Before we get started, I want you to know that we have released our Aerial study to our clients and Monday we will release to the public. In the last 2 weeks, AgMarket.Net Farm Division of JSA, JSA Corporate and private investors have flown the entire corn belt taking pictures every 20 miles to grid the health of the finishing crops. This Project captured 740 pictures, approximately 224,960 acres.
This map shows the flight pattern across the United States including Ohio Indiana Michigan and west into Nebraska and the
The purpose of this study is twofold. Our primary objective is to keep our clients informed about the health of this crop more than anyone in the industry. One of the best ways to do that is to click on attached PDF file.
Now our Sunday Comments:
I hope all is well around your place. I’ve had to do a bit of travel as is generally the case right before harvest. Whereas I generally don’t do much after Farm Progress Show as we are about to start harvest ourselves, this year of course is a bit different. I doubt we see much corn getting picked before October 1st, and I’d say the more likely scenario is some beans get cut. We see a few starting to turn here and there, so I’m sure we’ll see several cut in September locally. Everything is green again after getting plenty of rain the last three or four weeks. The interesting thing for me this past week was one of my trips was to Wisconsin…and most had jackets on as it was a bit chilly. Our highs over the weekend here in central Illinois are only mid-70s…I hope we get a few more 80s as we have some corn that simply won’t make it unless we get the right weather. I’ve had plenty of you reaching out about your crops with a ton of variability. There’s no doubt this year will be all over the board. Please keep me posted once you get started. I’d like to continue to hear about those early yields if possible. As always, I appreciate the feedback. mbennett@AgMarket.Net
Corn and beans both struggled this past week, with the move in corn feeling much worse than the one we saw for beans. With talks the US and China are going to sit down and talk in October not even getting an ‘eyebrow-raise’ from the market. It’s evident big money players are determined to drive these markets lower. In the case of corn, short positions continue to pile on, with the commitment-of-traders report showing a net short back to 125k contracts this past week. There is no question the weather hasn’t hurt yields lately…but at the same time, there is so much corn that needs heat in the worst way to get enough energy to finish well. With it looking less and less like an early frost will come to pass, the trade seems content our corn and bean crops will finish as they always do. While I think that bet isn’t wise, it’s going to take a long time to see just how much this late maturing crop loses in test weight and quality. Heading into the weekend, outside markets may have provided a slightly bullish influence as the Dollar index was steady to off a shade while crude settled higher on Friday. At the close, October crude was up 43 cents at $56.73. This was 22 cents off the highs and $1.90 off the lows of the day. Crude rallied $1.57 on the week.
CORN – The corn market had taken a week off of the run lower, but apparently wasn’t ready to head the other way. This past week, the corn market moved lower once again, breaking through long=term support. On Friday, December corn closed at $3.55 ½, down 3 ¼ cents. This was 4 ¾ cents off the high and 2 ½ off the low. On the week, the corn market lost 14 ¼ cents. Dec corn is now well over a dollar off the highs and 45 cents under the spring insurance price. There is no question this move is well overdone considering the potential risks we still have for this crop…and considering it appears to be a smaller crop than last year by a large margin. However, we also must realize some of the private estimates on the 2019 crop are coming in closer to the USDA number from August. While I have major skepticism that we could end up close to 170 bushels/acre nationally, I’m not sure this September report will be wildly bullish either. On Thursday, we’ll get the September estimate, but keep in mind that’s as of Sep 1 and simply the USDA counting ears…not looking at ear weights yet. I’m not giving up on the corn market, but man it looks rough right now.
DEMAND – Demand remains less-than-stellar and this week was no different. Weekly export sales were actually a net reduction of 166k metric tons for this marketing year, which is 160k less than a week ago. For next marketing year, net sales of 417k were posted, so overall sales were almost 600k mt lower than a week ago. Corn usage for ethanol was also lower on the week…by over 2 million bushels…at just over 104.5 million bushels, according to the Department of Energy’s EIA report. As far as basis is concerned, there wasn’t much movement. At a nickel under the Dec, my area’s basis was status-quo on the week. In Decatur, basis was also unchanged, staying at 17 over the Dec. On the river in St. Louis, basis was quoted at eleven cents under the Dec, which is just two cents wider than a week ago. I maintain end-users want the good, old corn…and that they will be quite hesitant to pay for it if they don’t have to.
CASH CORN – Cash corn didn’t have a great week. While prices continue to drop on the board, basis hasn’t done anything to help out. Yes, basis is great in some areas yet…but at the same time, it cetainly isn’t enough to make up for the drop in futures prices. While I remain hopeful we see some quick-ship bids and feel like it will happen regionally, it’s going to be tough for producers to capitalize on those gambling bushels they kept around. I think the best thing to think about is potentially using the old-corn to blend with some early-harvested corn to dry it down and get the quick-ship early bids…there should be some drying deals to start harvest as well. This fall we have to hope end-users treat producers decent on drying as natural gas and propane are quite cheap…but given less bushels will be handled, I’m not sure that will be the case.
2020 CORN – December 2020…this is the first week we’ll talk about Dec20 corn now that old corn has become new corn. On Friday, Dec corn settled at $3.96 ¾, down 2 ½ cents. With ‘new-corn’ back under $4, it sure doesn’t look all that attractive to price. Two years ago I started pricing new corn at this exact price, but last year, I started at $4.06 as we had the chance to sell that in December of last year…it seemed like a no-brainer. Now I know many looked at that $4.06 price as too cheap for much of the summer rally, but it sure doesn’t look cheap now. I will consider making new-crop sales somewhere in here, and hopefully one of these reports will give us that opportunity. My initial target is going to be $4.17 for the time being…and I have offers in to sell 15% there.
What To Watch For – I am out of 2018 corn. My final average rests at $3.74 CZ8 or $3.94 CK9 plus the gain from the calls I purchased to keep ownership. That gain was 50 cents. Rolling those calls to the Dec has my net gain on calls down to 31 cents with the value of those Dec calls. Consider incremental cash sales with the strong basis and look for even stronger basis just before combines roll. On 2019 corn, I’m 55% sold @ $4.31 basis Dec9. Next target will be at $4.84. 1st target for 2020 CZ is $4.17 for 15%.
– Strategies I’ve employed or considered.
Straight hedge of…(must be a client)
BEANS – The bean market wasn’t able to get anything going this past week either but fared better than the corn market, relatively speaking. To close the week, November beans settled 3 ¾ cents lower at $8.57 ¾. This was 8 ¾ cents off the high and a penny and three-quarters off the low. Nov beans lost 11 ¾ cents on the week. This bean market is struggling between good weather and poor trade news…combined with a late planting date that the trade knows will have an impact on yields. With many of the recent estimates showing yields closer to USDA, some in the trade seem hesitant to buy this bean market. While we are unlikely to run short on beans unless yields are closer to 40 bu/ac, there’s no question in my mind we are looking at a much lower carry than the USDA suggested in the August report. While the bean market looks pretty sick at the moment, I have to think it would be wise to hold off on making sales, especially if you can’t lock in profits. We have plenty of marketing year left to navigate.
DEMAND – Soybean export sales were higher overall from a week ago levels. With net sales of 69k for old crop, we saw a decrease of 25k mt. For new crop, sales were 788k, which is 400k over a week ago…so overall levels were around that 400k larger than a week ago. While current rhetoric suggests the Chinese are going to try and avoid buying US beans, I have a hard time believing they’ll be able to get from South American old-crop to new-crop. For basis, not much movement was noted in most areas. Local bids for me are 40 under the Nov, which is status-quo on the week. Decatur’s basis for cash beans also stayed constant at 15 under the Nov. On the river, basis was quoted at 31 under the Nov, which widened by 16 cents from a week ago. I would imagine part of bean basis widening is a few beans will be getting cut if they haven’t already.
CASH BEANS – Cash bean bids aren’t improving by any means with the drop in futures prices as well as some basis widening. While some areas will be a while yet as far as harvest is concerned, other areas will be starting before long. IF you see any basis bump at all, I’d be tempted to get any old beans moved. I would imagine keeping your focus on new-crop and getting the old-crop wrapped up would be a smart move. It’s a tough time to sell beans I know. However, while there’s not a ton of old beans out there yet, I know some still have them. We aren’t likely to see the same opportunities as with corn, so keep that in mind when you put your plan together to get out these old beans.
2020 BEANS – This is the first week for November 2020 beans as well. On Friday, Nov ‘20 beans settled at $9.22 ¼, down a penny and a half. As we start to think about selling beans for next all already, we must keep in mind this price level we currently see is a 65-cent carry from Nov ’19. My point is this price right now isn’t all that bad as compared to price levels over the last year. We didn’t get a chance to see $10 beans for the 2019 crop, and I’m not sure we will see markets much different for 2020. The spring price for 2019 was $9.54, and if we get a run towards $9.50 or so, I’ll be rewarding that rally with my first sale…of 15%. 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 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’m 100% sold-2018 beans with average of $9.63 cash. My targets for cash beans are now $9.36 & $9.61 basis the August. I’d have offers in now to take advantage of any rally unfolding. I am down to 50% sold/hedged (basis APH) at a board-based average price of $9.50SX for 2019. My next sales target is now $9.19 for a cash or futures sale.
For 2020, I’d sell 15% if we ….Must be a client
**For the strategies I talk about on here, please remember these are the tools I use for my farm. There are tons of good tools out there.
I hope you have a great week. Please let me know if I can help you in any way.
Matt
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mbennett@AgMarket.Net – E-mail
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