Happy Easter! Although today won’t resemble Easter as much for our family as compared to other years, we’re going to be celebrating the day together. While we’ve gone to sunrise service every year at 6:30 in the morning with my parents, this year the kids will get to sleep in a bit. They always look so cute in their Easter dresses and suit Tif gets them, but again this year those things won’t be happening. I know this holiday means different things to different people, but for my family, it sure is an important one. As we remain on lockdown, it gets interesting since we were able to farm some this past week. I know a couple of you weren’t impressed I planted corn, and to be honest, we struggled with the decision of whether or not to plant. We only planted about 250 acres of corn and ran just Monday and Tuesday. We only had a tenth of rain, so I don’t feel too bad about what we’ve done even though the forecast is still for plenty of cold to be around the next week to ten days. We also planted 300 acres of beans, but we’re sitting until we see how this weekend’s weather goes. We’re supposed to get a rain on Easter…which supposedly means we have seven Sundays of rain, according to the old-timers. However, we have dried out pretty good, so if it’s light as the forecast suggests, we’ll likely plant more beans this coming week. We’re going to be a bit hesitant with regards to corn, but as soon as we see good temps with a chance to plant and not see a pounding rain in the forecast, we’re going to roll. Again, this week Channel posted a video of Larry Adams and I talking markets after Thursday’s April USDA Supply and Demand report. We’ll do this for a few more weeks as many continue to be on lockdown. I’m not sure seeing my face is going to cheer you up…but I like getting a more personal chance to deliver some marketing news. Keep me posted on your operation’s progress…it’s a wide variety as always, and I love hearing from you. mbennett@agmarket.net
Th corn market went down to make a new low for the move and tried to rally heading into the weekend, but couldn’t get much done, while beans posted a nice gain. With the move last week seeming a bit overdone, sellers weren’t actively pursuing more shorts as bean demand is viewed as stable relative to corn demand. With energy prices getting shaky on the rally effort we’ve seen of late the corn market remains well-aware of the challenges it poses to corn demand. While Brazil continues to show concerning dryness, it’s not critical enough just yet to get a rally going…but needs to be monitored. The USDA report was similar to what we assumed with corn demand seeing big adjustments, however the bean report was mildly surprising as demand was cut a bit more than I had assumed. Outside markets were mixed to supportive as the Dollar closed the week at 99.5, which was over a point below a week ago. The DOW had a solid week as money flowed back into the market. With a close at 23,618, we closed more than 2.650 points higher on the week. Energy markets struggled after seeing some optimism due to the OPEC meeting on Thursday. While a deal looks to be reached, most question if it’s near drastic enough to make much of an impact on energy prices. May crude oil settled the week on Thursday at $23.19, down $1.90 on the day. This was $5.17 off the highs and 67 cents off the lows of the day. Crude lost close to $6 on the week on the May contract.
CORN – The corn market was able to stabilize this past week but couldn’t get much of a rally going. May corn settled on Thursday at $3.31 ¾, up a penny and three-quarters. This was a penny and three-quarters off the high and 3 ¾ off the low. On the week, May corn rallied just a penny. It was interesting to see a USDA report that was viewed as negative produce a small rally, but I wouldn’t get too worked up just yet. Seeing the USDA raise corn carry to 2.092 billion bushels, this is up 200 mb from last month. With a big cut in corn usage for ethanol (as was expected) at 375 million bushels, it’s obvious the USDA is being more aggressive in adjusting demand than many assumed they might be. They also raised feed and residual usage by 150 mb in the other notable change, and my personal opinion is they’ll have to raise this again. All in all, plugging in over two billion in corn carry with USDA projecting 97 million acres planted this spring is far from a bullish setup. I don’t want to be bearish, but we need to see these low prices scare some corn acres off…but I’m afraid it won’t be enough. Personally, I think our carry for this marketing year won’t be 2 bbu, but given the demand destruction from the ethanol sector, it won’t be as low as I once thought. Have your pencil sharpened and know your plan as 2020 may not offer as many opportunities to lock in profit margins as 2019 did.
DEMAND – Demand again is losing steam overall so we’re quite fortunate to see good export sales again. Weekly export sales were huge at 1.85 million metric metric tons for this marketing year or around 800k tons more than a week ago. For next marketing year, 609k tons in sales were posted. Overall sales were up by almost 1.4 million tons from the previous week! More of these big sales would certainly help ease demand concerns. Corn usage for ethanol was down sharply again on the week… With just under 67 million bushels of corn usage, we were down by around 17 million bushels, according to the Department of Energy’s EIA report. In two week’s we’re down 34 million bushels in usage. Basis is trying to stabilize after the recent weakening but it certainly isn’t enough just yet. My area saw basis widen two cents, moving to 20 under the May. In Decatur, basis was quoted at option the May, which was a nickel improved. On the river in St. Louis, basis was a penny wider at 25 over the May.
CASH CORN – Cash corn values were stable on the week with futures not doing much and basis improving in some areas while widening in others. I’d be hesitant to keep corn at home too long unless you’re absolutely certain the quality is good enough to do so. I hear of damaged corn quite often and I assumed would be the case. It’s tough to pay storage, so I hope you’re stored corn has moved…and while I’m not a huge fan of free-DP, it beats corn that is costing you money. With plenty of basis contracts out there yet, I know many need a rally. I think we’ll have a rally at some point, but I struggle to get bullish in the short-run. It’s tough to see how bids have plummeted…and who could have predicted this energy market collapse? There are no easy answers in this corn market, but if you can’t stomach another leg lower, have a plan in place to move bushels. A person can re-own if they want fairly cheap…and I’d be glad to help you come up with a plan, so call if you would like to chat.
2020 CORN – December 2020 corn also had a quiet week. With CZ20 closing on Thursday at $3.50 ¾, we were up a penny and a half on the day. On the week, we were unchanged. My thoughts on new corn haven’t changed much. I don’t see a need to be selling aggressively at these prices, but I certainly see a chance we move lower IF we get in the field in reasonable time this spring. Given strong exports of late, IF we’d see producer back off of acreage…and see the safrihna crop out of Brazil get cut, we’d be setting up for rally this summer as I currently see no weather premium in the market. IF this occurs this growing season, be ready. Know the price levels you need to turn a profit or to cover expense. It is handy to have all of this figured going in, so plug your numbers into the AgMarket app. Doing so will help you quantify your situation…and simplify your marketing plan. If you need help setting up your plan for 2020, it’s never too late to get ahold of us. https://www.agmarket.app/app/
What To Watch For –
On 2019 corn, my farm is 80% sold @ $4.30 basis March20. New ’19 target***must consider local basis.
For 2020 CZ, up to 30% sold at $4.05. Next target for me and my farm is $4.09.
BEANS – The bean market had a nice week, making three out of the last four weeks we’ve seen gains. At the close Thursday, May beans were up 9 cents at $8.63 ½. This was 3 ½ cents off the high and 9 ¾ off the low. On the week, May beans were up 9 ¼ cents, getting back just a third of the previous week’s losses. We’ll take it though! The USDA report wasn’t as exciting on beans as with corn. However, with carry moving from 425 million bushels up to 480, it was a minor miracle beans rallied on the day. Exports were adjusted 50 mb lower, which was a necessary change for now…but a person has to at least hope we’ll see big Chinese business at some point. This could change our fortunes quickly as with the bean balance sheet there isn’t near the wiggle room we see with corn. IF the US producer only plants 83.5 million acres of beans, our supply and demand balance sheet could get plenty snug. While this remains true with low acres, keep in mind plenty are calling for bean acres to grow due to corn abandonment in the corn-belt and talk of beans replacing cotton in the south. I’m supportive beans, but it’s tough to be bullish just yet. The bottom line with beans is to latch onto profit opportunities when they’re around…we are all well aware of just how quickly bean prices can move.
DEMAND – Soybean export sales were soft this week, backing off last week’s solid number. With net sales of 523k tons for old crop, sales were over 400k tons lower than a week ago. For new crop, 353k tons were recorded so overall levels were around 200k tons lower on the week. As far as basis is concerned, little movement was noted once again. Local bids for me are 13 under the May, which was three cents wider on the week. Decatur’s basis for cash beans didn’t change, staying at a dime over the May. On the river, basis was quoted at 28 over the May, which is also status-quo on the week.
CASH BEANS – Cash bean bids were a bit stronger on the week as the rally on the board helped values. With a quiet week overall, my advice on beans hasn’t changed much. I don’t see the chance at a big rally in the absence of much bigger Chinese purchases than we expect. Given the big crop coming out of South America and currency issues that continue to plague us, it’s tough to see US bean exports outpacing what the USDA is currently forecasting. IF we could see exports pick up and producers stick with the planting intentions numbers given by the USDA at the end of March, I believe it would help the entire bean complex. Given soybean crush has been solid the last few weeks, one has to expect solid crush moving forward. The bottom line on beans is we have enough in the world to go around…and while demand is solid, it’s nothing like it was previous to ASF. As China rebuilds their swine numbers, that demand will rebound…but for now, it’s still on shaky ground. If you still have beans around, make sure you have a plan in place to exit them. With how fast prices move at times, it’s tough to ‘catch’ the market. Get some offers in and hope they hit.
2020 BEANS – November 2020 beans had a solid week, rallying more than front-month futures. On Thursday, Nov ‘20 beans settled at $8.75 ¾, down 7 ¾ cents. Nov20 beans rallied 14 ¼ cents on the week. Nov beans are 42 cents under the spring insurance price, which isn’t near as much as Dec corn is below its insurance price, relatively speaking. While $8.75 beans don’t excite me much, I’d consider selling some on a rally up to and over $9. I’m trying to decide where I’d like to extend sales…and part of this is due to the fact I expect bean acres to grow somewhat. Yes, plenty will depend on spring weather, but if we have any inclement weather at all, I could see bean acres growing by a fair bit. Therefore, if we get a solid rally, I’d like to get sales extended at levels I can be profitable. As always, know what those levels need to be for your operation…and put your marketing plan together based on them. If you need help with your marketing plan, just get ahold of me at your convenience.
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 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. 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 $9.00 May.
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 $9.40.
**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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