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.

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 two additional cents.  Also, the two 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 1, 2017.

Market Update

As I look at the corn charts today, December corn futures are in a solid sideways channel ranging from $3.45 to $3.55.  December corn futures have solidly traded between these levels since the beginning of September, and really don’t show any threat to trade higher or lower in the near term.  For those of you who must sell corn for cash flow or because you don’t have enough space at home, I would place targets for Dec corn futures in the $3.52 to $3.55 level.  This is the top of the range and should give you competitive sales within the next two weeks.  Longer term, the corn market is probably going to be forced to move higher in order to generate movement.  Once harvest winds down, the farmer will likely lock the bin door, and it will take significant upwards movement in basis, futures, and spreads to encourage corn movement.  But make no mistake.  There is a huge amount of corn in this country and any slight upwards movement in the market will result in a huge amount of farmer activity in the country.

As I look at the November bean futures chart, one thing is clear.  We are currently resting on the support on the lower side of the upward sloping channel.  The market has confirmed this channel line 3 times since early September.  Additionally, bean harvest is nearly over in many parts of the Corn Belt, so selling pressure on nearby bean futures is gradually being reduced each day.  This tells me that beans could bounce in the coming days.  Looking at specific levels, I see support in November futures at $9.70 and resistance at the $10.15 level, which is the top line of the channel.  The market will be very sensitive to the South American weather situation.  If Brazil or Argentina cannot get their bean crop planted in a timely manner, the market will react, and possibly significantly.   The critical period will be in the next 2 weeks for them.  They are a huge producer of soybeans, and the world needs their production.

Storage Programs

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.  It is 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:    Corn will be shrunk and dried to 15.0% moisture and beans will be shrunk and dried to 13.0% moisture.  Delayed price charges will be 4 cents per bushel per month until 10/1/18, and deducted from grain settlement.

 OPEN STORAGE:    Corn will be shrunk and dried to 14.0% moisture and beans will be shrunk and dried to 12.0% 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.  Corn will be shrunk and dried to 14.0% moisture and beans will be shrunk and dried to 12.0% moisture.  Storage charges will be 5 cents per bushel per month, and invoiced monthly.

As you can see, our minimum charge for bushels placed into Delayed Price is 4 cents per month.  Additionally, if you price your bushels within 7 calendar days of delivery, we will waive the 4 cent fee.  If you look at the competition, their minimum storage rate is 15 cents and they will shrink your bushels down to 14.0% on corn and 12.0% on beans no matter the storage option you choose.  If you have any other questions, please call me and I will be happy to go over the programs with you.

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

Marcus

 

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