Sunday Night Calls are mixed to a little higher. Technical patterns are hard to ignore and short fund 112k bean and 95k short corn positions seems to be threatened. A break out above 391 in March corn and 942 in March beans would likely hit buy stops. No updates from US-China other than much more growing press in favor of big talking points and even one show suggesting investors look at struggling Ag company’s stocks. Impeachment looks like a dead end, Xi and TRump talked late last week and had different interpretations of the tone but both parties can call it a win and it seems solid right now. Many difficult issues including military, political influencing, and recent US congressional bill supporting human rights in China (HK). But those issues are back seat now.
Bill Biedermann
Matt Bennett’s Weekly Comments
I hope you’ve gotten most of your Christmas shopping completed as I know many if not most of you do it online. At this point, if you’ve not gotten everything you’ve needed to get, you’ll have to go the old-fashioned way. While I’m not a huge fan of shopping, I can’t say this doesn’t happen to me most every year. Yes, I like to buy stuff online as it’s easy…but I don’t always get everything done in a timely fashion when it comes to buying Christmas gifts. As for what’s on my wish list, I must say this year it’s easy. I don’t need anything as all five of the kids are home under one roof. We’ve seen some changes over the last year as our oldest got married…so we have an addition, which we are quite thankful for. The main thing for me again is just having everyone together. I’ve told them all to not get me anything…we’ll see if they listen. I know not everyone feels as festive this time of year…so my family sends well-wishes to you for whatever may be bothering you. For some I’m sure it’s frustrating not being finished with harvest…I’ve heard from several of you. Hang in there…and keep me posted. While many of us have things to be thankful for, 2019 will be a year that most all of us will be glad to see gone. mbennett@AgMarket.Net
Corn and beans were able to continue the recent rally this past week. With some fervor carrying over about the US/Chinese trade situation, it seemed most of the follow-up rhetoric was positive. Traders were arguing over the potential China could even import $40 billion worth of ag goods, but some reassurance from China was posted about doing so. As well we’ve seen talk about creative accounting from China by using goods shipped through Hong Kong and Taiwan, but overall we know the intent is to buy quite a bit of goods from the US moving forward. Now that the house has impeached the President, we’ll have to see if and when they send the articles to the Senate. Most give impeachment in the Senate extremely low odds, but either way, it’s been a bit of a distraction for everyone, notably politicians. Fortunately the USMCA was passed by the house, so that will likely be passed by the Senate just after the first of the year. It was a solid week for commodities when it comes to trade deal news. For outside markets, we saw a bearish tilt heading into the weekend as the Dollar was strong on the day while crude cooled off. February crude closed down 82 cents at $60.36. This was 84 cents off the highs and 34 off the lows of the day.
CORN – The corn market continued its recent rally as sellers seem to be on the sidelines for the time being. On Friday, March corn closed up a penny and a quarter at $3.87 ¾. This was a penny and three-quarters off both the high and low of the day. On the week, the corn market rallied 6 ¾ cents and 11 cents over the last two weeks. We’d talked after Thanksgiving that many times the bears get that holiday while bulls get Christmas. This certainly appears to be the case this year, even though the rally hasn’t been substantial. A corn rally of a dime, however, isn’t anything to scoff at, especially in a year where basis has been so strong. My thoughts on corn going into the end of the year is more of a friendly tilt for old-crop but as for new-crop, I look at our current markets as opportunity. Anytime we see rallies, we have to at least ask ourselves what that kind of move means to our operation. While I’m excited about the prospects for Chinese corn and ethanol purchases, I have to remember the ups and downs this process has provided…and manage risk accordingly.
DEMAND – Demand was solid on the week with exports vastly improved while corn usage for ethanol remains robust. Weekly export sales were 1.71 million metric tons for this marketing year, over 900k more than a week ago and easily the stoutest export number we’ve seen in a long time. For next marketing year, 536k tons in sales were posted which is also vastly in excess of what we’ve been doing. Overall sales were almost a million and a half tons above a week ago…I’d take a few more weeks like this! Corn usage for ethanol continues to impress, coming in just under 107 million bushels, according to the Department of Energy’s EIA report. This was a decrease of around a half-million bushels. Corn usage for ethanol had gone up for 11 straight weeks and finally saw a week of less corn used. Fortunately, it’s still a big number. Basis hasn’t backed off with strong futures, which is an excellent sign. My area saw basis option the March, which was an improvement of two cents. In Decatur, basis moved to 18 over the March, which is a widening of two cents. On the river in St. Louis, basis was quoted at a dime over the March, which was two cents improved from a week ago. Basis is certainly strong…if we see more rally, I struggle to believe basis holds together but this has been a strange year.
CASH CORN – Cash corn rallied on the week as futures were higher while basis was steady in most areas. areas. With many producers, it’s getting close to crunch time on some bushels. The first of the year is ‘bill-paying-time‘ for many of us so if we don’t have enough crops sold, generally some bushels are moving. The good thing here is we’ve seen a rally at a time basis was strong. Selling bushels now isn’t a terrible idea, but I’d sell in increments as we generally talk about. I’m a bit friendly old-corn, so I’d like to keep some ownership if possible. Given the potential for new export business, a possible adjustment on yield in the January report and a boosting of usage in that same report, I think corn is good property. On the flip-side, many are looking at 2020 corn showing big acreage, so there are people who think we’ll get to next September 1 with plenty of corn. Our research tells us final carry will be1.5 billion bushels at most…that’s pretty snug, but likely not snug enough to see a wild rally without a weather event in South America or the US this summer. Incremental sales at profitable levels make sense to me.
2020 CORN – December 2020 corn also had a solid week. Dec20 closed on Friday up a penny and a quarter at $4.01 ¾. This was a rally on the week of 6 ½ cents and over 11 cents in two weeks. We got over $4 earlier in the week, which again is a magic number for many people. The team of guys I’m on at AgMarket.Net moved our next target down to $4.04 which wasn’t hit yet. However, I think it’s a solid place to make a sale…for me it’s very profitable at insurance-type yields, so I like having risk covered there. I have been working on people to have their costs figured and plugged into a profitability spreadsheet with projections on yield with acreages for 2020. The webinar we did addressed specific strategies for 2020 that could be considered…I’d watch it if you have the chance. You can still go to the
https://register.gotowebinar.com/recording/267519279209723137
you can also view it on our www.AgMarket.App
Also, don’t forget to use the profitability calculator on the AgMarket.App to see how your profitability is shaping up. If you need help with a marketing plan for 2020, let us know and we will 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.
For 2020 CZ, I’m 20% sold at $4.06. Next target for 10%…$4.04
BEANS – The bean market continued to climb as again sellers appear to be done for the time being. On Friday, Jan beans settled 3 ¾ cents higher at $9.28 ¼. This was a penny and three-quarters off the high and 4 ¼ cents off the low. Jan beans rallied 20 ¾ cents on the week…and 52 over the last three weeks. This bean market looked like it could really plummet less than a month ago, but at this point, enthusiasm continues to ramp up. When I look at the bean complex, I can’t help but think about what we’ve already been given though. This market has been impressive, but there’s no guarantees the rally will continue. Therefore, a sale here and there would make sense. When a person factors in the huge basis improvement since harvest started, beans are worth significantly more than they were at that time. I’m not necessarily bearish beans…but if a person can make money selling them after a half-dollar rally…I’d think it would be strongly considered.
DEMAND – Soybean export sales were well above a week ago levels. With net sales of 1.43 mt for old crop, sales were around 400k tons bigger than a week ago. For new crop, just 36k in sales were recorded so overall levels were over 300k tons more than a week ago levels. Bean exports have been solid indeed. For basis, we’ve seen some stabilization, but certainly strong basis levels are remaining intact during a rally…a great sign once again. Local bids for me are a dime under the Jan, which is status-quo on the week. Decatur’s basis for cash beans also remained the same, staying at 15 over the Jan. On the river, basis was quoted at 30 over the Jan, which was 3 cents improved from last week.
CASH BEANS – Cash bean bids were again higher everywhere I monitor with a solid futures rally and steady to stronger basis levels. Again a futures rally in the winter timeframe isn’t generally met with strong basis. However, a smaller crop than we’ve been used to the last few years as well as solid demand has kept end-users in the buy mode. To me, it’s really tough to ignore this situation. I know a ton of beans went into commercial storage this year as the carry was solid while basis wasn’t pretty early in harvest. Those beans are worth a buck more than they were when they went in the elevator…at a bare minimum. So for me, I sold another 10% right at $9.30 SF, which gets me to 70% sold on old beans. If you have many unsold beans, you might look at it as I have explained here, keeping the strong basis in mind. My goal was to sell beans for a net of $9~, which was able to take place with this past week’s rally. I’ll look to sell more beans if we can see March climb to the $9.55 area.
2020 BEANS – November 2020 beans again rallied along with the rest of the bean complex. On Friday, Nov ‘20 beans settled at $9.66 ¼, unchanged on the day. Nov20 beans rallied 15 ¼ cents this past week and 40+ over the last three weeks. I had talked about getting more 2020 beans sold in this area, so I moved on another 10% at $9.68. My old target had been $9.83…and that will remain as my ‘new’ target. I’m now 25% sold on new beans for my operation…and the nice thing is I know I can make good money at these price levels with APH yields. Let’s hope for more rally…I’d be cautious as to wait for $10…we may get it, but don’t have all your eggs in that basket. That would be my advice. Let us know if you need help with a marketing plan for 2020.
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’d be glad to help, so be sure to reach out.
What To Watch For –
For 2019 beans, I am now 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 our website at ahttps://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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