as of late, and they work really well.

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

Add Fuel Maintenance to Your Spring Planting Checklist

From checking spare parts inventories to squeezing in one more maintenance check, equipment is always top of mind as you prepare for spring planting. And, while it’s crucial to ensure engine components and moving parts are operating at peak performance, checking your fuel practices should carry equal weight. Your equipment is only as good as the fuel used in it, so it pays to get into the habit of keeping fuel clean.

Two key things affect the quality of your fuel supply: Keeping bulk fuel storage up to snuff and choosing the right fuel.

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Weekly Grain Update – May 2, 2018

5/2/18

Corn vs Beans, Planting Decisions, and Weather

The market is still concerned about the delayed planting progress of the US corn crop.  On average, we are 10 days behind from a normal year.  Although true, we have made tremendous progress planting corn over the weekend and the first part of this week.  All efforts were made to push as much corn into the ground prior to the rain system that moved into the Corn Belt mid-week.  The USDA pegged Illinois with 32% of its corn planted and Iowa with 17% of its corn planted.  Make no mistake, the market will have its eyes squarely focused on these two states and will closely monitor their corn planting progress as the bulk of the US corn is produced there.  Many feel that these planting numbers could be on the low side as many acres were planted on Sunday and Monday that were not included in the total.

Why is the market so concerned about corn planting?  It’s because our margin for error, our cushion, is now gone.  Let me explain.  The USDA pegged the corn acres at roughly 88 M and the bean acres at 89 M.  Even if we plant 88.5 M corn acres, and if we have no production problems and have an average yield of 176 bpa, with our current demand structure, it is very likely that corn carryout next year will fall from 2.1 B bu this year to 1.8 B bu or so next year.  The market gets in comfort mode anytime corn carryout starts with a 2, or close to a 2.  Anytime corn carryout falls much below 2 B bu, the market gets uncomfortable, and when the market gets uncomfortable, it will put a big carrot out in front of you to make sure you do everything possible to get your corn planted.  It puts more risk premium in the market to encourage you to spend the extra money, extra time, the extra whatever, to make sure you get it done.  This explains why we are seeing corn react positively in the last 2 weeks.  The market knows producers make planting decision based on the current market and it is making the corn market as positive as possible right now.

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