Sunday Night Comments:
No corn deliveries again. We are expecting the market to continue to converge during deliveries. We remain positioned to take delivery if we have to with a few clients. There are only 1.0 mil bu in deliverable position of which Cargill owns and have no interest in selling. So that means if the short spec trader was asked to make dellivery….well, good luck in finding receipts to deliver. If traders need to offset shorts, they may as well rally the market to get it in line with cash. This is an old fashion squeeze play and should last a few more days. Cash markets continue to trade in the 400-420 range if your buying as a broker in the resellers market.
Weather is starting to be monitored closely in ARG due to a dry forecast that extends out 2 more weeks. We really are not concerned but it needs monitoring.
US China
Trump signed the Human rights Bill for HK. Many traders sold futures Friday on that news. However, Trump and XI reportedly had a conversation regarding that situation and Trump apparently reiterated his presidential authority to implement that bill…and that it would not cloud trade talks.
US – China negotiators – US my fly key negotiators to China this week. We should know by Monday what the plan is.
Calls are higher. Expect a choppy but firm tone to the markets to start the week.
Bill Biedermann
Below is our weekly comments from Matt Bennett
Good Evening
My family had a good week as we went to Beaver Creek, Colorado to spend the week with family. My aunt invited us out there, as they have a timeshare deal they can bless their kids with…she let us tag along, which was pretty cool in that the trip was excellent and quite cheap. I skied for the first time and my 7-year-old Toby did as well. While we had several mishaps, by the end of the day, we were doing great. I’m just glad I didn’t break my leg or tear something…that’s what everyone and their brother warned me about. The most interesting and challenging part of our week was getting home. With an 8:30 pm flight on Friday, we were watching the weather of course…and decided to play it safe and leave plenty early. We left at noon! However, I70 was closed about 30 minutes into our drive due to a rockslide, so we took highway 6 towards Denver. We got to Loveland Pass and they closed the road due to the snowstorm. So…we turned around and went south to Breckenridge and then Fairplay. Unfortunately, the now blizzard made the 30-mile trip to Fairplay last 3 hours! So we knew we were running short of time even with the huge buffer we built in. Unfortunately, we didn’t get to Denver airport until 8 pm, which was too late to fly. They said they’d get us on the next available flight to St. Louis, which was on Sunday at 11:59 pm! We politely declined and decided to drive home. We were blessed by Enterprise Rental, who allowed us to take the vehicle home and not charge us a one-way fee, which was $800…and we proceeded to take the 15-hour drive home. The main thing for me is we were safe…I can’t tell you how scary it was for me and my wife sitting still in a blizzard on top of a mountain…but it wasn’t fun. I know many of you experienced similar weather and still have crops in the field, so I feel like my complaints are petty. I hope the weather improves for you and you can get your crops out of the field. Keep us posted. mbennett@AgMarket.Net
Corn and beans had similar weeks earlier on with 2-month lows set for each as Wednesday’s trade was brutal. On Friday though, the corn market caught a bid and closed sharply higher while beans continued their abysmal showing. The interesting thing for beans is export sales were strong on Friday, while corn sales were good but not great. There is simply very little interest in buying beans while the US/Chinese trade situation is in limbo. With President Trump signing the Human Rights pact for Hong Kong, the trade was on edge…but going into the weekend, most indications were that the trade deal was just about finished. On Friday, outside markets were more of a mixed influence with the Dollar index backing off while crude was also down. January crude closed down $2.69 at $55.42. This was $2.88 off the highs and 40 cents off the lows of the day. Jan crude lost $2.27 on the week.
CORN – The corn market looked like its pulse was fading on Wednesday…and the adage that ‘bears’ get Thanksgiving looked as applicable as ever. However, Friday saw traders in more of a festive tone, with March corn closing up 7 ¾ cents at $3.81. This was a penny off the high and 6 ¾ cents off the low. On the week, the corn market rallied a couple of pennies…so Friday was obviously an important day with losses erased and gains built. The corn market has essentially ignored weather issues in North Dakota, where well over half of the crop is susceptible to the chance of wintering in the field. We all know this could have a tough impact on yields, so it’s been interesting the trade hasn’t cared about the snow some areas in the upper-midwest have received. I’m looking for this corn market to rally, especially as end-users scramble to find a way to get ownership. I’m going to remain patient when it comes to selling more corn, either old or new.
DEMAND – Demand was improved again this past week but the market hasn’t gotten too excited at the same time. Weekly export sales were 807 thousand metric tons for this marketing year, around 20k more than a week ago. For next marketing year, no sales were posted, so overall sales were a shade under a week ago. Corn usage for ethanol was huge, coming in just over 106.5 million bushels, according to the Department of Energy’s EIA report. This was an increase of threee million bushels. Corn usage for ethanol has gone up for 9 straight weeks now! Basis is staying strong as movement is obviously not impressing end-users. At two over the Dec, my area’s basis was status-quo on the week…but impressive nonetheless. In Decatur, basis narrowed a nickel, moving to 25 over the Dec. On the river in St. Louis, basis was quoted at 22 cents over the Dec which was three better than a week ago.
CASH CORN – Cash corn picked up some value pretty-much everywhere this past week as futures gained a little while basis was steady to improved. Our strategy all along has been to reward a market if profit margins were there. The only corn I have left is stored at home, and I don’t plan on selling it anytime soon. Yes, I have offers in at cash prices above $4. While we’ve had a target there for awhile, we must never lose sight of the impact of basis on the effective price we end up getting. If you see the rally you’re looking for, be sure that offer is in…as some of these buyers would be glad to buy at prices you may not be aware of.
2020 CORN – December 2020 corn didn’t do much overall this past week. Dec20 had dipped to sub-$3.90 but came back on Friday to settle at $3.92, up three cents. This was a loss on the week of a half-penny. While we have 20% sold so far, I’m looking to extend that if we see a rally of 15 cents or so. For those who can make money, I’d consider having an offer in. While I’m not bearish corn overall, new-crop could struggle to do what it did in 2019, even if the weather is similar. With the trade understanding how good these genetics can perform, even in circumstances like we saw in 2019, it’s going to take serious weather events to get weather rallies going. 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. The webinar Channel has me doing re-convenes on Wednesday, so be sure to tune in if you want help putting your marketing plan together. Go to the website to register…it’s free. Also, don’t forget to use the profitability optimizer on 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 –
On 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, I’m 20% sold at $4.06. Next target still $4.17.
BEANS – The bean market had a rough week, which has become the norm of late. To close the week, January beans settled 5 ½ cents lower at $8.76 ½. This was 8 ¼ cents off the high and three-quarters of a penny off the low. Jan beans lost 20 ½ cents on the week…and 42 over the last two weeks alone! The bean market is stuck in a rut. Given the lack of a weather issue in South America and no finished trade deal, traders aren’t interested in buying beans. With an extremely oversold market, one would think beans could catch a bid at some point, but nothing has been able to light that spark. I’m still of the opinion that this bean market could get exciting, but with the technical damage we’ve seen of late, it might be a tall order to see substantial buying come to the market. I’m going to continue to sit on the sidelines for now.
DEMAND – Soybean export sales were above last week’s big total. With net sales of 1.66 million mt for old crop, sales were 150k bigger than a week ago. For new crop, no sales were recorded so overall levels were again much bigger than the previous week. For basis, improvement is slowing down, which is concerning given what’s going on with futures prices. Local bids for me are 15 under the Jan, which is the same basis as a week ago. Decatur’s basis for cash beans didn’t change, staying at a dime over the Jan. On the river, basis was quoted at 18 over the Jan, which was a couple of pennies better than last week. I would expect bean movement to be slow for awhile unless basis begins narrowing again or futures rally.
CASH BEANS – Cash bean bids were lower across the board this past week as futures losses weren’t mitigated by any means by a basis that is stagnating. To be fair, basis has been amazing of late, but it appears enough beans were moved already that end-users don’t see a need to make up for futures losses like we’d seen previously. As I’ve said lately, if I were hauling in now, I’d consider locking in the basis or selling some beans…as basis is telling us to do so. However, at 60% sold, I’m going to give this market some time…with beans as oversold as we generally see them, there’s always a chance we could see a good rally heading into year-end. IF we don’t see any weather help from south of the equator, we may have to hang our hopes on the January report, which will have a ton of information to consider.
2020 BEANS – November 2020 beans also struggled this past week along with the rest of the bean complex. On Friday, Nov ‘20 beans settled at $9.27 ¼, down 3 ½ cents. Nov20 beans lost 15 ½ cents this past week and 45 over the past month. I remain 15% hedged…and willing to sell at least another 10% if we see a strong rally. My current target remains $9.83, given how early in the marketing year we are…but a sharp rally over $9.60 would be something to consider in my humble opinion. Don’t forget to keep offers current. If you know you can make money, be proactive about your marketing plan and have profitable offers sitting there ready to get taken.
As always, be sure to figure break-evens when deciding whether you want to make sales. For figuring your break-evens, we recommend using either the Profitability Calculator and the optimizer on the AgMarket.Net 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 60% sold/hedged (basis APH) at a board-based average price of $9.46SX for 2019.
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 us know if we can help you in any way.
Matt
217-273-1133 – Work
@chief321 – Twitter
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