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.

Thus, I encourage all of you who need to sell beans for either this year or early next year to use targets to take advantage of a pop in the market today.  It is simply amazing what these markets can do in a very short amount of time.  There is simply no way we can communicate to all of you during a short 5 minute rally right at 11 am after the numbers are released.  This is why targets work so well.  It allows us to have resting orders already in position at Chicago so when the market starts to gyrate at 11 am, your orders get picked off and you can take advantage of a very nice pop in the market.

Taking Advantage of Targets

We did see Iraq buy 500,000 tons of wheat this past week.  Frankly, our nearby wheat market has been pounded lower over the past three months and our wheat is very competitive on a world scope.  This news took the market by surprise and allowed us to rally quite significantly earlier in the week.  The wheat market continues to offer great carries and is still offering a decent price for new crop July / August 2018 delivery.  I encourage all of you who have planted wheat to constantly monitor the values for new wheat.  If we continue to sell wheat to foreign buyers, this market could react quite positively and offer nice opportunities.  Again, I would figure out what price you are comfortable selling new wheat, and place a target out there for what you need.  Targets are a great tool to help you lock in better returns for your farming operation.  You can call us and we can enter them for you, or you can do it all by yourself by entering them online through our Online Bid Center by clicking here.

CHS ProAdvantage

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.

This contract has been offered for three years and the results are quite remarkable.  Their bean contract has worked well, and has allowed participants to enjoy contracts that were significantly higher than the current market.  All of this goes directly to your bottom line.  For bushels in your bin, you can enroll in a contract for July 2018 delivery.  For next year’s production, you can enroll in a Fall of 2018 delivery, and we also have Fall of 2019 delivery contracts as well.  The cost is 10 cents per bushel for the July 2018 or Fall 2018 contracts, and 12 cents per bushel for the Fall 2019 contracts.  The Fall 2019 is an especially good deal because the contract allows our traders an additional year to make trading returns on your behalf for only 2 additional cents.  Also, the 2 year contract has worked tremendously well over its history.  There is no minimum bushel quantity required.  Please click here for more information on our CHS ProAdvantage contract.  Every grower in the area should take advantage of this contract on at least a portion of next year’s production.  It is a very good contract that has a long history of success.  If you have other questions, please call me at Readfield.  Enrollment ends December 1st, 2017.

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


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