Sunday Night Calls – easier to start.
Corona Virus update:
That is about a 10% rate of contagion from Friday. Some companies and government transportation in selected cities will resume. However, everyone is urged to use caution and companies must meet ventilation standards. FoxComm was scheduled to resume operations Monday but have since decided to postpone and meetings with health officials.
Schools and universities remain closed. Most until March 1.
Transportation disruptions of food and animal feed creating short supplies in demand areas and port backups in supply areas. Chinese officials urged a return to normal transportation but urges precaution.
FoxComm decision to delay reopening expected to cause further disruptions in the supply chain to giants like Apple, Amazon, Dell and others.
Financial markets are being supported by efforts to provide liquidity in uncertain time.
All AgMarkets are trying to hold support. If this weeks lower start ends in a strong end, a technical bottom my be in place.
I will be in Des Moines IA Tuesday and Wednesday, and in Louisville KY Thursday. Brian Burke will be at MidSouth GFA and Matt will be at IL GFA
Bill Biedermann
Matt Bennett’s Weekly Update:
I hope all is well around your place. We’ve had some snow again towards the end of the week in central Illinois and while it’s enough to stick, it hasn’t amounted to a great deal of precipitation. However, my forecast is showing rain the next couple of days with temperatures in the low-40s. I’ve about had it with mud. Literally we’ve been muddy without much of a hard freeze for most of this winter. I’d like to see another hard freeze or two but given we’re in February with the forecast the way it is, I’m not counting on it. On Friday night, I took my two sons to an Illini basketball game in Champaign. We go every now and then as some buddies and I split season tickets. Our team got beat which wasn’t ideal, but I was reminded that taking Toby, the 7-year-old, is a good thing to keep perspective. He’s just now learning how the game works…and in the second half, when I wasn’t exactly thrilled with what was going on, he asked me why I wasn’t having fun. So…after that, we ‘enjoyed’ the rest of the game, talking about what all was going on out there and explaining a few things. And I gotta admit, I enjoyed the game a little more from that vantage point than the one I was originally holding. If you’ve heard me talk markets, I talk about keeping perspective quite a bit. My family is a great way to keep perspective in my life as they remind me daily what is most important. With aggravating markets and profit scenarios here in 2020, do your best to keep it all in perspective. This too shall pass. mbennett@agmarket.net
The corn and bean markets actually picked up some ground this week, although beans performed better than corn. Mid-week, neither corn nor beans looked to have much of a pulse, with the bean market forging lows we hadn’t seen in some time while corn finally found support on Thursday as traders seem disinterested in hitting the ‘buy’ button. With the Brazilian Real puking…dipping to record weak levels, it’s doing nothing to help our exports when we need it most. It seems like we can’t catch a break with our markets, and Brazil not only has their currency to help them but no major weather issues. It’s tough on the corn and bean markets to rally when most expect a big bean crop out of the Southern Hemisphere. This past week we also had China already asking for leniency on Phase I due to Coronavirus. This didn’t help our cause either…and moving forward, if we don’t secure some sales from them, it could be a tough row to hoe for our markets. As far as the outside markets are concerned, the Dow rebounded this week, settling over 29k even as it fell a bit on Friday. Going into the weekend, we also saw the Dollar up while crude was off which didn’t do anything to bolster our markets. March crude closed down 61 cents at $50.34. This was $1.14 off the highs and 25 cents off the lows of the day. Crude lost $1.29 on the week…and over $8 in the last three weeks!
CORN – The corn market had an interesting week as prices dipped and found support on Thursday while posting a solid gain heading into the weekend. On Friday, March corn closed up 4 ¼ cents at $3.83 ½. This was a penny and a half off the high and 3 ½ cents off the low. On the week, the corn market rallied 2 ¼ cents. The corn market can’t seem to get its footing. There hasn’t been much of a story to get funds interested in buying as they sit on a decent-sized short position. Looking ahead to bit US acres, a person has to ask what might rally our corn market. The big question for me as Brazil’s weather has been good overall is when they’ll get the safrinha crop planted. With first-crop beans going in the ground a bit later than desired and wet weather in many areas they’d like to be cutting beans, some concern is warranted about timeliness of corn plantings. With dry season generally creeping in towards the end of the corn crop, pushing back planting has caused them issues before. Another issue long-term is how this low test-weight corn is going to feed…and what conversion factors may be for ethanol. Long story short, there are a few things that could provide us support…but on rallies, a person needs to have a plan for managing risk. IF Brazil has a big corn crop and we plant 95 million acres…with good weather this summer, prices might look pretty rough.
DEMAND – Demand was excellent as exports were again large while corn usage for ethanol was solidly higher. Weekly export sales were 1.25 million metric metric tons for this marketing year, up slightly from a week ago. For next marketing year, 91k in sales were posted. Overall sales were similar to the impressive number from a week ago. Corn usage for ethanol was up on the week…a welcome surprise with just over 108 million bushels of corn usage, according to the Department of Energy’s EIA report. This was an increase of over 4.5 million bushels. Basis continues solid in most every area I check on. My area saw basis option the March, which is status-quo as compared to a week ago. In Decatur, basis backed off by three cents, moving to 17 over the March. On the river in St. Louis, basis improved by four cents, moving to 23 over the March.
CASH CORN – Cash corn values improved slightly on the week in most areas as basis levels generally were steady. While futures didn’t rally much, they picked up value nonetheless. The cash corn market is a tough one to predict, but my guess is flat-cash values should hold steady. While we may not see futures markets on fire, I’d assume we’ll see basis hold together as corn is likely not as plentiful as the USDA has been suggesting. I’m not picking on them…but basis levels being as strong as they have isn’t only because of MFP in my opinion. With basis on fire in the east and south, one has to wonder where all the corn is going to come from. With low test-weight corn an issue in much of the corn-belt, usage is likely to be much stronger than has been assumed thus far. While this may not translate to a big move in the markets, it’s tough to think we don’t see it supportive of cash values. For basis contracts, it’s a really tough call…roll or sell? I personally have a few bushels on a basis contract and will likely sell them versus rolling to the May. As far as keeping owneship, this year is more about keeping physical ownership…IF you can keep the corn in good condition.
2020 CORN – December 2020 corn picked up some value this past week, entirely on the back of Friday’s trade. Dec20 closed out the week up 4 ¼ cents at $3.94. This was a rally on the week of 3 ¼ cents. The Dec20 corn market is getting average this month for crop insurance, which over the last few years has provided a bit of a lift. I would watch this closely…and if you aren’t where you want to be on sales, consider getting caught up. No one knows how these prices will compare later in the year, but given inputs have softened some, most can pencil profit at APH yields in this area. I’d plug it into the AgMarket app…it will give you assurance of where you are, which certainly helps with marketing decisions. The webinar Channel and I put together that I’ve mentioned several times continues to be a great tool for producer to access if they need help understanding how to get a plan in place. As I’ve been out speaking, I’ve found many didn’t know about it…so look it up if you’d like a little direction on marketing. 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 is 80% sold @ $4.30 basis March20. New ’19 target – hold for now
For 2020 CZ, up to 30% sold at $4.05. Next target for me and my farm is $4.09.
BEANS – The bean market finally saw the light of day. While they’re not setting the world on fire, beans found some support this week and rallied a bit. On the close Friday, March beans settled up a penny at $8.82. This was 2 ¾ cents off the high and 5 ¾ off the low. On the week, beans were down up 9 ¼ cents as they try to stop the bleeding from the last three weeks. This bean market looked like it could implode…and still could but is holding support for the time being. With a big crop out of South America, currency not working in our direction and Chinese purchases in question, it’s not been a great time to be a bean bull. If we’re honest, we’ve had several good chances to sell beans but unfortunately, it’s not always that easy. I realize many were talking about $10 beans which made it tough to sell in the mid-$9 range. However, we have to remember to look at our farms on a profit margin standpoint…and not get so wrapped up in the price. It’s a tough lesson but one we all need to continue training ourselves to put in place.
DEMAND – Soybean export sales were up from totals from a week ago. With net sales of 704k tons for old crop, sales were 230k tons higher than a week ago sales. For new crop, just 4k in sales were recorded so overall levels were around 230k tons above a week ago totals. As far as basis is concerned, there isn’t much going on which is still frustrating after futures prices had plummeted. Local bids for me are 15 cents under the March, which is status-quo on the week. Decatur’s basis for cash beans also was status-quo, staying at 8 over the March. On the river, basis was quoted at 24 over the March, three cents improved from last week. Bean basis still needs to heat up…but I’m not holding my breath right now. Until export shipments start increasing, we won’t see the river need to improve bids. If we could see their basis improve, we’d likely see that
CASH BEANS – Cash bean bids were finally improved…for the first time in about a month. Given the sharp drop off in bean futures and basis not improving, bean prices have really suffered. From what I can tell, there are fewer unpriced beans than there are for corn. However, I know many of you are still trying to figure out if we’ll see another 60-70 cent rally. This year has certainly offered some great opportunities but coming out of several years when we saw $10 bean prices, it’s still tough to get a person’s head wrapped around selling in the $9 levels. The things that could rally the bean market would be a weather issue developing in South America…and while Argentina has had more issues than Brazil, for the most part, we aren’t seeing enough in the way of weather problems. We could also get a bump from China IF they start buying our beans. It was interesting they said they were worried about being able to fulfill Phase I goals as they reportedly were buying South American beans this past week. The last good thing I can think of to rally the market would be if US acreage projections aren’t as big as some have suggested. My thought is bean acres would come in around 85 million which would certainly be sufficient…but if prices don’t rally, we could certainly see a number lower than that. Keep in mind…there’s no guarantee we’ll see a big rally…if you can pencil a profit, a person may consider selling a few beans on any sort of strength.
2020 BEANS – November 2020 beans also found some footing finally, following along with front-month futures. To close the week though, Nov ‘20 beans settled at $9.18 ½, down a penny and a half. Nov20 beans rallied 5 ¾ cents on the week…which isn’t any big win after a 60+ cent loss but is better than more down. I am still sitting at 25% sold for 2020 beans but certainly open to making more sales at lower levels than we were previously thinking. Our target was $9.83 to get another 10% sold…but our farm will likely add to sales at a lower level. Given how profitable some of our clients can be anywhere close to $9.50, it’s tough to not sell a few. Either way, we need to have a plan in place. Call us if you want help with your 2020 marketing plan. We’d be glad to help you get it put together.
As always, be sure to figure break-evens when deciding whether you want to make sales. For figuring your break-evens, I recommend 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 70% sold/hedged (basis APH) at a board-based average price of $9.64SH for 2019. I’ll consider selling more old beans with a rally to $9.55 Mar.
For 2020, I’m up to 25% sold at $9.63 average basis SX20. I’d be willing to sell more on a rally to $9.83.
**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 my website at https://www.agmarket.net
I hope you have a great week. Please let me know if I can help you in any way.
Matt
217-273-1133 – Work
@chief321 – Twitter
mbennett@AgMarket.Net – E-mail
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