Grain Market Update – October 10

Things Currently Driving the market       

It has been reported that China has offered to buy US products which is easing the tension in the trade war, which could mean continuing strength in the Soybean market. Follow that story closely because there is a lot of optimism for the bean market in the coming months. This story has also been followed by rumors of a partial trade deal with China so let’s see what happens. This could have a positive effect on the corn market as it tends to follow the bean market in relation.

Currently, the weather pattern has stayed consistent for the year as being wet, the predicted “blizzard” for North Dakota and Minnesota is also having an impact on the bean market. The window has been small for bean harvest as of late but as of Wednesday Oct. 9th beans have been consistent at 13.5% off the field. Numbers on yields have been reported lower in parts of Iowa, Illinois, and Ohio so if this stays true, we may see a bump in futures from the yield drop after harvest.

If you are reading this, you may already know the results of Thursday’s report. Current estimates are putting stocks down for corn and beans which may run the markets higher already.

Ideas:

If you are like me and are optimistic about bean futures, we may look at doing a minimum price contract.

Benefits:

Cheaper than storage.

                  Provides cash flow now.

                  Lets you participate in the market for a period and capture a gain.

                  You can’t do any worse than you get paid up front.

Disadvantages:

               Will not receive market price, will only get the price of the call.

Minimum price are 5,000 bu minimum.

Example: If you buy a $10 bean call for $0.18 and the cash price is $8.48 you will receive $8.30 (this is the minimum price you will receive). Say the market goes to $11 that $10 call may be worth $1 you sell that call back for a dollar which covers the initial cost and more. If the market were to fall you still get paid your minimum price of $8.30. If you have any questions on this call your grain originator for more details.

Pro-Advantage sign up is continuing, the deadline is December 11. I recommend trying this to diversify your marketing plan and use as a benchmark for your marketing year. There are 1 and 2 year programs and no minimum bushel amounts.

We will be starting a twice weekly grain email – Against the Grain in the coming weeks written by the CHS Larsen Grain staff. If you receive this email you will also receive the update, but if you know of anybody else wanting information let us know and we will get them on the list. They can also click here to sign-up to receive cooperative updates.

Leave a Reply

© 2019 CHS Inc.