Sunday night:
Calls are mixed and tech trading points are keep this week. March corn support is 378 and a close above 387 is needed to change attitude.
Jan beans took out the 3 day high but the market needs a weekly close above 921. Minor support at 915, better support at 910.
Fundamentally – there is a still a huge amount of crop in the field but traders are concerned about US china talks.
CNBC reports from China Morning press that talks made progress over the weekend
Reuters reported the billion dollar China Brazil port deal. This of course has been in the works for a long time but is very concerning as they continue to strengthen trade ties and policies and the US trade policy around the world is in disarray. WE all hope that changes abruptly within the next 3.5 weeks.
Bill
Matt Bennett Weekly comments:
I have had a busy week after we got finished with harvest. While we still have some ground-work left, we’re blessed to have a good chunk of it finished as my son Beau was working ground while we were harvesting. Much of the ground has firmed up enough we can again rip and vertical till, so I’m hopeful we’ll have everything done and put away by Thanksgiving. This past week, I got a chance to go on a show called Commodity Week, which can be found at https://will.illinois.edu/agriculture On this panel was Lance Honig with the USDA NASS…and I believe many in our world have questions that are pertinent in a year like this. You may give it a listen as I think it’s one of the more informative shows I’ve been a part of. I also had my first chance to go on Market to Market on Friday http://www.iptv.org/mtom/story/35218/market-market-november-15-2019. Some of you might be similar to me in that I watched Market to Market as a kid every Sunday…if watching TV is something I wanted to do during that allotted time. I was pretty excited they asked me to come on there…if you are someone who watches it, go easy on me. I was nervous as all get out! I think we have a ton of stuff going on in ag currently, and I’m sure glad to get a chance to be a part of the conversation. We have a ton of crops still in the field in the corn-belt…with a drive to Kansas City, up to Des Moines and home, I saw many fields standing. I hope those of you who are still fighting it…or have a ton to go…get blessed with good weather. mbennett@AgMarket.Net
Corn and beans both lost value again this past week. With a lack of bullish news otherwise, the lack of progress on the US/Chinese trade situation weighed on the markets. Yes we have progress on harvest, but we have millions of acres of both corn and beans still in the field. Many producers are asking how we could be weak given that fact, but demand’s impact on the market is certainly outweighing supply factors at this time. While frustrations are mounting with futures prices in decline, the USDA announced our next round of ‘aid’ is on the way. The 2nd MFP payment is supposed to be showing up by the end of the month, so that’s a bit of good news anyway. I think most of you know how I feel about this as my hope is trade gets opened up and we don’t need any assistance…but with how challenging times have been, this assistance will be welcome by most every producer I know. On Friday, outside markets were more of a positive flavor with the Dollar index surging backing off and closing below 98 while crude was up. December crude closed up $1.16 at $57.93. This was just 4 cents off the highs and $1.50 off the lows of the day. Crude oil rallied 49 cents on the week.
CORN – The corn market had another challenging week. With buyers on the sidelines, we were slightly lower going into Friday…but a poor market to finish us out ensured weekly losses. On Friday, Dec corn closed down 4 ½ cents at $3.71 ¼. This was 5 ¼ cents off the high and a half-penny off the low. On the week, the corn market lost 6 cents and 18 over the last two weeks. Technically, the close on Friday wasn’t good. When we went below the trading range for the November report and settled there, it opened the door for potentially more downside. This corn market is in need of medical attention it seems. While we see flat cash values hanging in there due to basis improvements, the futures market stinks to put it mildly. However, I’m not convinced the market will stay in this funk. I have to think some of our demand factors will improve from exports as Argentina likely won’t export a great deal more corn as well as improvements in our balance sheet which won’t happen until January. I believe we could see ‘friendly’ adjustments on both the supply and demand side of the equation, but whether that will be enough to spark a rally remains to be seen. We must take into account the whole picture as our 2019 balance sheet tightening could be vastly different from next year’s, especially if acreage is as great as some are currently predicting. The next several months necessitate us to have a plan in place…I firmly believe it’s as necessary as ever.
DEMAND – Demand was improved on the week but still has a ways to go, especially regarding exports. Weekly export sales were 582 thousand metric tons for this marketing year, around 100k more than a week ago. For next marketing year, no sales were posted, so overall sales were 100k more than a week ago. Corn usage for ethanol was up by around a million and a half bushels, coming in just under 103.5 million bushels, according to the Department of Energy’s EIA report. Corn usage for ethanol has gone up for 7 straight weeks! Let’s hope we can keep increasing production as this would certainly be a stabilizing factor on the demand front. It’s all about that basis… What a show we’ve seen of late when it comes to basis. At two over the Dec, my area’s basis was two more cents improved. In Decatur, basis was status quo at 20 over the Dec..but they were also drying corn up to 19% for no charge! On the river in St. Louis, basis was quoted at 22 cents over the Dec, which is a penny better than last week and 34 better than just six weeks ago!
CASH CORN – Cash corn was steady to lower on the week as futures were down and basis gains weren’t enough in most areas to make up the difference. Let’s be clear on something though. If elevators are posting 25 over, let’s be proactive and ask a couple of originators what they’re willing to pay. Most of these guys and gals are still hunting corn, so don’t be afraid to ask for a push. The way I see it, you’re giving them a chance to buy your corn at a time when getting corn bought has been anything but easy. I remain on the same exact page when it comes to sales. I’m selling corn across the scales as i doubt basis improves enough from here to make commercial storage pay. On bin bushels, fill the storage for sure…but at the same time, make sure your buyer knows what you’re looking for as you core bins and put your plan in place. They may not be able to get it now, but they might be able to later. Keep in communication with them…I’m sure they’ll appreciate it.
2020 CORN – December 2020 corn didn’t have a great week. With us fluttering around $4 and above for quite some time, the close this past week wasn’t what I’d like to see. On Friday, Dec corn settled at $3.95 ¾, down 3 ¼ cents. This was a loss on the week of 5 ¼ cents. I remain at 20% sold but have been considering advancing my % sold. I’m not necessarily interested under $4, but those who can claim profits should look closely. Given how balance sheets look with current acreage projections, producers should manage the risk of profit margins potentially shrinking. I’ll continue to push producers to start putting costs together with some projections on yield with acreages for 2020…and find out what break-even is looking like. Use the profitability calculator or the AgMarket.net app to see how your profitability looks in the event you want to make a sale or two. If you need help with a marketing plan for 2020, let us know and we’ll get you set up. https://www.agmarket.app/app/
What To Watch For –
On 2019 corn, my farm went to 80% sold @ $4.20 basis Dec9 after selling corn across the scale. Due to strong basis.
For 2020 CZ, I’m 20% sold at $4.06. Next target still 417.
BEANS – The bean market had a disappointing week as well. With a lack of bullish fodder, the path of least resistance certainly appeared to be lower. To close the week, January beans settled a penny and a half higher at $9.18 ¼. This was 5 ¼ cents off the high and 3 off the low. Jan beans lost 12 ¾ cents on the week. The bean market looked awful early in the week with the big drop on Monday. However, we saw the market seem to stabilize as the week went on. While we obviously lost ground overall, there’s no question that remaining flat after the Monday debacle would appear to be a victory. The basis story is not exclusive to corn as soybeans also have seen crazy improvements in basis at elevators and end-users. With no weather story in South America at the present time, it would be tough to get too bulled up, but at the same time, I’d hate to be short IF we continue to see strong demand for beans. With October soybean crush coming in at 175 million tons versus estimates at 168, it’s obvious demand is solid. I’m not bearish beans or necessarily bullish but feel we should see some support. I doubt the bottom falls out from the bean market, especially as we’ve seen such resiliency throughout the roller-coaster this trade negotiations have been. I’ll remain patient for the time being.
DEMAND – Soybean export sales were solid but well below last week’s number. With net sales of 1.25 million mt for old crop, we were over a half-million tons below a week ago. For new crop, just 3k tons in sales were recorded so overall levels were again over a half-million tons below a week ago levels. For basis, improvement was again noted in most areas. Local bids for me are 20 under the Jan, which was 8 cents better than a week ago and 17 better in two weeks! Decatur’s basis for cash beans improved another 7 cents, moving to 7 over the Jan. This is 43 cents improved from just 5 weeks ago. On the river, basis was quoted at 28 over the Jan, which narrowed a dime…and 66 over the last seven weeks!
CASH BEANS – Cash bean bids were steady to lower this past week. If it were up to futures alone, it would’ve been rough, but basis again continues to work overtime. On the river for instance, the 13-cent futures drop only netted us a 3-cent loss as basis improved a dime. I’ve been friendly beans at times this fall and still feel we should see support. However, if I were cutting beans right now, I’d be selling them across the scale. Is there potential we’ll see better basis yet? Of course that’s a possibility, but I don’t see basis performing anything like we’ve seen the last month and a half. For those who put beans in the bin or on commercial storage, consider putting offers in at levels you know you can make money…and just as with corn, ask for a push. The worst thing your buyer can say is no…with basis getting better every week for some time, chances are there’s some push in their bid.
2020 BEANS – We had a down week as well for November 2020 beans. On Friday, Nov ‘20 beans settled at $9.53 ¼, up a penny and a half. Nov20 beans lost 14 cents this past week and almost 20 over the past two weeks. I remain 15% hedged…and willing to sell another 10% if we get to $9.83. Keep your offers current…and based on your farm’s profitability. We don’t necessarily have to be aggressive, but if profit margins are robust, advancing sales might be a good way to manage risk for your operation. Again, put a plan in place for 2020…you may be surprised at the price levels you can turn a profit.
As always, be sure to figure break-evens when deciding whether you want to make sales. For figuring your break-evens, I recommend using either the AgMarket.Net Profitability App https://www.agmarket.app/app/ to help you get a handle on your budgets and to set your marketing plan for 2019 or 2020. We’d be glad to help, so be sure to reach out.
What To Watch For –
I am 60% sold/hedged (basis APH) at a board-based average price of $9.46SX for 2019.
For 2020, I got my first 15% sale on at $9.60 SX20.
**For the strategies I talk about on here, please remember these are the tools I use for my farm. These are not recommendations but merely a way for the reader to see how I approach marketing for my operation. There are tons of good tools out there. For more information on markets, strategies and ways to set up a solid marketing plan, visit our website at https://www.agmarket.net
We hope you have a great week. Please let us know if we can help you in any way.
Matt
217-273-1133 – Work
@chief321 – Twitter
mbennett@AgMarket.Net – E-mail
Bill Biedermann
AgMarket.Net
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