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Contact your CHS Larsen Co-op energy team for more information.
Content courtesy of Cenex Refined Fuels & Lubricants
“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
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
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.
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
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.
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.
The big news this week was that China was in the market place buying corn and ethanol. We have seen the Chinese purchase soybeans for many years, and frankly, we count on them to buy huge quantities of beans during the fall harvest. They are a cornerstone of our US bean export program, and help to add stability during a time when prices in beans could get quite sloppy. So when we see the Chinese looking at buying corn and / or ethanol, the market pays attention, and it causes some unique things to happen.
The funds currently have a huge net short position in corn futures. They are so short that last week’s Commitment of Trader’s report showed that they broke a new record on the size of their short position. Previously, the record short for managed money was 229,000 contracts of short corn futures. Last week’s report had them short 231,000 contracts, or a new record. The funds are short because the fundamentals tell them to be so. The corn crop is huge. Our corn export program is in the tank. The crop seems to be getting bigger each month, and there is a huge amount of farmer selling just above the market. All of this is weighing on corn, and they see this and are putting their money where it counts.
To redeem purchases, end-user customers must complete a redemption form, attach their detailed invoice(s) and/or receipt(s), and mail the documentation as instructed no later than April 6, 2018.
Article courtesy of Cenex Fuels & Lubes
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My colleague Lynn Sheets from Key Cooperative in Iowa has seen the changes for himself and would talks about how Cenex Fuels have addressed this.