Markets, Christmas, and 2020

2019 is finally coming to a close and Christmas is just 5 days away. Most of you have finished harvesting right now and are more focused on family time and year end financials. Unfortunately those in North Dakota, parts of Minnesota , Wisconsin,  and a few in South Dakota and Michigan will continue to work hard and stress a lot till spring. But as they say…it will all work out…somehow. We pray that your mind can focus clearly on faith and family the next week.

 

Encouraging thoughts going into 2020

 

With the fundamental shift in policy toward positive trade, it appears that the technical picture of these markets have bottomed. The December corn pictured below shows a significant bottom, market is well off its lows which would suggest to anyone trading that risk parameters are well defined. We would expect the short funds to be threatened with the fundamentals of potential demand driven markets versus demand destruction and with the right crossing of chart lines will exit short positions. As you can see below, futures markets are sitting about 50% into the price trading range that we have had since August and nearing the trading ranges we saw prior to the growing season. If the $4.20 on July corn is ever taken out, many would turn very bullish. Fundamentals do suggest futures need to get back near 420. During the December delivery period, AgMarket.Net positioned some clients to go into delivery with long positions. Having contacted our cash broker who indicated that Cargill would not sell their inventories for delivery receipts for less than $4.20. This told us that the short trader was in an adverse short position at $3.80.  This tells us that $4.20 area is a fair value for futures given current cash markets.

The soybean chart is interesting as the bottom was put in a couple of weeks ago ahead of the initial announcement of a US China Phase 1 agreement. Again this market seems to be shifting dynamics from a demand destructive trade policy to a demand driven trade policy. We believe the US will dominate World Trade in agriculture based on a positive trade policy. And although we believe this will be more beneficial to the corn market, it certainly is friendly to soybeans as we remain well below normal cash basis, as well as the 10 year average price…..all while ending stocks have dropped 60% in the last 12 months. Typically a market will move in 3 swings before it meets an objective. Elliott wave counters called this a 5 point move, and the 1946 swing theorist identifies this as a 3 swing move. Either way,  would suggest soybeans move higher.

AgMarket.Net Has a friendly bias to the market and has been positioned in long ownership via options,  futures or some cash. We expect USDA’s numbers to be revised downward with end stocks in corn around 1.5 billion bushels and soybeans to be closer to 400 than 475. Although these are not bullish numbers, it does suggest prices should recover to more profitable value area for the farm.

Our current Recommendations using Matt Bennett’s Farm activity:

Important:

Sell inventory while basis is strong and retain ownership using futures or options. Net result could be a price that is near last summer’s high. Our concern – as funds buy and futures move towards fair market value, basis will weaken.

 

Corn:

On 2019 corn, my farm is 80% sold @ $4.30 basis March20.

For 2020 CZ, I’m 20% sold at $4.06.  Next target is to sell 10% at $4.04

 

Beans:

I am 60% sold/hedged (basis APH) at a board-based average price of $9.46sx plus 20 for carry = 9.66 for 2019

Sell 10% more old beans with a rally to $9.25 Jan.

For 2020, I got my first 15% sale on at $9.60 SX20.  Sell another 10%  $9.60—$9.70

 

Lock in inputs as costs have dropped approximately $30/acre. With big potential acres in 202, do not be afraid to sell new crop to lock in a profitable P&L for next year. We will keep the upside open on the bulk of the sales using options. It will be much less stressful to know you have a profit locked in and still have the upside of the market available to benefit your revenue then it would be to sit open and gamble. We would like you to listen to this video if you have not already explaining these strategies:

 

https://register.gotowebinar.com/recording/267519279209723137

 

you can also view it on our www.AgMarket.App

 

When AgMarket.Net was established, We promised our clients we would work hard to bring tools to the table for our clients that would help them maximize their P&L’s profitability and manage risk better. We have recently released the www.AgMarket.App. We encourage all of you to take a look at this. It will track your expenses per acre, track inventory and sales, break evens will adjust has these sales and costs are procured. It will also give you futures markets and charts, cash markets and basis charts, videos and news streams. It will work on any device and each farm entity can have multiple users for the same cost. We believe this is a tool that we have all needed and thus we have priced it so all can use it.

 

Additionally we have committed ourselves to speaking at meetings all over the nation. We have approximately 30 meetings that one of us will be speaking at. If you know of any meeting that needs a speaker, we will be happy to send a well known professional to discuss farm profitability to your group. One meeting however that we would like everyone to put in their calendar will be in Council Bluffs at the Ameristar casino on February 3rd (optional) and 4th (main meeting). You can fly into Omaha, just minutes away. We have priced this at only $75 to provide you an incentive to book this. We  will also be providing a discount to all attendees for the App  and personally help you set the app up.  Below is an agenda for you to review period more details on this will be available on our website within a week or so.

 

Details:

7:00 – 8:00 Registration Coffee and wake up juice

8:00 – 8:45   Bill Biedermann/Jim McCormick Electionomic Macro/Micro outlook – This presentation will present the macro and micro trends that could influence the funds and outside money flow in 2020    45 min

8:45  –  9:25  Brian Splitt – Splitt Chat on Chart Direction – An up to date assessment of the technical outlooks for key agricultural and currency markets. Chart-based strategies and targets will be communicated to help you achieve your marketing goals.  35 min

 

9:25 – 9:45   Break

 

9:45 – 10:45 Matt Bennett It’s Profit Not Price – This hands-on presentation will allow you to set your farm up for monitoring profitability, show how decisions will affect Break even, track your inventory, and test decisions before you make them.  60 min

10:45 – 11:45 Drew Lerner World Weather  – “Volatile Weather Is Here To stay”   60 min

 

12:00  Lunch

Lunch speaker:  Betsy JibbenThe future of the Ag Industry from a reporter’s point of view

Besty Jibben is a National Reporter for Farm Journal Media. She works on the TV side for two nationally syndicated shows, “AgDay” and “U.S. Farm Report.

 

1:00 – 2:00 Room available to visit one on one

 

 

As accompany, we cannot tell you how honored we are to serve you as out clients. We are grateful for our relationship with you and wish you and your family a fantastic Christmas and ‘kan’t wate for the new year!”

 

 

From All of us at AgMarket.Net

 

Bill Biedermann

AgMarket.Net

815-893-7443 o

815-404-1917 c

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