Weekly Grain Update – March 27, 2018

3/27/18

The USDA Will Release Its Prospective Plantings Report Thursday At 11 AM

The USDA will release its annual Prospective Plantings report and March 1st Grain Stocks at 11 AM on Thursday morning.  There is no other report during the year that is quite like this one.  This is a big report, with a lot of information, and it usually causes the market to move in large volumes, either higher or lower, depending on what the government puts out.  This is the first time during the crop year that the USDA gives us their prediction on new crop acres of corn and beans and it sets the starting point for the ‘18/19 supply and demand tables.  The focus now shifts from the ‘17/18 supply and demand tables to ‘18/19.  Thus, this report is a big deal, and it usually creates market gyrations that affect the trade for several days after its initial release.  Today, the market is expecting the ‘18/19 corn acres to be in the range of 89 to 90 M acres, and the bean acres to be in the range of 91 to 92 M acres.  Last year, both corn and beans were right at 90 M each.  So this is a shift away from corn to more beans.

There are several reasons for this.  First, the bean market has give all of you a great opportunity to sell new crop beans for this fall at profitable levels.  Thus, more new crop beans will be grown.  Secondly, the farming economy is struggling on many fronts.  The banker is ramping up his criteria for farm loans, and raising corn takes much more dollars per acre than beans.  The path of least resistance is more beans and less corn, especially since we had the opportunity to lock in nice profits with new crop beans already this year.  However, the American farmer loves to plant corn if he can get his crop planted on time and has a big enough window to get this done.  I have said many times that the weather during corn planting determines final corn acres.  If he gets his original allocation planted and it is still dry enough to plant corn, and we are still before May 10th, he will pound more corn in the ground and less beans.

This report has a long history of significantly moving the market once the numbers are released.  Volatility will again be the word of the day.  Due to this, this is an excellent opportunity to get target orders placed for any remaining old crop bushels that remain unpriced in the bin or in elevator storage, and get orders to sell new crop bushels.  It is simply amazing how the markets will move in fractions of seconds once the numbers are released.  I encourage all of you to put a plan together, if not already done so, and put solid target orders to sell remaining old crop bushels and try to get at least 50% of your new crop bushels locked in before the planters roll.  I like July delivery corn at $3.50 or above, new corn at $3.60, July delivery beans at $9.75, new beans at $9.60, and new wheat at $4.10 and above.  These levels are all within 15 cents from hitting, and I would have no problem putting orders out there during the report to see if they could be picked off, and take advantage of the volatility of the report.  To see where cash grain prices are today, please click here.

I encourage all of you to be much more aggressive in forward contracting your grain ahead of planting and take advantages of opportunities while they last.  This is not the time to become bullish, but the time to pounce on opportunities to protect your farm.  The farmer can and will pound a massive amount of corn and beans into the ground at ever increasing speeds, so our planting risks continue to be reduced each year.  The earlier we plant, the less likelihood of having drought problems later in the year.  New seed varieties can produce even during the driest of the years.  We still have planting and weather scares during the year, but the industry is reducing these risks continually.  We also have massive amounts of grain around the globe.  The point is that the market will give you opportunities to lock in profits ahead of the planting season.  However, time is starting to run out.  Once the planters roll, and the corn gets planted, the market will give you less and less opportunities to forward contract bushels for this summer or this fall as it will get more and more comfortable with the crops growing in the field.  Your advantage is to lock in these premiums BEFORE the crop gets planted, not after.  There is no incentive for the market to rally after the crop is planted, unless we have a weather problem, as the crop is already planted.  If a premium is given, the market will try and encourage you to plant a certain crop before the crop is actually planted, by dangling a big carrot in front of you.  The carrot vanishes once the crop is planted.  The proactive grain marketer will be the successful operation moving forward.

Last week did a huge amount of damage to our grain markets.  Many times, after a significant pullback, the market will go back and “kiss” the previous low level goodbye, before the weaker trend prevails and the markets move lower and lower.  You can call us and we can enter these targets for you, or you can do it all by yourself through our Online Target Center by clicking here.

LAST CALL To Reserve Your Seat For Next Week’s Grain Meetings

On April 2nd and 3rd, we will be hosting 3 Grain Marketing Meetings throughout our draw area.  Here is the schedule:

  • Monday April 2nd at 5:30 at the Larsen Precision Ag Building. Dinner then meeting.
  • Tuesday April 3rd at 9:30 at the Waupaca Ale House. Meeting with lunch to follow.
  • Tuesday April 3rd at 5:30 at New London Crystal Falls Banquet Hall. Dinner then meeting.

Brian Rydlund from CHS Hedging will be joining us to go over the current S&D’s and also offer his recommendations for contracting and marketing.  It will be a lively discussion on current grain topics.  You are welcome to attend.  For more information on the location, times, and how to RSVP, please click here.

What Are The Charts Telling Us?

Looking at the charts today, all grains made a fresh low on Friday, and then worked higher into the close.  Since then, the market has not done much.  Here are the support and resistance levels for cash and new crop grains.  These are all futures levels as traded at Chicago:

Cash Corn – May 18 Corn Futures – Support at $3.69, Resistance at $3.80, Place Targets at $3.77

New Corn – Dec 18 Corn Futures – Support at $3.91, Resistance at $4.02, Place Targets at $3.98

Cash Beans – May 18 Bean Futures – Support at $10.09, Resistance at $10.40, Place Targets at $10.30

New Beans – Nov 18 Bean Futures – Support at $10.12, Resistance at $10.36, Place Targets at $10.26

New Wheat – July 18 Wheat Futures – Support at $4.62, Resistance at $4.79, Place Targets at $4.74

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

New Arrive Delayed Price Rates have Been Reduced

Effective March 20th, we have reduced our Delayed Price rates again 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.

New Crop Average Price Contracts – Have You Enrolled Yet?

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.

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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