Average Price Program Enrollment Open

Even after positive numbers on the report a few weeks ago, prices still do not seem to be positive. South America is running the bean market during harvest and corn seems to be piggy backing off bean trends, which do not help at all. Not to mention Chinese tariffs are not helping either. Setting targets at reasonable levels in the near future may be your best bet.

Our average price program enrollment has opened. The average price contract prices out an even number of bushels, at the close of every Wednesday. This happens for a 10 week period from May 1st to July 3rd. This program is a useful tool to use as a benchmark for your grain marketing, also it is free of charge. Click Here to learn more.

If you have questions or want to get some contracts in place feel free to reach out to Mike Steingraber and he would be happy to go over options with you.

Written by Mike Steingraber, Grain Originator

Grain Update – February 13, 2019

After 2 Months, We Finally Get A USDA Report.  Unfortunately, It Does Not Change Much

The USDA was out with its monthly crop report last Friday for the Grain Industry.  The report was a rather large data dump as this report was the combination of the Jan ’19 and Feb ’19 monthly data.  The government shutdown prevented the USDA from releasing its January report on time.  Thus, Friday’s report gave us first quarter grain usage, winter wheat planted acreage, final numbers from the ‘17/18 crop, and the supply and demand and ending stocks update for the current month.  Since the grain trade was waiting on this information for 2 months, it was widely anticipated and projected to be a game changer.  In the end, it changed little and came back as mostly as expected with little market reaction.

In the corn market, the USDA reduced the corn yield by 2.5 bpa down to 176.4 which caused total corn production to drop 206 M bu down to 14.42 B bu.  This change was mostly as expected by the market, and already factored into futures.  On the demand side, the USDA reduced corn used for feed by 125 M bu down to 5.375 B bu.  This was not expected by the market.  We have a big increase in total livestock now consuming corn, so how can feed corn usage go down?  The USDA also reduced corn used for ethanol by 25 M bu and reduced corn used for seed by 15 M bu.  When the dust settled, the corn ending stocks for this crop year was reduced by 46 M bu down to 1.735 B bu.  As discussed, the market pretty much anticipated this yield cut and the resulting reduction in corn ending stocks.  Generally, a 2.0 B bu carryout puts the market into comfort mode, and a 1.5 B bu carryout starts to put the market on edge.  This level allows the market to remain at the status quo as if we look back through history, this type of carry over number is actually quite common. 

The market will be looking forward to how the South American corn crop develops and if Brazil’s corn crop will have its yield trimmed like its beans.  Additionally, the market is projecting US corn planting intentions around 92 M acres this spring.  Dec corn futures are hovering just above $4.00 today.  Corn acres could get a bump if Dec corn rallies upwards close to the $4.25 level.

On beans, the market is a bit different.  It is currently being pushed around by the latest tweet, and the most recent headlines coming out of the US / China negotiations as the teams aggressively try and end the tariff war prior to the March 1st deadline.  If no agreement is made between the US and China by March 1st, the 10% US tariffs on China’s goods that we buy will increase from 10% to 25%.  This is a huge deal to the Chinese because they hate these tariffs, but it is the major item that is forcing China to be honest and negotiate with the US.  In the end, it will be Trump who will make the final decision to extend the March 1st deadline if no deal is made, but significant progress has / is occurring.

China is now done with buying beans from the US and from this point forward, they will buy all of their beans from South America as their beans are the cheapest in the world and both Argentina and Brazil are in major harvest mode today.  Argentina’s bean crop is just massive, but the Brazilian bean crop has been trimmed down to the 115 MMT level or so due to dry weather.  In the last week, Brazil has received more rain and Argentina received less rain which is benefitting both countries.  Thus, we could see the bean yields improve on both as we move forward.

Nearby, the bean market is in a tug-of-war between the big optimism of a new China trade deal, and the yield reducing weather in Brazil.  The fact is that neither will affect the outcome of this year’s world bean carryout that much.  The world has a huge cushion of excess beans, and once the Brazilian crop gets harvested, and the market sees that their volume is still quite substantial, and once the US gets its bean acres planted and emerged, I believe we could see a major reduction in bean prices going forward.  The US bean carryout is between 900 M and 1.0 B bu and could grow substantially going forward depending on final bean acres and planting weather.  Nov ’19 bean futures above $9.50 is a gift and should be sold by the farmer.  We have beans tucked away in many areas of the Corn Belt this year as the farmer hated the wide basis levels this past fall.  One can build a case where we have back to back bean harvests in late summer as the farmer cleans out his bins just before fall harvest to make room for new crop.  This will likely pressure futures and basis lower to significantly lower once the new crop acres emerge.

Let’s look at the USDA report from Friday.  The USDA reduced the bean yield by 0.5 bpa down to 51.6 bpa which lowered the final bean production number by 56 M bu down to 4.544 B bu.  The USDA also increased beans used for crush by 10 M bu, but lowered bean exports by 25 M bu down to 1.875 B bu.  With the lack of Chinese bean buying, the bean export number is still vastly overstated, and I can see bean exports being trimmed by at least another 100 M bu by the end of the crop year.  When the dust settled, the final bean carryout was trimmed by 45 M bu down to 910 M bu.  Yes, the bean carryout was reduced, but we are still looking at over 900 M bu which is a huge number!  To give you some historical background, the US bean carryout has never been over 1.0 B bu.  Going back to 1975, the biggest bean carryout prior to this year was in 2007 when final bean carry out was only 573 M bu.  Our current bean carryout is almost double this and looks to grow once exports come down.

If you do not like the basis, sell beans on an HTA contract and set basis later. However, the posted basis today could very well be the best basis of the year, only to widen out considerably as we get closer to harvest.  If you plan on growing soybeans on your farm this summer, and if you don’t have them sold yet, I strongly suggest you do this now.  I have no problem getting at least 50% of these beans protected in some way.  If you don’t like the cash price, and you don’t want to sell beans on an HTA, another option is to use our cash plus contract where you can generate an additional 25 cents today in exchange for a new crop offer.  Please see below for more details.  This is a great tool, and many customers are using it.

If you would like to place a target to sell grain, you can either call us or place your own target on our Online Target Offer system.  It is easy, free, and an awesome way for you to protect your farm.  Please click here for more information.  If you would like to talk to one of our grain originators or make an appointment for one of them to meet with you on the farm, please click here.

Do You Want a Premium for your Beans?  Cash Plus Is The Answer

We are currently bidding $8.20 for cash beans and $8.70 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 24 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 $9.90 level if on October 23rd 2019, the price of November soybean futures closes at or above the $9.90 level.  This is a win-win for you.  You will be paid a 24 cent premium now on your cash beans.  If on October 23rd , November bean futures close at or above $9.90, you will have the same quantity of beans sold at $9.90 futures, less the basis of 90 cents under November (this could vary slightly), equals a new crop bean contract at $9.00 for Oct / Nov ’19 delivery into Readfield or Center Valley.  This is a good price considering our posted new crop bean bid is $8.70 and represents a 30 cent premium over our posted new crop bid.  If on Oct 23rd , November bean futures close lower than $9.90, then you keep your 24 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.

Recommendations For Corn & Bean Meal Consumers (Livestock Producers)

The bean market has ramped up yesterday with the China enthusiasm, and this has pushed bean meal higher as well.  Corn futures ramped higher yesterday, and corn basis is firming.  At some point, this enthusiasm will cool and the marker will reset lower.  This will be the time for you to lock in corn and bean meal for your livestock.  Here are my recommendations for coverage.  To see where futures are currently trading, please click here.

Cash Corn – March 19 Corn Futures – Support at $3.67, Resistance at $3.88, Place Targets at $3.71

Cash Bean Meal – March 19 Meal Futures – Support at $303, Resistance at $325, Place Targets at $308

Sign Up NOW For New Average Price Contracts

We are again offering an average price contract this year for new crop delivery.  The new crop contract will be for corn or beans for Oct / Nov ’18 delivery into any of our facilities.  The contract 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 1st through July 3rd.  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 1st through July 3rd  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.

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 $3.88, Place Targets at $3.83

New Corn – Dec 19 Corn Futures – Support at $3.91, Resistance at $4.08, Place Targets at $4.03

Cash Beans – Mar 19 Bean Futures – Support at $8.80, Resistance at $9.41, Place Targets at $9.31

New Beans – Nov 19 Bean Futures – Support at $9.23, Resistance at $9.71, Place Targets at $9.65

New Wheat – July 19 Wheat Futures – Support at $5.17, Resistance at $5.50, Place Targets at $5.40

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

February Results For CHS ProAdvantage Contracts

For those of you who have placed bushels in the CHS ProAdvantage program, we have the updated pricing results for February.  Again, ProAdvantage is our fully managed contracts that we offered during December for patrons who wanted a completely “hands off” approach to grain marketing.  You simply gave the trading professionals at CHS a portion of your production for next harvest, and they take care of the rest.  Behind the scenes they are aggressively buying and selling complex futures and options positions to generate as much profit as possible on your bushels by the end of the program.  The goal is to give you the highest possible futures price at the end of the program as possible by using trading techniques and options that typically are not available to the individual farmer.  The signup period is obviously over.  However, we can see each month how they are progressing, and look at their current values as they trade through the period.  We can also see the percentage of the crop they have sold, which gives you a clue to how bullish or bearish they are.  For those of you enrolled in the program, and you did not receive the results yet, here they are.  This is an interesting read.  Don’t worry if you don’t completely understand all of the information.  If you have any questions about anything, and you want help, please call me and I will explain it to you.  Please click here to see the Feb results.

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

Marcus Cordonnier

Getting More Out of the Market

The current down swing in the market has put a damper on farmer’s spirits lately. Are you currently looking to get more out of the market?  Cash + contracts have done well for corn pricing. Farmers are getting anywhere from a $0.12 premium on a cash contract for a $4.40 new crop offer, to $0.20 premium for a $4.10 new crop offer. These need to be in 5,000-bushel increments. New crop prices are currently lingering above $3.50 which is a good place to start your pricing for the year.

The soybean market has been bleak especially when it comes to basis. Everybody needs to be proactive on getting some priced before things get worse. Cash + contracts on the compass programs is not very promising below $0.30 premium. However, getting some bushels on the books instead of selling over the scale is a good idea. It is never too late to start looking towards 2019 harvest. New crop bean prices have been shaky, especially the last few trading days around $8.50 with a -$0.90 basis. HTA contracts can possibly help make up the difference by locking in the futures and hoping the basis improves by the time harvest comes around.

If you have questions or want to get some contracts in place feel free to reach out to Mike Steingraber and he would be happy to go over options with you.

Written by Mike Steingraber, Grain Originator

Grain Update – December 13, 2018

12/13/18

USDA Released Its December Crop Report.  China Buys 30 Bean Cargos, Finally…

The USDA released is December crop report on Tuesday and really did not change much from November. Corn carryout did increase, but bean carryout remained the same.  Let’s look at the numbers.

For the ’18/’19 crop year, the USDA dropped corn used for ethanol by 50 M bu down to 5.6 B bu. They also lowered the amount of corn imported into the US by 5 M bu down to 45 M bu.  When the dust settled, the USDA raised corn carryout by 45 M bu to 1.781 B bu.  The cut in ethanol usage was not a surprise to the market as their margins have been negative for some time.  Each week it seems like there is another ethanol plant being moth-balled because the industry is not profitable right now, so the higher cost operations are being shut down. A 1.781 B bu carryout is tighter than last year’s numbers, but it will be interesting to see how the higher priced corn will affect feed demand incoming weeks, as lower priced corn from South America will be coming on line in March.

As harvest ends in the US, the corn basis levels have moved higher.  This is most noticeable in the southern Corn Belt where harvest has been over for quite some time.  Basis levels there have been stronger than normal for some time to try to stimulate movement.  The recent run up in corn futures has allowed the basis to back off slightly, but the farmer still is in no mood to deliver big quantities of corn yet, especially with the questions with China and how much they will buy of Ag commodities going forward.  China will focus on beans, but if they buy beans, the market should react positively, which will affect corn futures as well.

The USDA did not change one item in the bean complex on their December crop report.  This is odd as the market feels confident that bean exports need to be reduced at some point even if China starts buying now. Bean exports are currently pegged at 1.9 B bu, and probably in January they will start to get trimmed back.  In the meantime, the USDA probably wants to give China some time to see what they will do.  Yesterday, their state-owned grain company SinoGrain purchased 30 bean cargos of US beans mainly from the PNW.  This is roughly 42 M bu or so.  Will they buy more?  Time will tell.  However, we finally have them buying our beans and the northern plains finally have a market for their bean crop.  Brazil is just about out of beans, but they have a huge crop on the horizon.  This crop is at least 30 days earlier than normal, and Brazil’s weather so far has been just about perfect.  Even though China purchased beans yesterday, the window will close rapidly on the amount of beans they will buy from us for the balance of the year as Brazil will have a huge quantity available to them in roughly 30 days at a cheaper price.

The USDA left bean carryout at 955 M bu.  I don’t see how this bean carryout number can shrink much if any over the coming weeks. Frankly, I think there is a bigger chance that bean carryout will grow to over 1 B bu, and there is no doubt this would have happened if China did not step in yesterday and buy some beans. Now, the real question is how many more will they buy before going back to Brazil?  Yesterday’s buying from China has caused the bean basis at the Gulf and PNW to firm quite noticeably and will cause the basis in Brazil to weaken substantially.  The market’s role now is to get us back to a neutral market between the US and Brazil and unwind the premiums it placed on Brazilian beans over the last 6 months. In the US, the bean basis ought to start to firm.  However, we are still carrying out nearly 1 B bu of beans which is a huge quantity, possibly the biggest ever for the US.  This will likely weigh on the bean basis for the balance of the crop year unless China really ramps up its US buying program.  Time will tell, but China holds the cards at the moment.

We have seen a nice run up in the price of beans over the last 2 weeks as the market gets excited about China returning as a bean buyer.  I would recommend that all producers take a good look at the bids for new beans for next fall.  Nov ’19 bean futures at Chicago are now trading at $9.65 and have rallied over 50 cents in the last 2 weeks.  You need to seriously look at this opportunity and start to lock in bean production for next year.  The bean basis has firmed in the last 2 weeks, but if you still don’t like the basis, lock in the futures using an HTA contract.  The HTA contract will allow you to sell futures now, and then come back and set the basis at a later time.  However, there are fees involved for an HTA contract as the co-op will be covering the margin calls that you would pay if you sold futures in your own hedge account. Also, now is a great time to use our Cash plus contracts as it will pay you a big premium now in exchange for a new crop offer.  The calls for new beans next year are nice and fluffy and a great time to sell them and put these premiums in your pocket.  I will describe in detail below.  If you would like to arrange an appointment to meet with one of our grain originators to develop a custom marketing plan for you, please click here.  We would be glad to meet with you to help you with this process.  To see our current cash bids, please click here.

Do You Want a Premium for your Beans?  Cash Plus Is The Answer.

We are currently bidding $8.12 for cash beans and $8.61 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 21 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 $10.10 level if on October 23, 2019,the price of November soybean futures closes at or above the $10.10 level.  This is a win-win for you.  You will be paid a 21 cent premium now on your cash beans.  If on October 23, November bean futures close at or above $10.10, you will have the same quantity of beans sold at $10.10 futures, less the basis of 95 cents under November (this could vary slightly), equals a new crop bean contract at $9.15 for Oct / Nov ’19 delivery into Readfield or Center Valley.  This is a good price considering our posted new crop bean bid is $8.61 and represents a 54 cent premium over our posted new crop bid.  If on Oct 23rd ,November bean futures close lower than $10.10, then you keep your 21 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.

Recommendations For Corn & Bean Meal Consumers (Livestock Producers)

The bean market has ramped up over the last 2 weeks with the China enthusiasm, and this has pushed bean meal higher as well.  We have not seen the incredible gains in the corn market either, but corn basis is firming, and the corn market slowly trades higher in the meantime.  At some point, this enthusiasm will cool and the marker will reset lower.  This will be the time for you to lock in corn and bean meal for your livestock.  Here are my recommendations for coverage.  To see where futures are currently trading, please click here.

Cash Corn – March 19 Corn Futures – Support at $3.78, Resistance at $3.95, Place Targets at $3.83

Cash Bean Meal – Jan 19 Meal Futures – Support at $305, Resistance at $319, Place Targets at $310

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 handover 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 14th,This Friday.

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 $3.78, Resistance at $3.95, Place Targets at $3.90

New Corn – Dec 19 Corn Futures – Support at $3.99, Resistance at $4.06, Place Targets at $4.03

Cash Beans – Jan 19 Bean Futures – Support at $8.86, Resistance at $9.32, Place Targets at $9.22

New Beans – Nov 19 Bean Futures – Support at $9.42, Resistance at $9.71, Place Targets at $9.65

New Wheat – July 19 Wheat Futures – Support at $5.21, Resistance at $5.62, Place Targets at $5.50

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

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

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

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.

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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.

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Grain Update – September 28, 2018

9/27/18

The USDA Will Release Its Sept 1st Grain Stocks Report At 11 AM Friday.  This Will Give The Market Direction.

The USDA will release its Sept 1st quarterly grain stocks report at 11 am on Friday.  This report will give us the details of the last quarter of the ‘17/18 crop year, and will give us the starting point for the ‘18/19 crop year.  We will be able to see exactly how many bushels of corn and beans were used and exported during the last quarter, and the resulting ending stocks of the last crop year.  The ending stocks from last year will become the beginning stocks for this next ‘18/19 crop year.  The average trade estimate for Sept 1st grain stocks are as follows:  corn – 2.01 B bu, beans – 401 M bu, and wheat – 2.343 B bu.  Any major deviation from these numbers on Friday will cause the market to react, possibly significantly, if any major differences occur.  Our demand for corn has been rather large as of late, but just the opposite with beans without participation from China, our largest bean buyer.  Thus, I would not be surprised if corn carryout was trimmed a bit, but our bean carryout will likely approach 1 B bu for next year.

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Grain Update – September 14, 2018

The USDA Surprises Market With Larger Than Expected Corn Yields.

The USDA released its September crop report on Wednesday and confirmed big corn and bean yields.  The surprise was their larger than normal average corn yield of 181.3 bpa which is record breaking in many states.  The market did not expect this big of an increase over the 178.4 bpa yield which was reported in the August report.  This 240 M bu increase in production now puts total corn production at a whopping 14.827 M bu.  With this increase, the USDA also increased feed demand by 50 M bu and exports by 50 M bu as well.  When the dust settled, corn carryout for 18/19 was increased by 90 M bu from 1.684 M bu last month to 1.774 M bu this month.  Record ear counts and ear weights led to the 240 M bu production increase on Wednesday.  At the market close, corn traded down 14 to 15 cents.

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Grain Update – August 30, 2018

 

8/30/18

The ProFarmer Tour Confirms Big Yields.  The Soybean Market Remains Weak Without A China Trade Deal.

The ProFarmer Crop Tour was held last week throughout the Corn Belt and confirmed big yields in most areas.  The tour started from Ohio and South Dakota last Monday and both sides eventually met up in Northern Iowa on Thursday evening.  Each day the teams reported corn yields and 3’ x 3’ area soybean pod counts in various locations along the route as both sets of teams moved to the center of the Corn Belt.  Corn yields and pod counts were generally better than previously expected and confirmed the big yields the USDA recently used on its last August crop report.  When the dust settled last Friday, the ProFarmer Tour pegged the corn yield at 177.3 bpa and beans at 53 bpa.  The USDA pegged the corn yield at 178.4 and the bean yield at 51.6 in their August crop report.  Generally, there is a tendency for ProFarmer to give yield estimates that are several bushels less than the USDA on both corn and beans.  The fact that the tour gave us essentially the same corn yield and gave us a bigger bean yield tells me that the crop is very good in most areas, and the final USDA yields could grow bigger yet, not smaller.  Additionally, the tour basically confirmed the USDA’s August crop report yields and now most of the trade is wondering how much bigger the final yields could grow to vs being reduced in future crop reports.  The fact that the tour gave us a bean yield that is bigger than the USDA tells me that there is a huge bean crop on the horizon.  Generally, this does not happen, and for the tour to out yield the USDA, something very special has occurred.

On top of this, most areas of the Corn Belt received nice rains in the last week that will finish out the crop in nice order.  Locally, some areas have received almost too much rain, but most areas received 3-4” in the last week.  Receiving this much rain during August really does not happen that often.  This rain will fill the bean pods and add kernel size and test weight to corn.  Ultimately, it will add a significant amount of bushels that will be harvested in the next few weeks.  The big corn and bean crop continues to get bigger and bigger.

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