Weekly Grain Update- September 19, 2017

9/19/17

Last week, the big news was the USDA’s September Crop Report, where they pegged the corn yield at 169.9 bpa and beans at 49.9 bpa.  These are huge numbers, and many market participants were surprised by the continued increases in yield.  Many traders want a confirmation that these big yields are actually in the field before they take positions.  As harvest starts in the southern areas, the Delta region is seeing some very good yields on beans.  Even though they are experiencing some damage of 3-5% due to the hurricane rains, generally yields are very good.  As harvest starts to ramp up in many other areas, I get the sense that the yields are mostly there, and they are starting to confirm the big numbers from the USDA.

We are seeing the funds cover their bean short position, and this is supporting the bean market.  There are many index funds who want something to trade.  Corn and wheat are uneventful, and beans are the commodity that might have life.  We have seen the funds be rather aggressive in covering their short in the recent days, and this is one reason we bounced significantly off the lows prior to the close after the USDA report last Tuesday.  Beans seem to be supported compared to corn and wheat.  The market is also seeing the Chinese being rather aggressive in buying our beans for October out of the Gulf.  If they continue to buy our new crop beans, this will add another layer of support to the bean market.  From a cash perspective, the farmer is selling his beans for cash flow, and storing his corn in any crevice he can find.  He hates the cash price for corn, and will only sell if forced to do so.  If this trend continues, we will likely see the basis firm as harvest progresses.  The lack of farmer selling will cause the commercial to also hesitate to sell company owned corn because he also does not own much corn.  All of this will likely cause the corn basis to firm rather quickly after harvest.

Locally, we saw our first load of new beans be delivered into Readfield yesterday.  They were cut on Saturday, and had a moisture 11.9%.  We were all surprised by the moisture level, and many other bean fields are turning rather quickly.  Last week’s heat really helped mature the crop in this area, and likely pushed harvest forward in many fields.  We definitely needed the heat from last week to help progress the crop forward.

As you deliver your grain into our CHS Larsen Co-op elevators this fall, please communicate with your drivers on what you wish to do with your grain when delivering.  At the elevator, the scale operator will need to know if you want to sell your grain, place it on an existing contract, place it in Delayed Price or Open Storage, or into Grain Bank if you are using it for feed.  It is critical that we know what to do with your grain BEFORE the truck leaves the elevator.  This will help to make sure there are no delays in processing your grain deliveries.  Unfortunately, if your truck leaves without telling us what to do with your grain, we will be forced to place your grain into Delayed Price and title will be lost.  Please avoid this mistake by communicating with your divers or simply calling our office so we do not make a mistake on processing your grain shipments.  We greatly appreciate your help in this matter.

As always, if I can help you with anything, please call me at Readfield.

Marcus

September 17 USDA Comments

On Tuesday, September 12, the USDA released its September Crop Report and shocked the market with its findings.  The USDA pegged the corn yield at 169.9 bu / ac with a production total of 14.184 Billion bu.  They pegged the bean yield at 49.9 bu / ac with a production of 4.431 Billion bu.  Most traders thought the government would lower yields from last month, but this was not the case.  Looking at ending stocks, using these numbers put the 16/17 corn ending stocks at 2.35 Billion bu and the 17/18 stocks at 2.335 Billion bushels.  Any number over 2 Billion is considered bearish and will usually cause futures and spreads to act quite weak.

On beans, the government pegged the 16/17 ending stocks at 345 Million bushels and the 17/18 stocks at 475 Million bushels.  The bean ending stock number for this year is not excessively bearish, and this is what the market could be looking at today.  The markets reacted significantly weaker after the report yesterday, but fund buying at the close supported futures significantly off their lows.  Today, we witnessed the firmer tone in beans as well.  The Chinese are looking to buy more Oct beans out of the gulf and their buying could be significant.  This is helping to firm the bean basis locally and is providing support to the futures market.  However, the corn market is struggling, and the bushels are stacking up.  We do not have a corn export program of any size, and this is allowing corn futures and the basis at the gulf to remain much weaker than normal.

By Marcus Cordonnier, Grain Manager

Weekly Grain Update- September 12, 2017

 

9/12/17

The big news this week is the monthly USDA grain report to be released on Tuesday at 11 a.m.  There are definitely areas of the corn belt where the crop is less than stellar, but the over-all size and quality of this crop is pretty good.  I am hearing reports today of damaged beans coming out of the southern delta region due to the massive rains from the hurricane over a week ago in Texas and western Louisiana.  This rain is causing problems with quality on a ripe crop.  Still, yield reports from these southern areas seem to be quite good.  The market is expecting a 166-168 bpa yield on corn and a 48-49 bpa yield on beans.  Any significant variance from this and the market could react explosively.  I have seen enough of these report days and anything is possible.  I encourage all of you to have your targets already in place resting at Chicago in case we do see something bullish hit the floor today.  If this happens, you all can take advantage of a pop.

We did witness a nice bean rally last week.  The cool weather has the market concerned about the lack of maturity in many areas.  The dry areas in Ohio and Indiana are also raising concerns.  The funds were short beans early last week, but these uncertainties caused them to cover the majority of their short positions in beans.  So most of us had the opportunity to sell $9.00 fall beans again if you needed to make some “catch up” sales.  We witnessed strength Monday through Thursday in beans, and then the managed money crowd decided to take their profits to the bank and sold it back again before the close on Friday, sending beans solidly lower on Friday at the close.

Corn and wheat are acting like “sticks in the mud” while beans moved higher last week.  Beans would rally, but corn and wheat could not do a thing.  Folks, we have a solid export program in beans at the Gulf this year.  Our beans continue to be the cheapest beans in the world.  China is expected to continue to buy more and more beans as harvest progresses.  However, our corn export program is woefully inadequate, and the corn will start to stack up soon.  South American corn is the world’s cheapest bushels, and world buyers of corn are bypassing the US.  Corn basis levels at the Gulf remain weak, and this is weighing on the entire corn market.  What is concerning is that we are not to gut slot harvest yet, and there are already concerns about the back log of corn barges.  This corn market could get really interesting in about 30 days.  Time will tell.

As I look at the charts last night, I still see clear resistance on the Dec ’17 corn futures chart at $370.  Any rally attempt to this level needs to be sold.  On beans, it is interesting to see that Nov ’17 bean futures rallied to the exact 50% retracement level of the entire $1.26 slide from July 11th  through Aug 16th.  The high point during this move is $977 ½ and that is now our resistance point.  Any rally attempt to get us back to this level should be sold.

If I can help you in any way, please call me at the Readfield office.

Thanks,

Marcus

Weekly Grain Update- September 5, 2017

9/5/17

We all witnessed a nice rally on Thursday due to fund short covering on the last day of the month.  Managed money had accumulated a short position in corn, beans, and wheat, and in order for these firms to realize their gains during the month, many decided to cover some of their short positions, and take their profits to the bank.  Many had their fiscal year end closing Thursday night, and this rally was due to managed money buying back their short positions so profits could be realized during the month of August.  I hope that everyone who needed to liquidate corn, either on storage or selling for new crop, took advantage of this short lived opportunity.  Again, these opportunities will be few and far between in the coming weeks and months ahead.  These are opportunities to get caught up with needed sales, and not to get overly bullish.

Hurricane Harvey did a big number in South Texas with massive flooding and huge amounts of water everywhere.  Fortunately, the devastation is mostly in South Texas and Western Louisiana.  These flooded areas will affect the energy market in the coming days and weeks.  However, the grain industry can breathe a sigh of relief that our main grain shipping channel, the Mississippi River and the Gulf ports in Southern Louisiana, were not harmed in a big way.  That scenario could have been very serious for our industry.  Harvey is all but gone now, and some areas did receive some much needed rain.  However, parts of Indiana and Ohio are now quite dry and Harvey did not bring much moisture to the area at all.  Crop ratings will be out Tuesday at 4 p.m. and will likely show some deterioration in crop quality in the Eastern Corn Belt.  However true, some of this is already factored into the market at this time.  It is quite normal for condition ratings to fall during the end of the growing season, so this is not a huge surprise.

It will be interesting to see what the funds do on Tuesday.  Will they continue to short this market like they have been?  Most likely they will.  If this is the case, the bigger the short they put on, the bigger the potential rally we will have when they decide to cover.  All it takes is for one or two firms to get spooked, or decide to head for the exit, and the herd will follow.  If this does not develop, we could very likely see another rally at the end of September for the very same reasons as listed above.  We also have another monthly grain report on September 12, at 11 a.m.  If the USDA decides to throw us a curve ball, we could see some fireworks on that day as well.

How can you take advantage of these short bursts of market activity?  By using target orders.  Give us a firm order to sell a specified amount of grain at a price above the market, and we will watch it for you and place orders at Chicago to price your grain if the market suddenly pops up.  These work extremely well, and it allows you to take advantage of opportunities that sometimes are very short lived.

As I look at the charts tonight, I see clear resistance on Dec ’17 corn futures at $367.  On Friday, we closed at $355 ¼.  If we can get back to the $367 area, and if you need to move corn for this fall, I would seriously consider selling what you need to move.  On beans, I see a clear resistance level on the Nov ’17 bean futures chart at $955 followed by $963.  On Friday, we closed at $949 ½.  Again, if we can continue to see strength in beans and get to these levels, I would seriously consider selling what needs to be moved at harvest.  I hear many farmers saying they will sell their beans for cash flow this harvest, but store their corn.  I have heard this many times already this year.  The point is that if we do have a rally, we are likely to see many farmers take advantage of it, and their selling could smother the fire.  Something to keep in mind.

If I can help you in any way, please call the Readfield office.

Marcus

Weekly Grain Update – Aug 28, 2017

 

8/28/17

It’s been said that bull markets end quickly and bear markets usually last a long time.  Something tells me that we are witnessing the second choice with our current grain markets this week.  This is a long, slow grind, if there ever was one.  All grains continue to struggle with outstanding yield reports coming out of the Delta areas in the south as well as southern Minnesota.  We did see the bean market attempt to rally this week, moving about a dime higher during the session on Thursday.  Nov bean futures were able to rally to the $947 level, but then hit its head on resistance right around $950.  I hate to be the bearer of bad news, but we are definitely in a bear market, and I am not sure what could change to create a bullish pop.  We did see the Chinese buy a huge amount of new beans this week, and this also added to the support for beans.  In the coming weeks, it will be important that we keep selling beans to them as they are the single largest buyer of US beans, hands down.  The fact that beans out of the Gulf are the cheapest in the world should allow more export sales to be made.  This will be critical in the weeks ahead.

Corn Export

Unfortunately, Brazil has corn for sale that is cheaper than our corn at the Gulf.  The result is that corn is starting to stack up with no real export program.  Some farmers are starting to “throw in the towel” on old corn and just dumping it or just selling new corn across the scale.  This selling is causing the corn export values to soften and the basis at the Gulf has crashed this week, down by more than a dime.  This gives us a sense that we don’t have a strong corn export program this year, and we desperately need one.

Traders continue to feel that the bottom is close and we are due for a bounce.  While we are most definitely over sold, what will change to create more demand?  The managed money funds are now short all grains, and they have become shorter and shorter each week.  If this continues, there might be a chance for a short covering rally, but this probably will take several weeks for this to materialize.  We had the Pro Farmer tour this week, and they pegged the corn yield at 167.1 bpa and beans at 48.5 bpa. The USDA pegged the corn at 169.5 bpa and the beans at 49.4 bpa on its August crop report.  Yes, the Pro farmer yields are less than the USDA, but the tour has had a long history of pegging a yield that is at least 1 bu less on beans and 2 less on corn.  Thus, these numbers from the tour are not bullish, and in fact could be viewed as bearish.  Why?  Because the market was expecting lower yields from the tour, and this did not happen.  In fact, many are surprised by the tour’s corn yield.  Many did not expect their corn yield to be this high, and many are surprised that the crop is better than expected.  However, the tour was a little disappointed in the bean pod counts, but again, the bean yield was higher than most expected.  All of this is not bullish.

Harvest Coming

If you are in the position where you do not have enough corn or beans sold for the coming harvest, you have a challenge on your hands.  I believe you need to closely monitor the markets, and be a seller on any kind of strength the market gives you.  This is especially true for bushels that must be moved this harvest because you don’t have enough space at home.  If we see a pop, this will be a short-lived selling opportunity, not a chance to get bullish.  Frankly, our next bullish opportunity will come with a South American planting issue in January, and then our planting issues during the first part of May.  If you will be storing your crop in anticipation of a rally, it will likely take this long in order for something significant in the market to develop.

Looking at the charts today, I see major resistance on Dec ’17 corn futures around the $368 level.  We closed at $356 on Friday.  On Nov bean futures, the chart is starting to wedge.  This means we will likely break up through the resistance level, or fall down to support.  Frankly, if you need to move beans this fall, I would start here, and take advantage of this week’s bounce.  If this rally fails, Nov bean futures will likely fall back to the $935 level.  Nov ’17 beans closed at $946 ½ on Friday.

If I can help you or your team in any way, please call me.  I will help in any way I can.

Thanks,

Marcus

Weekly Grain Update – Aug 21, 2017

August 21, 2017

One way our co-op can help add value to your farming operation is to communicate when different opportunities come about during the grain marketing year.  In an attempt to add value to the grain marketing services we provide at CHS Larsen Co-op, I will begin to write a Weekly Grain Update in which I will try and highlight significant events that have occurred in the past week and share them with our customers through email and posting on the web.  These weekly comments will be located on a tab directly below the grain bids tab on the CHS Larsen Co-op website.

The grain markets have been trading in one direction since the USDA released its August crop report on August 10, 2017 .  The government pegged the average corn yield at 169.5 bu and the beans at 49.4 bu.  Immediately once these numbers were released, the market sank to new lows and it has not looked back.  Frankly, these numbers shocked the market, and caused the funds to sell, and sell in a big way.  After having moderate long positions, the funds now have blown out of the long positions and are now slightly short.  All of this selling has been a constant downward pressure on the market, and the path of least resistance has been down.

However, I get the sense that this market is very oversold and the funds are looking at various buying opportunities to purchase value.  I get the sense that we have pressed this market enough, and we are due for a bounce of some kind.  Some supportive justification could be the results from the Pro Farmer Tour, which starts on Monday, August 21, 2017, which find yields not as good as once thought.  Additionally, harvest is beginning in the south and much more accurate yield results will start to come in.  If there are any surprises, this will add support.  However, the trend is clearly lower.  If we get a bounce, please view this as an opportunity to make sales on bushels which must be moved to town this harvest.  It is very unlikely that this trend will change anytime soon and a bounce is a selling opportunity, and not the opportunity to become bullish.

As I look at the charts today, we have broken below previous low points.  This in itself is bearish.  Once we hit solid support, we will likely bounce back until these previous lows now become resistance points.  Now, Dec 17 corn futures are trading at $363 and it broke down through previous support at $374.  This tells me that you should have selling targets in at $372 vs Dec 17 corn futures.  On beans, the previous support on Nov 17 beans was $955.  I would have targets at $950 vs Nov 17 bean futures for bushels that still need to be sold for this harvest.  If we get to these levels, I would seriously consider selling.  It could likely be one of the last opportunities we have before harvest to take advantage of a nice pop in the market.

If I can be of further assistance to you, please call me at the Readfield office.

Thanks,

Marcus

In a Weather Market

 

It’s been just over two weeks since I started as the Grain Department Manager at CHS Larsen Co-op.  We have accomplished many things during this period.  I have been able to visit all of our grain facilities and nearly all of our employees.  Wheat harvest is all but over, and we were blessed with decent yields and good quality.  The Readfield area received nice rains over the last three days, and this was the perfect answer to the crops planted on sandy soils.  These rains will put additional corn and bean bushels in the bin and even though the crops are later than normal, these rains should make final yields quite desirable.

(more…)

Welcoming Marcus Cordonnier

 

Starting Wednesday, July 19 2017, CHS Larsen Cooperative welcomes our new grain department manager, Marcus Cordonnier. Marcus brings with him 22 years of experience, managing country elevators and rail terminals.  He has worked for ADM and Bunge as well as being the Grain Manager of several co-op’s.

Growing up in western Ohio, Marcus was raised on a grain and beef farm. He milked cows for his uncle during his high school years and drove a milk truck on the weekends to help pay for college.  Marcus attended The Ohio State University and graduated in June 1994 with a degree in Agricultural Economics.  He later received his MBA from Ashland University in May 2004.

Marcus has a deep passion for the grain business and loves to manage the grain position.  In addition to trading grain, he has much experience with managing rail terminals, building relationships with end users, and helping customers market their grain.  He takes the harvest planning process seriously and has a lot of experience with operations and logistics, especially during harvest.  There is nothing more important to him than to keep all facilities open and ready for business during the harvest push.

Please feel free to stop by and introduce yourself to meet Marcus in person. He is very excited to start meeting the employees and customers of our co-op and to learn how we conduct business.  His door is always open and willing to work with any employee or customer.  He enjoys conversations about all possibilities in the grain markets.

Marcus will be relocating to the New London area, where he plans to find his new home. He enjoys fishing, watching football, and spending the summer months going to tractor pulls.  Marcus is an avid Buckeye fan and cannot wait until the Badgers play the Buckeyes this fall.  But don’t worry; he’s already a loyal Packer fan!

Please help me in welcoming Marcus to CHS Larsen Cooperative. With a sales territory that is so large I have decided to communicate these messages through this memo; however, group or in person meetings with me are available upon request. Also, I would like to thank everyone for handling this transition period well.

Thank you,

Todd Reif

General Manager

CHS Larsen Cooperative

Center Valley Facility ResponsibleAg Certified

ResponsibleAg Certification Group

CHS Larsen Cooperative’s Center Valley location was honored to receive their ResponsibleAg Certification. This certification recognizes the commitment this facility has made to the safety and security of employees, customers and community.

ResponsibleAg is the only program in the nation that provides a comprehensive assessment of retailers and wholesalers to achieve and maintain federal regulatory compliance. Certification requires a facility to meet stringent regulatory-based criteria, to implement industry leading safety and security measures, and to resolve the facility safety as their highest priority.

All of the Center Valley employees participated in the corrective actions necessary to meet the requirements for this certification. Most actions were safety related items, as well as, proper identification with labels, proper waste management and communication.

CHS Larsen Cooperative is proud to be a part of this voluntary program that is a proactive commitment to providing a safe, secure and complaint workplace for their employees, customers and neighbors.

“Having the ResponsibleAg Certification will help us show the community around us that this is a safe place for the neighborhood and employees,” said Andy VanDyck, CHS Larsen Co-op Operations Manager. “We want to ensure those living in our community feel safe knowing that our business is compliant.”

To learn more about the ResponsbileAg program check out their website www.responsibleag.org

Pictured above are the Center Valley employees that helped make this certification possible. Left to Right: Jeremy Hunt, Taylor Coy, Jeff Beresford, Dave Barth, Paul Tank, Andy “Dutch” VanDyck, John Andraschko, Clay Alexander, and Tom Rose. Not Pictured: Hailey Sorenson and Mary Kay Cleven.

 

Latest Market News, Including Corn Condition

Corn Condition

Planting, planting, and replanting … Where are you at in this process? Things have been coming to a close for most of the producers in the area with some of those hard to reach spots being filled in with whatever is available. The crops are in the ground and now we have to sit back and watch to see what will happen next. Will we go without rain for the most significant time of the growing process, or will we get timely rains? This is not in our hands but is always on our minds. One thing we can remember is to market our grain as well as we care for it. Keep an eye on June for any possible weather related rally, if they come it will be fast. Corn has only moved in a sideways direction, not making any moves up or down for some time now. Beans on the other hand have been trailing downward with no sign of any upward movement.

Monday June 5th gave us a look at what the crops are looking like at this present time.

Corn Condition – Selected States: Week Ending June 4, 2017

[These 18 States planted 92% of the 2016 corn acreage]

—————————————————————————-

State  : Very poor :   Poor    :   Fair    :   Good    : Excellent

—————————————————————————-

:                          percent

:

Colorado ………..:      –          –          17          71          12

Illinois ……………:     2           9          30          50         9

Indiana ………….:      5          12          37          41          5

Iowa ……………..:      1           2          20          61          16

Kansas …………..:     2           7          30          56           5

Kentucky ………..:    1           3          14          70          12

Michigan ……….:     –           4          26          61           9

Minnesota ……..:     –           2          21          66          11

Missouri ………..:     1           6          34          51           8

Nebraska ………:      –           2          19          70          9

North Carolina .:     1           4          18          61          16

North Dakota …:     1           6          26          63          4

Ohio ……………..:    2           8          41          41           8

Pennsylvania …:     –           –          18          74           8

South Dakota …:    –           6          32          58           4

Tennessee ……..:    1           2          14          56          27

Texas ……………:    1           4          16          68          11

Wisconsin …….:    1           6          25          56          12

:

18 States ………:    1           5          26          58          10

:

Previous week .:    1           6          28          57           8

Previous year .:     1           3          21          61          14

–     Represents zero.

 

Idea: Anyone sitting on old crop inventory should give us a call to discuss options for receiving a premium on those old bushels. We have some thoughts on how to increase the price. It is worth your time since the crops are in the ground for the harvest year.

 

Look For Dates:    June 9, 2017 Supply and Demand Report

June 30, 2017 Grain Stocks Report

 

June is Dairy Month, So Please Thank a Dairy Farmer!

THANK YOU to Everyone for Your Hard Work and Dedication.

by Helen Nemitz, Grain Originator

© 2017 CHS Inc.