Grain Update – November 29, 2018

11/29/18

Trump and China’s Xi Will Meet This Weekend.  Can A Deal Be Reached?  Harvest Nears Completion.

The big news as of late is that Trump will meet with China’s President Xi over the weekend in Buenos Aires at the G20 Summit.  As you can imagine, the grain industry is very hopeful that a deal can be reached with China at some point, so the 25% soybean tariff can be lifted.  Up to this point, each country has been standing staunchly behind their guns, but I get a sense that China may be in a position to finally negotiate.  The tariffs are hurting their economy and their bean processors are really getting squeezed.  On our side, we are suffering from a lack of their demand for our beans.  Beans are stacking up in a big way all across the Corn Belt, and bean basis levels in all areas are depressed by 25 to 50 cents depending on the area.  Nearby bean futures have rebounded significantly since the beginning of October, but the loss in basis has hurt the American farmer.

Unfortunately, the world is a competitive place, and when one trading relationship does not work, the market usually finds an alternative solution.  If the US and China can’t work out a trading solution rather quickly, other countries will step up and supply China with the beans that they need, permanently destroying our demand base.  We have seen Russia, in recent weeks, take steps to make selling big volumes of soybeans to China much easier and workable.  They would like nothing more than to supply China with beans.  We have also seen the Brazilian farmer be much more aggressive in planting early varieties of soybeans this year.  Instead of harvesting them on Feb 1st, some will be ready to cut a month earlier than normal.  Why? So they can supply China with more beans because they know China is not buying US beans, at least not yet.  The Brazilian bean crop has in fantastic shape.  The beans are nearly all planted and they have had adequate moisture.  A huge bean crop is on the horizon for them, if the weather holds.  This is a double wammy for the US.  Their large bean crop will continue to pressure bean futures, and they are directly taking away our demand base.  Not a good deal folks.  Stay tuned as the bean market is very volatile as of late.  Huge price swings can be caused by a simple tweet.  The results of the meeting will likely dominate the markets Sunday night and early next week.

Harvest is finally starting to wrap up in most areas of the Corn Belt.  The USDA pegged both corn and bean harvest at 94% complete in the nation.  There are some pockets that still have corn and beans let, but this is the exception.  These crops will not sit until we get consistent cold and dry weather to freeze the fields with little snow to slow down harvesting.  We will see on Dec 11th what the USDA pegs the corn and bean yields at.  I would not be surprised if the yield could be slightly reduced on both again.  Beans suffered heavy shatter loss and the tops of the plant broke off due to excessive rains on a mature plant.  Additionally, many areas suffered corn yield loss due to extreme dryness or too much rain in June.  The USDA will peg the final yield in its January report.

Its not too early to start thinking about protecting next years corn production.  Nobody likes the current cash bean price.  As discussed above, the lack of China bean demand has caused the bean prices this year to be relatively weak.  Thus, most US farmers will likely plant more corn next year.  My guess is that we could plant at least 92.5 M corn acres next year, and if the weather cooperates during April, we could see as much as 95 M corn acres planted next year.  What do you think this will do to Dec ’19 corn futures?  Once we pass the 50% mark on corn planting in early May, watch out.  The market will likely suck the risk premium out of the market at press futures lower, and possibly significantly so, into harvest next fall.  Dec ’19 corn futures are currently trading at $3.95 and the chart shows significant resistance around the $4.08 level.  Personally, I would have targets in to sell Dec ’19 corn futures at $4.00 and sell at least 10% of next years production every nickel higher.  I believe it will be very difficult for Dec ’19 corn futures to rally higher than $4.25, assuming normal weather and planting.  Obviously, if the crop does not get planted, or we have a drought, all bets are off.

Corn basis has already started to strengthen in many areas of the Corn Belt.  The delayed harvest has caused the processor to firm up quicker than normal, and now that harvest is complete in many areas, and the bin door is slammed shut, the basis will be forced to do more of the heavy lifting.  Corn basis should work firmer in the coming days and months as the processor and feed demand picks up.

Bean basis is different.  It has been soft all year, and this will likely not change anytime soon.  That being said, very little beans are moving now, so the processor has been firming his bids too stimulate movement.  But will we get back to historical basis levels this year?  Doubtful.  Also, we are looking a having a huge amount of bean ending stocks this year.  When is the last time we have carried over 1.2 B bu of beans?  I don’t think its ever been this large.  This will pressure futures, basis, and spreads all year long.  That being said, if the US and China can work out an agreement of the weekend, this would have a dramatic effect on the bean market.  Futures, basis, and spreads would all instantaneously strengthen, but after all of the market gyrations, we will still be carrying over 1.2 B bu of beans.  No matter how you slice it, this is still a big pile of beans.  To see where the cash grain prices are today, please click here.  To talk to one of our grain originators about a contract, or to schedule an appointment for one of us to visit you at your farm, please click here.

LAST CALL – CHS ProAdvantage Contracts.

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 4 years and the results have been quite solid.  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 2019 delivery.  For next year’s production, you can enroll in a Fall of 2019 delivery, and we also have Fall of 2020 delivery contracts as well.  The cost is 10 cents per bushel for the July 2019 or Fall 2019 contracts, and 12 cents per bushel for the Fall 2020 contracts.  The Fall 2020 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 8th, 2018.

Recommendations For Corn & Bean Meal Consumers (Livestock Producers)

The corn market broke lower over the last week and many took this opportunity to lock in their corn needs for the next several months.  The corn basis has been relatively firm in many areas, and will likely remain so.  If you need to buy corn, especially if we see corn futures continue to drop, sooner is better than later.  The price of bean meal has been sliding lower in recent weeks, and the chart looks to be wedging to the down side.  This tells me that there is a decent chance that bean meal will move lower in the near future.  Jan ’19 bean meal futures have bounced off of the $303 level 4 times in the last few months and is currently trading at $309.  If we can break down through the $303 level, it will likely break hard to the down side.  I would be patient buying bean meal, buying only hand to mouth, until the market gives us further direction.

Cash Corn – March 19 Corn Futures – Support at $3.56, Resistance at $3.75, Place Targets at $3.60

Cash Bean Meal – Jan 19 Meal Futures – Support at $303, Resistance at $312, Place Targets at $305

What Are The Charts Telling Us?  Recommendations For Grain Producers.

Here are the support and resistance levels for cash and new crop grains.  These are all futures levels as traded at Chicago:

Cash Corn – Mar 19 Corn Futures – Support at $3.67, Resistance at $3.75, Place Targets at $3.74

New Corn – Dec 19 Corn Futures – Support at $3.91, Resistance at $4.05, Place Targets at $4.00

Cash Beans – Jan 19 Bean Futures – Support at $8.56, Resistance at $9.00, Place Targets at $8.95

New Beans – Nov 19 Bean Futures – Support at $9.10, Resistance at $9.50, Place Targets at $9.40

New Wheat – July 19 Wheat Futures – Support at $5.17, Resistance at $5.48, Place Targets at $5.42

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

Still Own Old Beans?  The Cash Price Still Not Good Enough?  Cash Plus Is The Answer

We are currently bidding $7.85 for cash beans and $8.24 for Oct / Nov ’19 beans delivered into Readfield.  If this level is still not enough to satisfy you cash flow demands, you should consider our Cash Plus Contract.  This contract will allow you to receive a 29 cent premium over the cash bid, and paid to you today.  In exchange for this premium, you will give us an offer to sell the same quantity of new crop November ’19 bean futures at the $9.70 level if on October 23rd 2019, the price of November soybean futures closes at or above the $9.70 level.  This is a win-win for you.  You will be paid a 29 cent premium now on your cash beans.  If on October 23rd , November bean futures close at or above $9.70, you will have the same quantity of beans sold at $9.70 futures, less the basis of 110 cents under November (this could vary slightly), equals a new crop bean contract at $8.60 for Oct / Nov ’19 delivery into Readfield or Center Valley.  This is a good price considering our posted new crop bean bid is $8.27 and represents a 33 cent premium over our posted new crop bid.  If on Oct 23rd , November bean futures close lower than $9.70, then you keep your 29 cent cash premium, and have no other obligation.  This contract has been popular as of late, and if you still own old beans, you should seriously consider it.

As always, if I can help you with anything, please call me at the grain office in New London at 419-279-3809 or send me an email at marcus.cordonnier@chsinc.com.

Marcus Cordonnier

CHS Larsen Cooperative Supports Hometown Fire Department

Pictured: Todd Reif, CHS Larsen Co-op General Manager and Loren Steinacker, local farmer and fire fighter. 

CHS Larsen Cooperative awarded a $2,250 grant to Hortonville-Hortonia Fire District. The funds will help to keep their equipment up to date and their firefighters certified. Some of the equipment they are looking to purchase will aid in rescue situations if there were an active shooter incident. As a department they interact with several different local agencies and the school district, helping teach kids what to do if such a situation would arise.

“We’re proud to support this project as a way to strengthen the community and see it thrive,” says Todd Reif, General Manager, CHS Larsen Cooperative. “Projects like this are essential to enriching our rural area and the people who live here.”

In addition to the funds contributed by CHS Larsen Cooperative, the contribution has been matched dollar for dollar by a CHS Seeds for Stewardship grant, which helps cooperatives grow their impact locally. Together more than $4,500 will benefit Hortonville-Hortonia Fire District.

“Cooperatives were founded on the principles of education, community involvement and cooperation,” says Todd Reif. “By combining resources, we are providing double the impact to our area and demonstrating the cooperative spirit.”

To learn more about other ways CHS Larsen Cooperative gives back, visit https://www.chslarsencooperative.com/community/

A simple 4-question test for choosing a diesel engine oil

filling diesel engine oil jugs

By Erin Wroge, CHS market supervisor, Cenex brand lubricants

Choosing the right engine oil for your equipment can get complicated fast. Today’s diesel engine oils are more advanced than ever, and with all the options on the market today, it’s no wonder if your head is spinning. Viscosity control? Shear stability? TBN retention? It can almost feel like you need an advanced degree in mechanical engineering just to pick the right product for your equipment.

Not everyone is a lubricants expert, and they shouldn’t have to be. Still, choosing the right engine oil is a critical decision. The oil inside your heavy-duty equipment is a protective barrier against thousands of pounds of pressure and constant stress. Without the right premium lubricant, your equipment can wear itself down to the bone — incurring costly damage and downtime.

The good news is that picking an engine oil doesn’t have to be rocket science. Cenex® offers a full line of high-quality lubricants designed to meet a variety of heavy-duty applications. To determine which product is right for your operation, just ask yourself these four simple questions. (more…)

Grain Update – November 8, 2018

 

11/8/18

USDA To Release Monthly Grain Report On 11/8/18

The USDA will release its monthly grain report on Thursday, November 8, at 11 am CST.  The market is expecting the corn yield to be reduced by 1-2 bushels down to 180 or so.  As harvest has moved north, many of the areas in the northern corn belt were forced to deal with flooding conditions in June.  This has caused more yield variance than normal, and it has also caused vomitoxin levels to rise in some of these flooded areas as well.  We have also seen some lower test weights in corn than previously thought.  Lower test weights lower the bushel per acre yield as well, and also affect corn quality.  We have seen some major hog producers in western Iowa now raise concerns about the lower quality corn with higher vomitoxin levels.  With this new threat, they may now be forced to buy their corn from another region to secure better quality corn so their feed ration quality does not deteriorate.

(more…)

2019 Cenex® Gift Card for Gallons Promotion

 

The Gift card for lubricant gallons promotion is back again this year starting on November 1, 2018. For every 125 gallons of qualifying Cenex® lubricants you purchase from CHS Larsen Co-op from November 1, 2018, through February 29, 2019, you will receive a $50.00 Visa gift card. Better yet, there is no limit to the gallons you can buy during this four month promotion period or the number of Visa gift cards you can earn. Listed below are the qualifying Cenex® lubricants that are eligible (most commonly needed products). Plus, greases are also eligible towards the 125 gallon threshold.

Qualifying Products:

Maxtron® DEO Synthetic Blend Diesel Engine oil

Maxtron® Enviro-Edge® Full Synthetic Diesel Engine Oil

Superlube TMS® Conventional Diesel Engine oil

Maxtron® GL Full Synthetic EP Gear lubricant

Maxtron® THF+ Full Synthetic Tractor Hydraulic Fluid

MP Gear Lube

Qwiklift® HTB® Hydraulic Fluid

 

Greases:

Blueguard® 500+

HD Moly Extreme

Maxtron® EP

Maxtron® FS

ML365®

Molyplex 500+

Poly Extreme®

Red Protect®

Fluid Gear Grease

For more information or to place a lubricant order please call your Energy Specialist today. CHS Larsen Co-Op thanks you for allowing us to be your Cenex® lubricants supplier.

Grain Update – October 25, 2018

 

10/25/18

Corn & Bean Harvest Progress Passes The Halfway Point

The USDA reported on Monday that the national bean harvest was 53% complete and corn harvest was 49% complete.  The northern Corn Belt has been in active harvest since mid-last week, and farmers have been making huge progress in the last week.  Locally, the focus has been on beans first, and then the corn.  I would estimate that bean harvest is now 30% complete and corn harvest is likely only 5% complete today.  Farmers will likely continue to harvest beans until Sunday when rain is forecasted, and this rain will continue for several days next week.  Thus, beans that don’t get harvested this week, it may be some time before farmers are able to return.  In the meantime, many will likely change heads on their combines and go after corn until the beans dry out again.  Bean yields continue to be very good and way above average.  Corn yields seem to be more varied as many fields were negatively affected during the dry period in mid-June.  Some corn fields are having problems with lodging with a few varieties having a real problem.  The decent yields and soft soil conditions are making some fields more prone to lodging compared to others.  We have not seen much damage in soybeans as compared to the problems in the Delta areas and southern Corn Belt.  However, another rain event, and this could start to change.  Over all, yields and quality seem really good this year on corn and beans.

(more…)

Now is the Perfect Time to Change Lubricants in Your Equipment

 

As we enter the end of October, harvest is in full swing in many parts of Wisconsin. As field work comes to an end in the November and December it’s time to think preparing for putting equipment away for the winter. With new technologies in oil and other lubricants, we are seeing higher hour thresholds and thus longer drain intervals for such things as engine oil, transmission, and hydraulic oils/fluids. Many farmers are now experiencing just one oil change per year and topping off other lubricants as needed in season.

Many manufacturers of farm equipment and accessories are recommending that oil/lubricant changes take place when the equipment is being put away for the winter. The reason for this is twofold; first, it is important to make sure all that old and worn out lubricants are pulled out of the engines, transmissions, braking, hydraulic, and gear areas so the acids/dirt do not sit on metal parts over winter, possibly causing corrosion or other damage. Second, new oil and lubricants, with their full load of protective additive ingredients, will not only protect the metals, seals, and other parts, but add full lubrication protection over winter/extended periods of inactivity, aiding in start-up come next spring. Think of this as applying a protective layer of lubricant on all metal parts before the cold Wisconsin winter and months of inactivity occur.

Because of these manufacturer recommendations to change oil and other lubricants in the late fall/early winter, CHS and Cenex® have a bulk lubricant program in place called the Gift Cards for Gallons lubricant program. This program takes place from November 1, 2018, through February 28, 2019, for delivery of the most requested oil, lubricants, and grease needed for farm and heavy duty equipment. This program not only allows you to get engine oils and lubes when you need them after the harvest season is completed; but, also gets you ready for spring and eliminates the annual road bans on deliveries come March and April. Talk to your local CHS Larsen Certified Energy Specialist for more details on this gift card program and how you can earn a Visa $50 gift card for every 125 gallons of lubricant and grease products purchased during the promotional period. Combine high quality Cenex® lubricants and the Cenex Total Protection® Warranty program (TPP) and you are set to protect the internal parts of the machines that power your farm operation.

Written by: Todd Plath, CES

Keeping Your Engines Protected is Our Top Priority

Protecting you Equipment from Wisconsin’s extreme winter temperatures

 

As the days get shorter and the nights grow colder, it’s time to start thinking about protecting your equipment from Wisconsin’s extreme winter temperatures.

CHS Larsen Co-op has already started the process of planning for winter.  Approximately a week ago we added the WA4 additive to our Cenex® Ruby FieldMaster® and RoadMaster® fuel.  For a few extra cents per gallon the WA4 cold flow improver gives you a slightly higher operability range than our standard fuel. It’s perfect for this time of year, when temps can range anywhere from 25 to 70 degrees.

Thanksgiving and deer season will soon be upon us, and so will be the switch to Our Cenex® Ruby FieldMaster® and RoadMaster® SE (Seasonally Enhanced).  SE was formulated to provide excellent coverage for the end of fall/beginning of winter, with a cold filter plugging point (CFPP) of -25 degrees.

But, as anyone that lives in Wisconsin knows, we need more protection than the SE once winter actually hits.  When it gets cold, I mean really cold, like nose freezing shut/hurts to breath kind of cold; we need a fuel blend that will keep us going.  Everybody knows, the world doesn’t stop turning because it’s -30 degrees outside and we don’t stop either.  That is why Cenex® created WinterMaster®!

Cenex® WinterMaster® gives us operability of -30 degrees with a CFPP of -55 degrees.  With a 70/30 blend of #1 & #2, this is the final step we take to ensure that we are ready for whatever winter can throw at us.

If you are wondering what formulation is right for you and at what times you should make the switch to winter fuels, please call your Energy Sales Representative today.

Winter Master Road Master XL 

Written by: Kim Leisner, Energy Sales Manager

CHS celebrates National Co-op Month through cooperative education

October is National Co-op Month

The CHS Foundation, funded by charitable gifts from CHS Inc., announced it has awarded more than $440,000 in cooperative education grants to projects that will help students learn about the cooperative business model and what makes cooperatives unique.

“October is National Co-op Month to raise awareness about cooperatives. What better time to celebrate how the CHS Foundation has supported cooperative education projects for more than 20 years?” says Nanci Lilja, president, CHS Foundation. (more…)

Wisconsin Home Energy Assistance Program

As the leaves fall and the cooler weather sets in, preparing for winter moves up on our “to do” lists.  Many of us prepare by giving our snow blowers a tune up, putting away our summer wardrobe and get the sweaters & vests out of storage, maybe installing a snow fence.

How many of us are tasked with having to prepare financially for winter?  Maybe not you, but someone you know could be struggling with having to decide whether to pay their heating bill or buy groceries.  Many of our parents & grandparents are going without crucial medication in order to pay their heating bill.

If you or someone you know is struggling to make ends meet in the winter, please know that there is help. The Wisconsin Home Energy Assistance Program or WHEAP is available and they are now taking applications for the 2018/2019 heating season.

Please follow this link for contact information and income guidelines or call 1-866-HEATWIS.  CHS Larsen Cooperatives energy department has worked with WHEAP for many years and We will be happy to assist in any way we can.

 

© 2019 CHS Inc.