Sunday night calls re slightly higher after China passed IT protection legislation that is expected to please the US and move closer to agreement. On the other side however is Hong Kong clearly voting for pro-democratic leadership and the question if Trump will sign a bill supporting HK democracy once it gets through conferee committee and goes for final vote
From Matt Bennett:!
What I thought was going to be a not-so-busy week turned out to be a bit more hectic than planned. In the last week, our furnace went bad, which was evidenced by our carbon monoxide detectors going off…at 12:30 am of course. We took the whole crew to the shop to sleep on a couple of couches and a mattress topper. At least we were safe though…with the levels in the house that morning, it’s possible we could have seen a much worse situation. If you don’t have carbon monoxide detectors, get some…and don’t take the batteries out to silence them…I know it’s tempting, but it can save a life. Speaking of that, a good friend from college lost his 14-year-old daughter in a car accident this past weekend. I’m not sure I could have the right words in a situation like that. I have a daughter the same age…in fact, they played volleyball against each other this fall. Regardless, life is precious…this past week has made that as clear as ever. While I have many questions as to why things happen, one thing I know is no one should walk through these situations alone. Being a good neighbor is one of the most important things we can do in my opinion. If you’re the praying type, the Lidy family from Vandalia, Illinois could sure use some prayers…an excellent family in the ag community. I know many of you have a load on your plate as well this fall. Given the weather, it’s been hard on many of you, especially in the upper-midwest. While I’d hope the weather would cooperate, most indicators point to an active weather pattern into the end of the year. I hope you are fortunate enough to get your harvest finished up…keep us posted on your progress if at all possible. mbennett@AgMarket.Net
Corn and beans had similar weeks with not much enthusiasm or movement either way. With the US/China cloud hanging over the market’s head, it seems buyers are on the sidelines, even as our markets are quite oversold. With plenty of corn and beans still remaining to be harvested, the USDA announced it would extend the crop progress reports on Monday afternoons to track how harvest is coming along. The market sure doesn’t seem to care though. With the idea that the crop size won’t change much even if a decent chunk winters in the field, few traders seem concerned there will be any tightness. While the basis would suggest otherwise, we can tackle that later. On Friday, outside markets were more of a negative influence with the Dollar index moving back over 98 while crude was off. January crude closed down 65 cents at $57.93. This was 81 cents off the highs and 43 off the lows of the day.
CORN – The corn market had a boring week with a bit more down. On Friday, Dec corn closed up a quarter-penny at $3.68 ¾. This was a penny and a half off the high and a penny and a quarter off the low. On the week, the corn market lost 2 ½ cents and 20 over the last three weeks. The corn market is stuck…in a rut. With MFP’s second tranche showing up, it’s allowing producers to be even more tight-fisted than they already were. That continues to boost basis levels across the country while the futures market continues its lackluster performance. While demand continues to improve, it still has a way to go, while no big stories are present as far as the weather is concerned. I have to think a potential bit of excitement could develop on the cash market, but whether that continues to manifest itself in basis or we see some sort of squeeze play develop on the nearby contracts remains to be seen. I’m going to stay patient for now…and look for opportunities to sell on rallies with both old and new-crop.
DEMAND – Demand was improved on the week but still trying to impress the market. Weekly export sales were 788 thousand metric tons for this marketing year, around 200k more than a week ago. For next marketing year, 46k in sales were posted, so overall sales were over 250k more than a week ago. Corn usage for ethanol was up a bit, coming in just over 103.5 million bushels, according to the Department of Energy’s EIA report. Corn usage for ethanol has gone up for 8 straight weeks now! Basis is still trying to do the work. At two over the Dec, my area’s basis was status-quo on the week…but impressive nonetheless. In Decatur, basis was off a nickel for a weekend but back to 20 over the Dec for this coming week. On the river in St. Louis, basis was quoted at 19 cents over the Dec for the coming week but 23 over as of Dec 1…plenty of effort trying to shake bushels loose.
CASH CORN – Cash corn was steady to lower on the week as futures were down and basis wasn’t doing much. Flat cash price was off by a nickel at most and in some areas flat as basis pushes were common. As I’ve said lately, I think selling across the scale is what I would do on my farm with this strong basis. Yet I want to keep the grain in my bins as good property as originators continue to hunt bushels. I am personally interested in maintaining ownership, which can be done rather cheaply with calls that are much cheaper ownership than commercial storage. I remain hopeful this tighter situation on the cash will prompt a rally…we shall find out in the next few weeks.
2020 CORN – December 2020 corn didn’t have any better of a week than the nearby. In fact, Dec20 lost ground, settling at $3.92 ½, down a penny and a half. This was a loss on the week of 3 ¼ cents. I continue to remain at 20% sold but my team at AgMarket.Net and I have discussed how aggressive we might be on a move back to $4 and above. Given the chance next year’s balance sheets could be much more burdensome than this year, a person would be wise to consider spreading some of that risk out. I feel confident the carry-out for this marketing year will be well below the 1.91 bbu the USDA is forecasting…but we can’t forget all the prevent-plant acres coming back into the mix…and what 95 million or more acres would do to stocks levels IF we’d have a little better year weather-wise. I continue to urge those who talk to us to be getting their costs together with projections on yield with acreages for 2020…to find out what break-even is looking like. Our AgMarket.App is all about learning how to get a break-even and marketing plan put together. Also, don’t forget to use the profitability calculator in the AgMarket.net app to see how your profitability is shaping up. 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 –
2019 corn, my farm is 80% sold @ $4.20 basis Dec9 after selling corn across the scale. New ’19 target***must consider local basis.
For 2020 CZ, we are 20% sold at $4.06. Next target still $4.17.
BEANS – The bean market had a rough week once again. With traders seemingly not interested in any way in buying beans, the path of least resistance continues to be lower. To close the week, January beans settled 4 cents lower at $8.97. This was 6 ½ cents off the high and a penny and a half off the low. Jan beans lost 21 ¼ cents on the week. The bean market can’t seem to see the light of day lately. With just under 10% of the crop still left to be harvested, field losses are assumed to be nothing to be ignored. However, even with an improved demand outlook, traders are looking at the lack of trade progress with China as well as improved weather in South America as solid reasons why a person doesn’t need to buy beans. While I don’t have a ton of beans left, I’m going to give this a little time yet…I’m not sure beans will continue on this path for much longer.
DEMAND – Soybean export sales were well above last week’s solid number. With net sales of 1.51 million mt for old crop, we were 250k+ in excess of the sales from a week ago. For new crop, no sales were recorded so overall levels were again much higher than a week ago levels. For basis, improvement was again noted in a few areas. Local bids for me are 15 under the Jan, which is a nickel better than a week ago and 22 better in the last three weeks! Decatur’s basis for cash beans improved another 3 cents, moving to a dime over the Jan. This is 46 cents improved from just 6 weeks ago. On the river, basis was quoted at 16 over the Jan, which finally widened…by 12 cents. This had been an amazing run of late, but it appears in St. Louis, they’ve gotten the beans they need for now.
CASH BEANS – Cash bean bids were lower this past week. With beans unable to find support, we continued this trajectory lower. Basis had been making up for the futures losses, but this past week, we didn’t see near enough improvement to offset the loss on the board. I like where I’m at with 60% of my cash beans sold…and while I’ve taken a hit having beans susceptible the last couple of weeks, I’d like to see how we trade going into the end of the year as well as waiting to see the January report. I’m not necessarily bullish but have a hard time getting too critical of a bean market that looks oversold to me. I’d also re-emphasize if I were hauling in right now, I’d be selling…especially if I didn’t have at least half of my beans sold. This basis is begging producers to sell a few.
2020 BEANS – We had a down week as well for November 2020 beans. On Friday, Nov ‘20 beans settled at $9.42 ½, down 2 ¾ cents. Nov20 beans lost 10 ¾ cents this past week and 30 over the past three weeks. I remain 15% hedged…and willing to sell another 10% if we get to $9.83. Keep your offers current…and based on your individual farm’s profitability. Don’t forget…if you put a plan in place for 2020, it may make it easier on you to lock in profit margins when they are present.
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 are here to help, so be sure to reach out.
What To Watch For –
I am 60% sold/hedged (basis APH) at a board-based average price of $9.46SX for 2019. My targets for cash beans are $9.30 & $9.57 basis the Nov. I’d have offers in now to take advantage of any rally unfolding.
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. 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 our 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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