Monday Night calls are better:
CoronaVirus continues to spread but at a slower rate.
China manufacturing strating to come back on line. Most economist calling for a .5% – 1.0% cut in 1q GDP but by late 2q-3q it will exceed previous estimates.
China injects more liquidity into markets -equities higher
China rumored to be looking for some US Ag commodities. We will keep our ears out as these rumors circulate
Funds sold more last week and may have over done it. Cash remains much stronger than normal.
S American weather remains mostly good with only isolated concerns in Arg.
Matt Bennett’s weekly Report:
Good Morning!
Here we are in the middle of February. To me, it seems like the winter is flying by. To think if the weather cooperates, I’d like to be planting in 6 weeks is hard to fathom. Given how wet it is, I kinda doubt we’ll get the chance, but you never know. We went from 40s to a high of 15 on Friday, but our high on Monday is supposed to be pushing 50. It’s crazy how this weather has been. I can speak for all of us when I beg for better weather in 2020 than we saw a year ago. However, early indications are some of the issues we had coming into spring are quite similar to a year ago. Let’s hope we aren’t waiting to plant corn for a couple of months again. I have heard from a few of you who are going to Commodity Classic in San Antonio. IF you’re going to be down there, please reach out. I’ll be there from Wednesday to Sunday with my wife and the two youngest, Toby and Abileen. I’m looking forward to them being able to see what I do when out and about. Just as much, I’m looking forward to visiting with many of the people I’ve met when out speaking or who read this. Please let me know…and my sessions are on Thursday morning and Saturday, so if it works for you and your crew, hopefully we’ll see you. Either way, feel free to reach out and let me know how it’s going around your place. Shoot me an email any time. mbennett@agmarket.net
The corn market lost ground on the week while the bean market continued its nice little run. With an up and down type week for corn, the focus was on Coronavirus and its impact on demand. With some reports looking for the rate of infections to back off, others seem to indicate that’s not the case. In the market’s eyes, the likelihood of Phase I saving the day seem to be backing off. While I’d imagine the Chinese will have to buy regardless, this CV issue gives them wiggle-room in their eyes anyway. For the bean market, it’s been a nice run…9 straight session of higher closes before Friday putting an end to it. While the gains haven’t been large, it’s been a nice run nonetheless. IF South-American weather continues to improve with rains backing off, harvest should accelerate in Brazil, which could provide pressure. Either way, it’s been a nice run. I would expect both corn and beans to be under a bit of pressure as February wrap up IF this CV issue continues to linger. Let’s hope for many reasons it doesn’t. As far as the outside markets are concerned, the Dow closed within 600 points of 30k, while the Dollar had a solid week, settling quietly on Friday. March crude closed up 83 cents at $52.25. This was 9 cents off the highs and 93 off the lows of the day. Crude finally rallied…settling $1.91 higher than last week’s close.
CORN – The corn market never could get any traction this past week as buyers remained cautious due to CV issues surrounding China. On Friday, March corn closed down a penny and three-quarters at $3.77 ¾. This was 3 ¾ cents off the high and a penny and a half off the low. On the week, the corn market lost 5 ¼ cents. The corn market is stuck in a rut. While the month of February can often bring a supportive tone, this year we aren’t seeing that as much. While it may be simply a phenomenon, there are many who feel some in the industry try to prop up especially Dec corn prices through this month as it could ensure decent acreage. Regardless, there are some concerns our corn market won’t have near the excitement we saw in 2019, even if the weather would be similar. With demand concerns out of China, a big crop forecasted out of Brazil and big US acres possible, one must know even at these not-so-impressive prices, there is down-side price risk. I’m not necessarily bearish, but I want us all to have a plan as to how we’re going to manage our farm’s risk. Sometimes doing nothing can work, but it’s not very often.
DEMAND – Demand was solid but off of last week as exports were respectable but well below a week ago while corn usage for ethanol was lower. Weekly export sales were 969k metric metric tons for this marketing year, down over 250k tons from a week ago. For next marketing year, no sales were posted. Overall sales were down around 350k tons from a week ago. While these numbers are lower, they’re still solid. Corn usage for ethanol was down on the week…with around 103.5 million bushels of corn usage, we were down around 4.5 million bushels, according to the Department of Energy’s EIA report. This ethanol situation has jumped around a bit lately. Hopefully margins will improve as we have to have solid demand for corn in this sector if we’re going to keep our corn market stable. Basis continues to try and do the work in most every area I check on. My area saw basis actually back off a couple of pennies, moving to two under the March. However, in Decatur, basis improved by three cents, moving to 20 over the March. On the river in St. Louis, basis improved by two cents, moving to 25 over the March.
CASH CORN – Cash corn values once again were lethargic, backing off in every area I know of. Given the nickel drop in nearby futures, basis wasn’t able to make up for the whole loss. This cash corn market is a tough one to figure out. While we haven’t seen values drop much due to a strong basis, we sure haven’t seen any improvement. With farmers tight-fisted with some MFP money in their pockets, many have waited to see if we’ll get a rally. Given talk the China could buy US corn, it’s been tough for a producer to get excited about stepping in and selling much. I understand the dilemma. My gut all along has told me if a producer could have good quality corn this next summer it could be worth a fair bit. IF this weather pattern ends up similar to last year and we have a late spring, in some regions, old corn will be a scarcity in the late summer timeframe. The problem is will the corn keep? I hear about poor quality corn about every day…I know it’s going to be hard to keep as a general rule. IF you can keep some around, I think it’s a smart play. However, I don’t think I can store corn commercially much longer given the way this market looks…I’m afraid the storage will eat up all my gain…IF there is a gain. Let me know if you need help working your way through your marketing plan on cash corn…I’d be glad to help.
2020 CORN – December 2020 corn didn’t have a great week. With a nice close last week going into the weekend, I was hopeful we’d see some follow-through. Given how important the average is for December corn in the month of February, seeing Dec down is frustrating. Dec20 closed out the week down 3 ¼ cents at $3.88 ¾. This was a loss on the week of 5 ¼ cents. The Dec20 corn average for the month is now $3.91, which is just 9 cents below a year ago. We all know that 9 cents is bigger than it sounds though. I’m not making any more sales at these prices…but would be willing to consider more sales if we get back over $4. Be sure to figure 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. 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 has been on a nice little run of late. While we had a streak of 9 straight higher closes, all good things must come to an end…and that’s what we saw on Friday. At the close Friday, March beans had settled down 2 ½ cents at $8.93 ¾. This was 5 ½ cents off the high and 3 ¾ off the low. On the week, beans were up 11 ¾ cents making the two-week gain over 20 cents. It’s nice to see the bean market rally as the steady dose of negative information doesn’t seem to subside. There is no doubt that the bean crop out of South America is set to be large…in fact, given their increases in acreage, I’m not sure we’ll ever see a ‘failure’ down there again as the buffer continues to increase. Part of the reason they’ve continued to expand has been because of feed and protein demand, particularly out of China. While CV is a big issue, they still have 1.4 billion mouths to feed…so demand isn’t going to die by any means. I’m a bit worried about 2020 the way we’re starting. It could be another tough year, but at the same time, we all know this is going to turn sooner or later. Even with big production out of both North and South America, with world population increasing every day, it’s tough to be bearish agriculture. Let’s hope CV runs its course soon and we can see both the corn and bean market recover somewhat.
DEMAND – Soybean export sales were down a bit from totals from a week ago. With net sales of 645k tons for old crop, sales were 50k tons smaller than a week ago sales. For new crop, just 6k in sales were recorded so overall levels were around 55k 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 also was status-quo, staying at 8 over the March. On the river, basis was quoted at 29 over the March, a nickel improved from last week. While it’s tough to see bean basis improve while a rally is occurring, we actually saw it happen this marketing year. Can we see it in the winter? Probably not…but bean basis is solid for the most part. I’d assume that will continue.
CASH BEANS – Cash bean bids were improved on the week. With a nice move in the futures again and basis holding steady, producers saw a little better price levels. Having old beans isn’t something everyone can say, but as I told a guy this past week, at least you have something to sell. I know we beat ourselves up over missed marketing opportunities, but at the same time, we’ve had plenty of times the bean market has rewarded us for missing those opportunities. While I’m not looking for any big rally in beans in the absence of big Chinese purchases…which could happen of course…I have to think similar to corn we could see some basis action for these beans at some point. In some regions, beans could be rather tight, so a producer who has the luxury of beans in their own bin might consider holding onto a few of them. While I wouldn’t want to risk a great deal of them, holding onto some gambling bushels might not be a bad idea. I’ve had several ask about re-ownership for old beans. I’m not a huge fan at this point unless you keep your risk limited. Given how tight our margins are, we can’t afford a big loss on paper…so keeping you risk/reward at a healthy level is quite important. Let me know if you need any help here as well…I know many of you have called to talk about beans this year, so don’t be shy about asking questions. I’m here to help.
2020 BEANS – November 2020 beans also continued their recent rally but not quite to the extent front-month futures were able to. To close the week, Nov ‘20 beans settled at $9.22 ½, down a penny and a quarter. Nov20 beans rallied 4 cents on the week…and a dime over the last two weeks. The average for crop insurance is now $9.20, which is a fair bit lower than the $9.54 we saw a year ago. While I expect crop insurance prices to have an impact on acreage, typically weather has just as big of an impact. The other thing that is likely to come into play this year is the cost to putting the two crops out. With it being way cheaper to put beans in the ground, I’m sure some acres will be forced to go to beans given the rosy financial situation many of us have been dealing with the last few years. Therefore, I think bean acres could be rather large yet. Right now, my group is thinking 85-86 million acres of beans. This is important as we are certainly capable of raising a big bean crop at those acres. 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 either the Profitability Calculator on the Channel website or 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. I’d be glad to help, so be sure to reach out. http://www.channel.com/Markets/Pages/Profitability-Calculator.aspx
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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