Weekly Grain Update – November 14, 2017

corn harvest

 

The USDA came out with its November crop report on Thursday and shocked the market with their interpretation of the current crop.  Most believed that bean yields would be lowered and corn yields would be raised slightly from the October report.  This was not what the USDA had in mind, and their report dramatically altered the markets going forward.

In the case of corn, the USDA raised this year’s production by a whopping 3.6 bpa which took their final corn yield to 175.4 bpa.  This is a huge yield and beat last year’s average yield by .9 bpa.  Production was raised by 293 M Bu from last month’s total to a jaw breaking 14.578 B bu.  In addition to the yield increase, the USDA also increased exports by 75 M Bu to 1.925 B Bu.  Many traders are scratching their heads about this number as we are having a very difficult time making increased export sales to foreign buyers today, yet the USDA is projecting a big increase.  Time will tell on whether the USDA is right or not.  But the only way for our exports to increase is through lower prices which none of you will like to see.  When the dust settled, the carryout for the 17/18 corn crop was raised 147 M Bu to 2.487 B Bu.  This is a tremendous amount of corn carryout and an amount we have not seen for decades since the glut of corn in the mid 80’s.  With this amount of corn hanging over the market, it will be very difficult for the market to rally anything significant.  Any type of strength will be met with a huge amount of selling from the country.

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Weekly Grain Update – November 9, 2017

USDA Crop Report

The USDA will be out with its November Crop Report Today, November 9, at 11 am.  I get the feeling that we could see the USDA raise the corn yield by 1-2 bpa and leave the bean yield either unchanged or lowered by up to ½ bpa.  We have seen some extraordinary corn yields across the Corn Belt this fall as harvest has progressed thus far.  Consequently, later bean yields have not improved like corn throughout the entire Corn Belt.  If the above changes in yield are pegged by the government tomorrow, we could see the corn carryout approach 2.5 B Bu which we have not seen since the huge CCC days in the mid 80’s.  However, beans are another story.  If their yield gets trimmed, we could see carryout reduced from 430 M bu down to something less than 400.  Folks, if this happens, we will see fireworks tomorrow at 11 am.  The market is, and will continue to be, very sensitive to any reduction in bean carryout.  This is especially true since Brazil and Argentina are having weather issues with either being too dry or too wet for optimum bean planting conditions down there.  Any sort of change in the bean Supply and Demand table and the market will react accordingly, and possibly very violently depending on the scope of the change.

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Weekly Grain Update – October 31, 2017

10/31/17

We are constantly looking for ways to add value and profitability to your farming operation.  One way we can do this is by offering unique contract alternatives that will allow you to diversify your grain marketing portfolio, spread out your risk, and add another layer of pricing protection to your operation.  We are again offering the CHS ProAdvantage grain contract this year.  This contract is a very simple approach to allowing our trading professionals at CHS to market your grain for you.  Basically, you will hand over a portion of your grain to them to squeeze as much money out of the market as they can.  They will do many trades behind the scenes to generate as much profit for you as possible and when the program is over, their profits will be added together and given back to you in the form of a price that should be higher than the prevailing price at that time.  You don’t have to worry about the trades that they do, or any complex marketing strategies to learn.  This is easy folks.  Just give them a portion of next year’s grain production, and allow our marketing professionals to make money for you.

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Weekly Grain Update – October 24, 2017

 

10/24/17

Many of you have interest in storing your corn or beans at the co-op, and I thought I would take a minute to summarize our storage programs again for this fall as many are asking about specific details.  Please remember that Delayed Price is your most economical choice for us to store your grain.  For grain placed into Delayed Price, the grain is only shrunk down to 13.0% on beans or 15.0% on corn, the storage rate is cheaper, and the monthly storage charge follows the grain and is not invoiced monthly.  Monthly storage charges are simply taken out of the settlement when the grain is sold.  The biggest disadvantage to Delayed Price is that you give up title to your grain in exchange for the above benefits.  This allows us to move your grain out of our facilities if you have not priced it yet, and it keeps us from plugging up with grain.  There is no time restriction for grain placed into Delayed Price.  You may keep your bushels in this program for as long as you wish.  There is no “dumping” fees or any other service charges associated with Delayed Price.  Here is a summary of what storage programs we are offering this harvest:

DELAYED PRICE:    Beans will be shrunk and dried to 13.0% moisture and corn will be shrunk and dried to 15.0% moisture.  Delayed price charges will be 4 cents per bushel per month until 10/1/18, and deducted from grain settlement.

OPEN STORAGE:    Beans will be shrunk and dried to 12.0% moisture and corn will be shrunk and dried to 14.0% moisture.  Storage charges will be 5 cents per bushel per month until 10/1/18, and invoiced monthly.

GRAIN BANK:    TO BE USED FOR FEED ONLY.  Beans will be shrunk and dried to 12.0% moisture and corn will be shrunk and dried to 14.0% moisture.  Storage charges will be 5 cents per bushel per month, and invoiced monthly.

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Enrollment open for CHS Pro Advantage contracts

CHS Pro Advantage open enrollmentCHS has announced open enrollment for corn and soybean marketing contracts through CHS Pro Advantage now through December 13, 2017. New this year, contracts for spring wheat are also included in this enrollment period.

CHS Pro Advantage gives growers access to industry experts at Russell Consulting Group, a wholly-owned subsidiary of CHS, to price and sell their grain. This helps to manage risk while delivering superior profits even during a tough market.

“With wheat futures falling from three-year highs seen just a few months ago and volatility following USDA’s August report, now is the time to commit bushels for professional management and marketing by our hedging experts,” says Kent Beadle, director, Russell Consulting Group.

Growers can enroll 2018 and 2019 bushels. Bushels in the one-year program will be priced between December 18, 2017, and August 24, 2018. Bushels in the two-year program will be priced between December 18, 2017, and August 23, 2019.

If you’re interested in knowing more, contact your local CHS grain team for more information or visit the CHS Pro Advantage website.

Weekly Grain Update – October 17, 2017

10/17/17

The USDA was out with its October crop report last Thursday and gave the market some numbers that were not expected.  In corn, they raised this year’s yield by 1.9 bpa to 171.8 which raised total corn production by 95 M bu up to 14.28 B bu this year.  They also raised feed usage by 39 M bu for last year.  When the dust settled, corn carryout for old crop was lowered by 55 M bu to 2.295 B bu but the carryout for next year was left virtually unchanged at 2.34 B bu.

On beans, the USDA lowered this year’s production by .4 bpa down to 49.5, and also reduced last year’s production by .1 bpa down to 52.  This reduction in yield trimmed last year’s production by 11 M bu down to 4.296 B bu and they also increased seed and residual on last year’s crop by 23 M bu.  After the changes were made, the bean ending stocks from last year was reduced by 44 M bu from 345 M bu down to 301 M bu.  This 44 M bu reduction in ending stocks virtually flowed straight through this year’s S & D table to reduce it as well by 45 M bu from 475 to 430 M bu.  These changes in the bean complex surprised the market and caused the funds to add to their already long position.  We have seen this time and time again where the bean ending stocks starts relatively big, near 500 M bu and by the end of the crop year, it gets trimmed down to 300 M bu or so.  This is a relatively big change for beans and will likely add a layer of support under the market long term.  The real test will be determined if the Chinese and others continue to buy our beans.  Bean exports remain relatively good this year, and if this continues, ending stocks could continue to be trimmed further.

Forward Contracts

Folks, our corn crop is big and getting bigger.  Unlike beans, we do not have much of an export program this year.  Corn is being tucked away, off the market, in any place possible by the farmer.  Big crops generally get bigger and I see the same thing this year.  The market’s job is to press the nearby price low enough to stimulate additional demand.  This process of lowering the cash corn price while leaving deferred prices the same puts big carries in the market.  You can take advantage of this by forward contracting much better prices in the corn market for summer delivery or forward contracting for next fall delivery today.  However, you must sell these levels relatively soon, and not wait until we get to that point on the calendar as the carry will evaporate, and the cash price will remain basically the same level it is today by the time we get to July.  In order to lock in the premium for your farm, you need to forward contract these levels today for delivery sometime in the future.

In beans, the market has given you a wonderful opportunity to sell additional bushels needed for cash flow until you move your corn.  Isn’t it amazing how November bean futures rallied to exactly the 10.02 level on Friday which is basically the exact level of the 61.8% retrace of the entire July – August slide?  The real test for the bean market now remains.  Most times, once a market retraces 50 to 61.8% of a move, it will resume the previous trend.  In this case, the previous trend was lower, and judging by the amount of beans we purchased as well as what all commercials purchased on Thursday and Friday, we saw significant farmer bean selling after the report.  All of this selling weighed on futures at the close on Friday.  If you still need to sell beans this year, I would seriously look at this opportunity.  The high water mark of November bean futures of $10.02 reached on Friday could well remain the high level for nearby bean futures for months to come.

Focus on Targets

In the meantime, I encourage all of you to use targets to generate more profits for your farming operation.  Let’s figure out what level you feel comfortable selling, and then either call us or simply use our online target system where you can place a target all on your own.  I firmly believe in rewarding the market when it rallies, and if a target gets filled, simply place another target on beans 20-25 cents higher or 10-15 cents higher on corn or wheat.  Our online target system is simple, easy, free, and we have many people using the system today.  If you have interest, please click here and it will direct you to our online offer center.  If you have any questions, please call us at the Readfield office, and we will be happy to walk you through this process.

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

Marcus

 

Weekly Grain Update – October 9, 2017

soybean harvest

10/9/17

The USDA will be out with their October crop report this Thursday at 11 am.  I continue to recommend growers to use target orders on report days as the market gyrates greatly almost immediately once the numbers are released.  Many times we see opportunities present themselves moments after the numbers are known but vanish by the time the market closes.  If you still have bushels you must sell for this fall, lets take advantages of these opportunities as they will likely be few and far between in the coming days.

Many areas of the Corn Belt received rain over the last few days.  Most areas received between 1.5 to 3 inches of rain since Wednesday.  This quickly stopped any bean cutting for the moment.  Locally, we are seeing no rain in the forecast until Saturday.  This will allow the beans to dry out or give you the opportunity to go after some early corn before switching back to beans later in the week.  The rain might have been a blessing in disguise as most beans were terribly dry.  Most beans being brought into our facilities were testing 9-12% moisture.  Obviously, 13% is dry and anything under this moisture is hurting you with excess shrink as the beans loose moisture in the field.  With the rain, you will now have the opportunity to cut beans much closer to 13% which will help boost bushels per acre.

This rain will put a damper on harvest selling pressure for the next day or so.  As a result, we have seen bean futures catch a bid and are currently moving higher again.  Currently, Nov ’17 bean futures are at $9.75.  I still feel we have an opportunity to rally Nov bean futures to the $9.85 to $10.00 level as this will represent the 50% to 61.8% retrace of the entire July – Aug slide.  Again, if Nov bean futures can rally into this window, I would seriously consider selling all remaining beans that must be sold this calendar year for your operation.  This would create a double top on the charts and Nov bean futures could easily fall quite dramatically if achieved.

On corn, we are seeing December corn futures have a decent amount of support at $3.50.  I don’t believe Dec corn futures will fall below $3.45 as the farmer is not selling corn.  We continue to see the farmer selling beans for cash flow and will tuck away every kernel of corn as possible.  This will cause futures and basis to remain firm.  The real test will be in two weeks when nearly all of the Corn Belt is in active corn harvest.  If we cannot break Dec futures during this period, this will likely be the low for the year.  Futures and basis will react to what the farmer does.  If he is not a seller, the basis and futures will be forced to do the work to create movement.  I encourage all of you tucking corn away in every crack on your farm to NOT get complacent.  In order to protect your operation, you need to be proactive and lock in corn sales later in the crop year where futures and basis is much stronger.  The corn market is offering excellent carry, where you can gain approximately 30-40 cents per bushel if you can hold the corn until July, for example.  You can only lock in this carry if you forward contract the bushels now for July delivery.  You cannot wait until July and sell it spot because the cash carry will vanish by then as the cash price will likely be very similar to what it is today.

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 drivers 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.

For farmers delivering into Seymour, there is a major construction project being completed at the main intersection of town.  Please look at the easiest way to get into our facility by the map posted online.  Any questions, please call the Seymour or Center Valley office.

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

Marcus

Weekly Grain Update – October 3, 2017

Mississippi barge

 

10/3/17

The USDA came out with its Quarterly Grain Stocks report on Friday and pegged corn at 2.295 B bu and beans at 301 M bu.  These numbers indicate the final amount of corn and beans left over before the new crop year starts on September 1st.  As a comparison, the final numbers from last year were 1.737 B bu of corn and 197 M beans.  These numbers indicate that there are very ample supplies of corn and a slightly tighter bean supply than originally thought.  This helps to explain the higher market on Friday as several funds decided to cover their short positions after these numbers were released.  However, by the close of the market on Friday, many elevators pre-hedged their anticipated purchases over the weekend, and all of this selling pressured futures right at the close.

The Mississippi and Ohio Rivers continue to struggle with shipping problems during this harvest.  The Ohio River is closed at lock 53 as it is broken down.  Many areas on the Mississippi are struggling with low water levels, and many have hit bottom on their way to the Gulf.  The lower water level is forcing all barge loaders to only partially fill their barges so they have lower drafts and so they don’t bottom out.  All of this is occurring during the most active barge loading season of the year, during October.  This is causing excess capacity to not be utilized and more barges are needed to ship the same amount of grain.  This is causing barge freight to scream higher as barge freight costs reach levels during 2014.  Rumors have surfaced that barges traded at 1300% of tariff today which is a huge number.  It will be a long season this year if this situation remains.

Local Update

Locally, we are seeing many beans being delivered into our facilities.  Most of the beans are dry, with only a few loads over 13% moisture.  Beans continue to be dry, but the stems are difficult to cut.  We have not had a killing frost as of yet, and thus most bean plants and all vegetation are not dead yet.  The dry weather has allowed many acres of wheat to be planted, and significantly more acres than last year.  Once we get a rain, this wheat should germinate and grow aggressively with the warm temps.  Everyone planting wheat should be looking at forward contracting their wheat for July delivery into the elevator.  The wheat market is offering some wonderful carries which is resulting in better prices for next July.  I suggest placing targets at $4.50 and then place a target to sell every 25 cents higher and reward the market on rallies.

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 drivers 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.

For farmers delivering into Seymour, there is a major construction project being completed at the main intersection of town.  Please look at the easiest way to get into our facility by the map posted online.  Any questions, please call the Seymour or Center Valley office.

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

Marcus

Weekly Grain Update – September 25, 2017

9/25/17

Harvest is starting to ramp up in many areas of the Corn Belt as the unseasonably warm temperatures push the crop into maturing several weeks earlier than originally anticipated.  Local yields on beans seem to be decent, but many farmers are complaining that although the beans are dry, the stems are still alive and hard to cut.  On Saturday at Readfield, we dumped approximately 20 loads of new beans and almost all of them were under 13.5% moisture.  Most of these beans are coming from the southern areas.  It is truly shocking how the beans dried down so quickly when just 2 weeks ago we thought nothing would ever dry down.  Heat will do this.  In fact yesterday was the hottest day of the entire summer in this area, and it is the last week of September!  Who would have ever guessed.

We witnessed an unusually strong grain market on Friday.  Corn closed up 3 and beans closed up 14 cents.  This type of market activity normally does not happen during harvest.  After consolidating around $3.50, Dec corn futures broke up through its upper channel line of resistance that it had been respecting for weeks.  This bullishness caused some of the funds to start to cover their short positions, and the market ran higher after many protective buy stops were triggered.  This is the first sign of corn bullishness that we have seen in months.  This strength is from a technical perspective and not from a fundamental perspective.  The corn fundamentals are still quite weak.  Argentina still has the cheapest corn in the world by far, and we have no outside country buying corn at any significant volume.  We did start to see some slight farmer selling of corn on storage, but most farmers continue to sell their beans for cash flow and store their corn.  Time will tell if this is the start of a reversal process in corn.  However, please keep in mind that we have just barely started corn harvest in the corn belt.  When this happens in about 2 weeks, there will be some selling pressure which will likely put pressure on futures and basis.

The bean market took the lead from corn and continued its upward move as well.  It is interesting to note that if one looks at the Nov bean futures chart, it made a high on July 11th at $10.47 and made a new low on Aug 16th at $9.21.  Now, please keep in mind that it is quite normal for the markets to retrace 50% to 61.8% of a move before resuming the previous trend.  The market move lower during this period by the total of $1.26.  The normal retracement window is 50 to 61.8% of this move or 63 to 78 cents above the low of $9.21 before it turns around and again moves lower.  This represents the Nov futures window of $9.84 to $9.99.  On Friday, Nov beans closed at $9.85 ¼ or exactly a 50% retracement.  Isn’t it interesting how a normal barrier of resistance like $10.00 almost exactly matches the 61.8% retracement level of $9.99?  This is not by coincidence.  There are many traders at Chicago who are looking at the very same thing.  If you still have beans left to sell for harvest delivery, my best quest is that Nov beans will make a high between $985 and $10.00 before turning around and moving lower, and possibly significantly lower through harvest.  Please take advantage of this opportunity before it slips away.

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 drivers 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 in Readfield.

Marcus

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

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