Weekly Grain Update – April 26, 2018

4/26/18

Weather and China Remain Central Focus

After trading subdued for the majority of last week, the grain markets hit support, bounced back, and seem to be in rally mode the majority of this week.  We are seeing volatility ramp up a bit this weeks as the trade continues to be concerned about the ability of the US farmer to get enough corn planted in the north ½ of the Corn Belt.  The southern ½ of the Corn Belt is either very close to or should be planting corn now or by this weekend.  Many predict that on Monday’s planting progress report that we could have as much as 20% of the US corn crop planted by then.  If this occurs, this will take a lot of the fuel away from the bulls as the planting risk goes down dramatically once 50% of the corn crop gets planted.  Once we get past 50%, any bullish momentum that was developed by slow planting progress seems to dissipate very quickly.

However, the concern is when the northern areas such as MN, WI, northern IA, the Dakota’s, and MI finally get their corn planted.  Last week, many of these areas received huge snowfalls, and some of this snow is still not melted and the soil temps still need to warm up to 50 degrees so corn can germinate.  The real concern here is timing.  When will these areas have soil temps at 50 degrees and will it be easier for the farmer to plant beans and forget about corn?  This is what the market is concerned about.  For the grower, the market still has a nice premium for new crop corn to encourage all of you to get after it.  This is usually the case.  The marker is willing to place a carrot in front of you to make sure you do everything in your power to plant every last acre of corn that you can.  However, many times the market quickly pulls the rug out from under you once it sees that enough acres will get planted and unfortunately, you are so busy doing your job, that the majority of the premium vanishes before you have a chance to react and sell your planted crop.  The market is a ruthless animal.  It could care less if you sell your corn with a premium.  It’s job is to make sure you plant all of your corn.  It could care less if you took advantage of the carrot it placed in front of you to do the job.

Frankly, this is where we can help you.  Our grain originators can help you manage this pricing process BEFORE the opportunity slips away.  We have been busy working with area growers and developing marketing plans and watching the markets for you so you can concentrate on your job.  This is also why targets work so well.  Targets allow you to place firm orders to sell your crop with a premium and will execute when the market reaches your selling price, so you don’t have to watch the market.  These targets work great, are free, and allow you to be more productive during your busy times.  I encourage all of you to pay attention to the new crop corn and bean markets in the next 2 weeks.  Once we get past the 50% mark on planting corn, many times the premium comes out of the market.  You need to sell corn prior to this time as the market gets comfortable.  You need to sell when the market is uncomfortable and is willing to pay you a premium.  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.

In addition to potential slow corn planting, the other big news pieces this week are:

  • China has not purchased any US beans in the last 2 weeks. They are buying from Brazil, Canada, and even Argentina.  The price of beans from these countries is moving higher, and the Chinese bean crushers are having a much more difficult time being profitable.  China is doing everything possible to avoid buying US beans due to the 25% tariff.
  • China also slapped a 179% export deposit on US milo. This almost doubles the price of milo to the Chinese buyer who uses US milo.  Thus, the milo market in the US has crashed as there is no more demand from China, and there are currently 5 cargos of milo in route to China that have been just diverted away this week.  Reports surfaced that Saudi Arabia and the Philippines are taking delivery of this milo that was in route to China.
  • The weather has much improved for corn planting. Much of the corn belt is seeing temps in the 60’s this week with very little additional moisture.
  • The extreme dry area in Kansas and Oklahoma did get some rain the past weekend, and the HRW crop seems to be improving. Time will tell whether the rain will continue.
  • The US farmer has been disengaged from grain marketing until he gets his corn crop planted. This has allowed the basis to firm on corn and beans on old crop bushels.  Locally, the old crop bean basis has improved a dime over the last 2 weeks.  Once the farmer starts to sell again, expect the basis to back off.
  • High level US trade reps will be travelling to China next week in order to hammer out a potential deal with the US. The market is being supported today due to this.
  • We witnessed some fresh technical buying this week as the funds want to increase their length of ownnership.

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 $3.85, Resistance at $4.01, Place Targets at $3.96

New Corn – Dec 18 Corn Futures – Support at $4.02, Resistance at $4.16, Place Targets at $4.10

Cash Beans – July 18 Bean Futures – Support at $10.27, Resistance at $10.78, Place Targets at $10.68

New Beans – Nov 18 Bean Futures – Support at $10.25, Resistance at $10.60, Place Targets at $10.50

New Wheat – July 18 Wheat Futures – Support at $4.67, Resistance at $5.10, Place Targets at $5.00

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

Sign Up ENDS Monday for New Crop Average Price Contract – Enroll Today

We are now enrolling bushels into our new crop Average Price Contract which is for new crop grain that will be delivered during this fall.  This is a cash contract and will use a 10 week period to average the price.  The timing of the new crop contract will be May 2nd through July 5th.  We will simply average the closing prices each Wednesday during these periods, pricing 1/10 of your contracted bushels each week during the period.  At the end of the period, we will simply average the prices together.  There is no minimum quantity and the best part of these contracts are that they are FREE.  There are no fees associated with these averaging contracts.

The dates associated with the new crop pricing period of May 2nd to July 5th is normally a very good time to sell new crop grain because the market is dealing with planting problems and then dealing with dry weather problems somewhere in the Corn Belt.  When problems surface, the market puts more risk premium in the futures, and you will be participating in the market to capture these premiums.  If there are no problems, the market usually drifts lower after the July 4th holiday, making the timing an excellent part of this new crop average contract.    These contracts are simple, easy to understand, and they work.  Every farmer should put a decent amount of grain into these contracts to help protect your farm.  For more information on these exciting new contracts, please click here.

New Arrive Delayed Price Rates have Been Reduced

Effective March 20th, 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.

5,000 bu Condo Space For Sale

We have a patron who wants to sell 5,000 bu of Condo Space.  This 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

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