Good Morning!
I hope you’ve had a great weekend so far. Mine has been excellent as we’ve had a couple of celebrations as my wife and son Toby have February birthdays just a week apart. Tif won’t allow me to say her age, but Toby turns 8 on Monday, so we tried to get his friends and our family together for a weekend deal. He hasn’t gotten it yet, but we’re getting him a go-cart for his birthday. Beau, his older brother got a 4-wheeler around this age, but my better half prefers to go the safer route…and given Toby’s enthusiasm for life, it’s probably smart to go that route. I’m excited just to see how he reacts as he’s been wanting something to drive other than an electric toy vehicle for a long time. It makes me think back to my days growing up. While I drove a go-cart around the farm non-stop, I was driving tractors and even vehicles at a much younger age than any of my friends. I’m sure many of you reading this are chuckling at the same memories. Speaking of memories, I am ready to go make some this week in San Antonio. I know I’ve mentioned it on here…but getting to take family along doesn’t happen often, so this coming week will be a great one. While this past week was a good one visiting Columbia, Fargo and Grand Island, I wish my family could go along with me to those places as it would make the week more enjoyable. I know several of you will be at Commodity Classic and I look forward to catching up with you. Whether you get to go to one of these or not, always feel free to reach out on here. mbennett@agmarket.net
The corn and bean markets didn’t really do much of anything this past week. While we started with some enthusiasm, by the end of the week, the change didn’t amount to much. There wasn’t much news other than the USDA World Agricultural Outlook Board (WAOB) numbers. With WAOB calling for 94 million acres of corn at a 178.5 yield, it wasn’t a complete shock by any means. In fact, they used fairly strong demand numbers to help eat up this big crop they’re calling for, with 5.8 billion bushels of ‘feed and residual’ and exports jumping from 1.725bbu this year to 2.1. This put carry at 2.637, which is certainly a big number if it comes to pass. While little of what they said is outlandish, I believe this year’s carry of 1.892 is a solid 300-400 mb too high still, which would bring that big carry down. The bean outlook was much rosier, with 85 ma planted at a yield of 49.8. With WAOB jumping bean exports 225 mb to 2.05, this gets carry down to 320 mb. This is pretty darn snug in all reality and could be viewed as a reason to buy some acres…let’s hope. All in all, the numbers weren’t bullish like we’d hoped…supportive beans for sure but far from a bullish outlook on corn. As far as the outside markets are concerned, the Dow backed off a bit this week, settling right at 29k, while the Dollar finally dropped a bit on Friday after it had been banging on 100 on the index all week. April crude oil closed down 42 cents at $53.46. This was 40 cents off the highs and 91 off the lows of the day.
CORN – The corn market had some movement on the week, but overall it simply couldn’t get the traction to rally. On Friday, March corn closed down a penny and a half at $3.77. This was 3 ½ cents off the high and three-quarters of a penny off the low. On the week, the corn market lost three-quarters of a penny. The corn market continues to be dead. With demand trying to keep support for the market, talks of big supply aren’t helping matters at all. We’ve known all along we could be seeing big stocks coming, but sometimes we forget it takes the right type of spring to plant a big crop. Flying into Fargo and talking with a good friend who buys a ton of grain up there opened my eyes as he’s seeing 50-60% of his area with corn still standing. We hear about it, but seeing it flying in and hearing it from a buyer helps see the situation. Will they plant corn up there? Probably but the weather will have to cooperate as there’s plenty of snow up there yet…and there’s a ton of harvest yet to be completed. All in all, we need to have a plan for the possibility we plant 94 or 95 million acres…that much is for sure. I am hopeful we can’t get that many acres in the ground though as good summer weather could make today’s crummy prices look awful attractive at 95 and 180. Let’s have our plan in place and be proactive. Let me know if you’d like some help in that regard.
DEMAND – Demand was solid this past week with an increase for both exports and corn usage for ethanol. Weekly export sales were 1.25 million metric metric tons for this marketing year, up over 250k tons from a week ago. For next marketing year, just 1k tons in sales were posted. Overall sales were up by over 250k tons from a week ago. Corn exports of late have been good…mostly due to Brazil not having much corn to offer. Our prices are competitive though, which is helping the matter. Corn usage for ethanol was up slightly on the week…with around 104 million bushels of corn usage, we were up aruound a half million bushels, according to the Department of Energy’s EIA report. Basis continues to stay solid but needs to improve if these markets don’t rally. My area saw basis status-quo, staying at two under the March. In Decatur, basis was also status-quo, staying at 20 over the March. On the river in St. Louis, basis widened by three cents, moving to 22 over the March.
CASH CORN – Cash corn values once again are a lesson in patience…the tough thing is asking if that patience is going to pay off. As I’ve been saying for a while, I don’t see keeping it in the elevator and paying storage at this point. I’d get that corn moved…the big question is for basis bushels. I know we’d like to have a rally to get them moved, but I don’t see it happening in short order. I believe cash corn prices will stay solid, but it’s likely to be more of a function of basis than futures. I maintain that keeping good quality corn on hand, especially in those regions where there isn’t much, will pay dividends. The corn in the bin might be some property a person wants to be stingy with while we see how this cash situation and spring weather turn out. A late spring could make good quality corn solid property this summer.
2020 CORN – December 2020 corn had another rough week. While we didn’t lose a ton of ground, every penny counts as we all know. Dec20 closed on Friday down 2 ½ cents at $3.86. This was a loss on the week of 2 ¾ cents. The Dec20 corn average for the month is $3.91, which is still 9 cents below a year ago. I can’t get excited about selling at these prices…but not sure I’m going to move to a higher percentage sold at a level over $4. I like being hedged with the chance to eventually roll that hedge to July on stored bushels…and we should be able to do that at 25 to 30 cents…making any $4 hedges a nice $4.30. Regardless, we need to be figuring all your costs and get an idea of what you need out of your marketing plan in 2020. Plug your numbers into the profitability calculator or my 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 waiting 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 didn’t show much life on the week either…in fact lost some ground. At the close Friday, March beans had settled down 2 ¼ cents at $8.90 ½. This was 11 ½ cents off the high and 3 off the low. On the week, beans were down 3 ¼ cents. This bean market is struggling with talks of a big Brazilian crop and an overall large crop out of South America. While areas of Brazil are struggling to get the crop harvested, they’re going to have a big crop regardless. Given the Real continues to make new all-time lows versus the Dollar of late, they’re going to be quite competitive on the world market. Overall, I see a bean market that got a bit of a shot in the arm from the outlook numbers…but has some issues moving forward with demand unless the Chinese can rebuild their sow herd much quicker than previously thought. I like to see beans for the time being as supported…but at the same time wouldn’t be surprised by a move lower yet. Be cautious into making too many assumptions on the bean market…and manage risk any time you see profit on the table.
DEMAND – Soybean export sales were down again from totals from a week ago. With net sales of 494k tons for old crop, sales were 150k tons smaller than a week ago sales. For new crop, just 3k in sales were recorded so overall levels were around 150k tons lower than a week ago totals. As far as basis is concerned, there isn’t much going on still. Local bids for me are 15 cents under the March, which is status-quo on the week. Decatur’s basis for cash beans improved three cents, moving to 11 over the March. On the river, basis was quoted at 29 over the March, the same basis as a week ago. If beans on the board move lower, I have to think basis will respond…any move higher would likely produce a weakening though as we aren’t like to have a shortage this year without big Chinese purchases sometime soon.
CASH BEANS – Cash bean bids were down on the week. With futures moving lower and some locations improving basis, I suppose a few may have had steady bids. We didn’t see an improvement in value though. For cash beans, it’s a tough discussion. Our export situation is entirely dependent on whether the Chinese step in and buy beans…if they don’t, it would be tough to assume our river bids would be supportive at all. Given the USDAs 425 carry, while it’s smaller than we’ve become accustomed to, it isn’t tight by any means. I’m not saying beans can’t rally…in fact, IF we see Chinese purchases…and I think we will…we should see a sharp price reaction. The big question is WHEN. When are they going to buy? Remaining patient on this probably necessitates having those beans in your bin as it’s obviously a bit of a gamble and is going to cost some money leaving them in storage. It’s up to you…but overall, I believe I wouldn’t keep a ton of beans around waiting on the Chinese imports…maybe gambling bushels. If a person wants to get out and re-own, there are ways to do so with minimal investment specifically designed for this situation. Let us know if you want to discuss a strategy or two.
2020 BEANS – November 2020 beans also lost some ground on the week. To close the week, Nov ‘20 beans settled at $9.17 ½, unchanged. Nov20 beans lost a nickel on the week. The average for crop insurance is now $9.19, which is obviously lower than the $9.54 we saw a year ago. After seeing the outlook numbers this week, I kind of expect some sort of support to come into this bean market. I’m not saying a large-scale rally, but $9.20 isn’t buying many bean acres. I am sure hopeful we see beans rally, as this crop insurance price is going to be a real let-down…but a good spring rally might make folks re-consider their options as the cost to putting beans in the ground is certainly cheaper than corn. Either way, we need to have a plan for what to do IF we see a rally or IF we don’t. Let us know if you’d like some help in that regard. As a producer, be sure to know what price levels you need to make it work in 2020…and reach out if you need help in that regard. We have good tools to assist you.
As always, be sure to figure break-evens when deciding whether you want to make sales. For figuring your break-evens, I recommend using 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 we can help you in any way.
Matt
217-273-1133 – Work
@chief321 – Twitter
mbennett@AgMarket.Net – E-mail
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