AgMarket.Net Sunday Night Comments 091519

Sunday night calls are higher

Weekend attack on Saudi Oil will affect 5% of the worlds oil. If Iraq blocks the Strait of Hormuz, some say I could affect 20% of the world oil supply. We have not confirmed that.

Crude opened +800, now it is +500 on ideas strategic reserves could be opened.

Ag – crops are drying down unusually fast. Harvest is right around the corner. But test weight will be an issue as well as corn fill – S of Effingham a lot looks like nubbins. We do expect yields and stocks to decline. Warmer than normal temps might temper things. US China meeting this week will hopefully lay the foundation for a successful higher level talks within the next 2 weeks.

AgMarket.Net Aerial study of over 244k acres from OH to KS and north to the Dakotas. Take about 4 sections across the corn belt and look at crop stress. These pics were taken last week and the prior 7 days.

Monday Movie Night – look for our market video that will get posted Monday night or (maybe Tuesday am this week due to travel) but we will try for Monday night.

Now Matt Bennett’s comments

Good Morning!

I hope things are running smooth around your place.  While a few of you are getting started with harvest, many of you are like me and running out of things to do.  This will be the latest we’ve started harvest in several years…probably since 2009.  I would expect to be cutting beans in September…maybe 200-300 acres, but doubt we get much corn picked until after October 1st.  I am doing much of my writing en route to a Channel meeting north of St. Louis here on Friday evening.  I’m able to as my wife and the two youngest are going along for this event.  They don’t get to go often…and it’s an undertaking to make this happen…but I sure enjoy being able to take them along.  It’s an adventure for the kids…and a great way for me to show them what I do on all those nights I can’t be at home.  I talk about this as so many of you have let me know your favorite part of this newsletter is hearing about my family.  Heck, I’ve even had people tell me that’s the only part they read!  ?  I’m not sure how to take that, but at least some people are reading at least part of it.  As you nose into fields, please let me know how you’re doing…how yields are compared to expectations and recent results.  As always, I appreciate the feedback.

Corn and beans both had a good week…with some buying before the report reinforced after the report on Thursday.  With the USDA dropping corn yields from 169.5 to 168.2, total production came down with acreage not changing.  Unfortunately, carry-out grew a shade, so the report was a touch bearish corn as yield came in above expectations.  For beans, yield dropped just .6 of a bushel, but overall carry-out was down 115 million bushels to 640 mb.  This made for a friendly report.  While the market ended higher on the day, the report could have been better in my estimation.  The company I am part owner of, AgMarket.Net did another study, looking at the crop from above.  While we didn’t make any yield projections along with it, it’s safe to say the crop looks challenged from above.  Be sure to go to our website and check out the new pictures which covered a much greater area of the corn-belt than the first go-round.  We observed over 244,000 acres from OH-KS and north into Dakotas.

On the news front, US/Chinese relations seem to be thawing going into October meetings as the Chinese bought 600k mt of soybeans this week while declaring tariffs on both beans and hogs would be waived as a kind gesture.  It’s obvious some headway has been made…we have to hope and pray things keep moving in this direction.  Heading into the weekend, outside markets were pretty quiet for much of the day with the Dollar trending lower, while crude was slightly lower.  At the close, October crude was down 15 cents at $54.94.  This was 72 cents off the highs and 50 off the lows of the day.  Crude lost $1.79 on the week.

CORN – The corn market got back on the right track this past week with some rally action both before and after the report.  Heading into the weekend on Friday, December corn closed at $3.68 ¾, up a penny and a half.  This was 3 ½ cents off the high and 3 ¼ off the low.  On the week, the corn market rallied 13 ¼ cents. The report once again wasn’t friendly in any way on Thursday, and the corn market was lower right off the bat.  However, corn rallied back up, putting in what some technicians are calling a doublt-bottom.  With corn at one time 5-6 lower then closing up 7-8 cents, we also saw a reversal…so technical traders could be satisfied a low is in for the time being.  In the big picture, IF the USDA is right or close to right, a rally could be hard to come by.  However, with the USDA only counting ears in September, I have to think they’ll find room to not only adjust harvested acreage lower in future reports but to also drop yield.  More often than not, when yield is dropped from August to September, it continues to drop in subsequent reports.  I am not bullish corn necessarily, but more friendly than not…as I don’t see corn making new lows unless production increases on further down the road.  We need to keep an eye on the carry in the market, know our break-evens and be patient with our marketing plans.

DEMAND – Demand was mixed on the week with exports solid while corn usage for ethanol wasn’t too impressive.  Weekly export sales were 498k metric tons for this marketing year, which over 650k more than a week ago.  For next marketing year, no net sales were posted, so overall sales were around 200k mt higher than a week ago.  Corn usage for ethanol was lower on the week…the first week of the marketing year for ethanol showed just 87 million bushels, according to the Department of Energy’s EIA report.  As far as basis is concerned, there again wasn’t much change.  At a nickel under the Dec, my area’s basis was status-quo on the week.  In Decatur, basis widened by two cents, moving to 15 over the Dec.  On the river in St. Louis, basis was quoted at nine cents under the Dec, which is two cents improved as compared to last week.

CASH CORN – Cash corn had a better week than it’s been having.  With prices on the board improving and basis holding steady, old corn that’s moving as well as early-harvested corn picked up some value on the week.  To those who still have old corn in the bin, again I’d consider picking some wet corn and blending with your old corn if you can’t get a big premium on the old corn stand-alone.  I would look for early pushes on corn as well as drying deals or I doubt I’d be picking too much corn.  However, I know many of you have great setups for drying…so if you can dry much cheaper than the elevator, I’d certainly do what I could to get harvest underway and get some early premium at the same time.  Keep in mind most univerity and seed companies show picking corn wet will gain bushels over waiting for it to dry down in the field.  The verdict is out on exact numbers, but a person must do their homework to find out if it makes sense to spend too much at the elevator drying that corn down.  I’ve talked lately about ‘protecting‘ your insurance claim as a move back towards $4 would essentially take money from your pocket for those with a yield loss…if you want advice on how to do that, please get in touch with me.

2020 CORN – December 2020 corn had a good week along with the rest of the corn complex.  On Friday, Dec corn settled at $4.06 ¾, up a quarter of a penny.  The move on the week put corn back above $4, which offers some good pricing opportunities in my opinion.  For my farm, I got started with a sale at $4.07.  While I considered selling 15%, I started at 10% as I feel we might see some strength as we figure out what this 2019 crop is going to look like.  I had talked last week about selling at $4.17, but upon looking at my break-even for 2020, I believe it’s a good place to get started on my marketing plan.  My next target will now be $4.17 for another 10%.

What To Watch For –

On 2019 corn, I’m 55% sold @ $4.31 basis Dec9.  New ’19 target will be at $4.04.

For 2020 corn, 1st sale for 2020 CZ hit at $4.07 for 10%.


BEANS – The bean market had an even better week with again some rally before the report…but this bigger rally after.  To close the week, November beans settled 3 ¼ cents higher at $8.98 ¾.  This was 4 ¾ cents off the high and 5 ¾ off the low.  Nov beans rallied 41 cents on the week.  This bean market has come to life on a variety of items such as continued talk about the 2019 bean crop potentially struggling to reach a lofty USDA estimate. The USDA’s assumption we’d see an all-time-record pod weight on a year like we are in when beans were planted so late was interesting…although their low pod-counts were something I could go along with.  Perhaps the biggest news of the week was the large purchase of US beans from China, who bought 600k mt of beans after a hiatus of late.  With relations seeming to get better, traders seem to be assuming more beans will get sold into China…as evidenced by this week’s buying.  We should all be paying attention…as profit margins improved substantially with the move this past week.

DEMAND – Soybean export sales were huge…much larger than a week ago levels.  With net sales of 1.17 million mt for old crop, we saw a huge increase.  For new crop, no sales were recorded.  Overall levels were about 300k larger than a week ago.  For basis, some movement was noted but nothing excessive.  Local bids for me are 44 under the Nov, which widened four cents on the rally.  Decatur’s basis for cash beans also widened…by a nickel, moving to 20 under the Nov.  On the river, basis was quoted at 34 under the Nov, which widened by 3 cents from a week ago.

CASH BEANS – Cash bean bids improved a ton this past week as the futures rally was solid, while basis held intact for the most part.  I’d be cautious to assume basis will improve on continued strength in the markets, especially heading into harvest.  Also, we must realize bean harvest won’t be near as late, relatively speaking, as corn harvest.  With beans shutting down based on daylight, we won’t see harvest more than a week or two later in most areas.  We also have different dynamics with the bean market as no one will be cutting wet beans and blending them off…at least nothing like we might see with regards to corn.  The bottom line if you have old beans is they’ll need to move before too long.  For the beans we’re harvesting, I am not ready to move forward with sales just yet as I want to see early yields as well as the October report before getting too aggressive.  I believe the USDA is too high on beans yet.

2020 BEANS – We saw a nice rally for November 2020 beans as well.  On Friday, Nov ‘20 beans settled at $9.53 ¼, unchanged on the day.  Nov20 beans rallied 31 cents this past week.  Last week I talked about selling beans at $9.50 to get started…after I saw the way we rallied earlier in the week, I moved my sell order to $9.60 as I thought we’d see a good shot at getting it filled.  I feel good about selling my first 15% at that price…and remain hopeful we’ll get a shot to sell a few more this fall.  Given how many beans we see globally and the fact South America can produce such a large crop, I will be rewarding rallies…especially when these prices are profitable.  Don’t forget, the spring price for 2019 was $9.54, so those of you who feel you have an insurance claim…you can still protect that claim similar to what we discussed with corn.  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 Profitability Calculator on the AgMarket.App  to help you get a handle on your budgets and to set your marketing plan for 2019 or 2020.  Anyone of is will be glad to help, so be sure to reach out.

What To Watch For –

2019 Beans – I am down to 50% sold/hedged (basis APH) at a board-based average price of $9.50SX 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.  There are tons of good tools out there.

I hope you have a great week.  Please let me know if I can help you in any way.


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