Grain Markets

2018 All Over Again? Northwest Corn Belt Farmers Face Storage Crunch, Basis Collapse

Thu, 28 Aug 2025 16:46:31 GMT

Farmers in the northwestern Corn Belt are experiencing déjà vu. Harvest 2025 is starting to feel like 2018 all over again. The lack of export business has widened soybean basis in North Dakota, says Frayne Olson, crop economist and marketing specialist with North Dakota State University.

China, which takes 25% of all U.S. soybeans, is facing tariffs as high as 23%. As a result, Beijing has made no purchases of new crop soybeans .

“Current soybean basis levels are anywhere from -$1.35 to -$1.55,” Olson says. “During the peak of the last trade war between the U.S. and China, we were at a -$2 in many locations.”

North Dakota farmers depend on soybean exports to China, so they’re looking for a market for more than half of their 220 million bushel crop.

“We’ve been set up to ship through the Pacific Northwest to China. Right now, with that market shut down, 120 million bushels have to go somewhere,” explains Randy Martinson, Martinson Ag in Fargo, N.D.

Farmers Might Face Storage Crunch
With $8 cash soybean bids in the Dakotas and Minnesota, and no bids for fall in a few markets, farmers might need to break the norm and store soybeans.

“The incentives are now for farmers to store soybeans on-farm and try to push some of the corn through the system as quickly as possible,” Olson says. “Our challenge with that, of course, is harvest capacity.”

Farmers are scrambling to find storage and have limited options — with old crop still to move and capacity lost to storm damage in North Dakota.

Olson says their options will depend on harvest conditions and moisture content.

“If the corn is dry enough, I think there will be a lot to put into bags . There will probably be some we’re going to have to pile outside regardless, whether they’re farm storage piles or commercial storage piles,” he says.

Other Areas Also See Basis Weaken
Basis has also weakened in other areas of the Corn Belt, such as Kansas, where big crops are predicted and processors have backed off bids for corn and soybeans, says Mark Knight with Farmers Keeper Financial.

“You’re seeing some basis get wide. They expect a big crop coming, so there’s not a big supply fear out there right now. Why pay up?” Knight says.

Farmers might have to sell overflow bushels and look at buying the crop back on the board, he advises.

“They’re looking for ways to re-own — whether it’s through futures, options or storage themselves. I think most of the guys are going to get away from paying for commercial storage,” he explains.

With the storage crunch, commercial storage costs will likely be much higher this fall.

Ag Economist Offers Farmers What He Calls 'Some Contrarian Advice'

Fri, 17 Jan 2025 19:27:56 GMT

With president-elect Donald Trump set to re-enter national office on Monday, Scott Irwin offers row crop growers a word of caution and what he describes as a bit of contrarian advice.

“I know farmers have had some optimism about recent grain prices, but I think it’s a good time to dip toes in the water and consider getting some downside price protection for the 2025 crop,” Irwin told Farm Journal during the Illinois Soybean Association Field Advisor Forum earlier this week.

“It’s a little hard to do that when you’re pricing at what would be a full cost loss, but I think that potential immediate downside risks of trade problems we could be heading into could hit both corn and soybean prices moving forward really hard,” he adds.

In analyzing corn and soybean prices, Irwin is predicting corn at $4 per bushel and soybeans at $10 per bushel for 2025. Furthermore, while net farm income hit a peak at over $180 billion in 2022, his latest projections for 2024 show a significant drop to around $40 billion.

The University of Illinois agricultural economist says that procuring some downside price protection is his No. 1 recommendation to farmers for the short-term.

Will Trump Impose Tariffs?

Weighing on Irwin’s mind is what Trump will do regarding trade, namely whether he will impose tariffs on any or all of the United States’ three largest trading partners - Canada, Mexico and China.

Trump has said he will impose a 25% tariff on imports from Canada and Mexico until they clamp down on drugs, particularly fentanyl, and migrants crossing the border. He has separately announced the U.S. will impose tariffs from 10% to 60% on goods from China.

“The one thing I learned thinking about economic implications during Trump 1.0 is that when he makes a pronouncement on economic policy, you better take him seriously,” Irwin says.

A Look In The Rearview Mirror
U.S. agriculture has some recent history of what could happen if tariffs are imposed and trade partners decide to implement tit-for-tat retaliations.

Irwin specifically referenced China’s decisions during Trump’s first administration as an example. When the U.S. imposed tariffs on China in 2017-18, the country retaliated on U.S. soybeans and took its business to South America, namely Brazil.

The financial fallout for U.S. agriculture was significant. USDA Economic Research Service data show the United States exported $12.2 billion in soybeans to China in 2017. However, in 2018, U.S. exports to China fell to $3.1 billion, a 75% decrease.

“A lot of people downplayed that experience because, honestly, it didn’t last that long,” Irwin recalls. “The worst of it was only about six to eight months.”

He attributes the short duration partly to the crisis China went through at the time with swine flu, which decimated pig herds and required the company to undertake extensive herd rebuilding. In the process, China was unable to source enough soybeans from Brazil to meet demand.

“Unless China gets a new swine flu disease that’s not going to bail us out this time,” Irwin says.

China Is Already Changing Course
In response to tariff concerns, Chinese oilseed importers have already shifted gears to purchase competitively priced Brazilian soybeans.

The move is hitting U.S. suppliers towards the end of their peak marketing season in January, according to a Reuters article published on Friday (Chinese buyers switch to cheaper Brazilian soybeans ) .

The Reuters article says the move is likely to leave the U.S., the No. 2 soybean exporter after Brazil, with 10.34 million metric tons of beans by the end of the 2024/25 marketing year in August, the highest in five years, according to U.S. Department of Agriculture estimates.

‘Something Always Happens’
Regardless of his concerns about trade, Irwin says it’s important to keep some perspective on what he describes as a normal price cycle for agricultural commodities currently.

“Don’t get too pessimistic ever about prices or too optimistic, that’s my attitude,” he says. “Something always happens eventually (to send prices up or down).

“This summer, we could get a big drought here in the U.S., and all of a sudden, grain prices are at very profitable levels,” Irwin says. “Or it might take us several years to grind our way out of the trade problems that I think we could be facing, and that’ll be a lot tougher environment. But even if that happens, it won’t last forever, and that’s, I think, a very important mindset to have.”

Your Next Read: Treasury Nominee Bessent Defends Trump Policies in Testimony; Promises to Press China to Resume Ag Purchases in Phase 1 Agreement

In The Countdown To Elections, Consider Marketing Risks And Rewards

Tue, 17 Sep 2024 21:27:58 GMT

With ag economists and other industry experts predicting 2024 will be remembered for record-low corn and soybean prices, farmers continue to work on managing their financial risks while trying to capture any reward in the marketplace.

Tommy Grisafi, with Advance Trading, and host of ATI – ProMedia, says he would like to see more U.S. farmers use futures and options to manage commodity price ups and downs. But he says many growers are uncomfortable with using those tools.

“What they want you to tell them is there’s no risk in selling $6 futures – if and when we were at $6 – but that’s not true. There’s a huge risk in doing that. There’s also a huge risk in doing nothing,” he told guest host Davis Michaelsen on AgriTalk.

With the potential risks versus rewards in mind for corn and soybean prices, Grisafi offers a couple of takeaways for farmers’ consideration.

With the presidential election just weeks away, consider whether you need to take any action in the short-term. “Folks, if you don’t need to take risks, this next (48) days might be a great time to just lay low and take a little off the table,” Grisafi says.

That’s not to say you should do nothing if a rally occurs. Rather, it’s a matter of being astute about the opportunity and knowing what you would consider a marketing win.

“Keep an eye on Washington and on your bushels” Grisafi advises. “We don’t have a farm bill right now. There are a lot of things that can happen politically that could affect farmers.”

One highly anticipated move is the interest rate cut by the Federal Reserve, expected to happen on Wednesday.

The markets are somewhat torn on whether the Fed will cut interest rates 25 or 50 basis points following its monetary policy meeting on Wednesday, though the highest odds are with a smaller reduction to start, Pro Farmer reports.

Consider the risks associated with a high carry – the cost of storage, insurance and interest.

When economists talk about a large carry, it usually has to do with the use of longer-term storage for a big crop.

The latest WASDE report, released Sept. 12, has pegged domestic corn production at 15.2 billion bushels

Grisafi says there is an “incredible carry” in the market this year. In looking at futures months out into early 2025, they are higher than December 2024. Corn growers wanting to take advantage of carry will need to determine their cost of storage.

“Look at the March and May carry in corn,” he says. “If you need to sell grain off the combine, then do it. But look at that carry. Get to know those carries better. That is better marketing.”

For your next read on AgWeb:
Take Our Poll: 5 Questions Ahead of the Presidential Election

Why You Should Start Hedging Now

Fri, 02 Aug 2024 18:30:00 GMT

A couple decades ago I had the privilege to speak at the USDA Forum in Washington, D.C., on risk management. Little did I realize my version of risk management did not jive with RMA, which was beginning to implement crop insurance. A time thereafter I also testified in Congress on the same subject as it pertained to which crops would be covered and indemnities. Since then, RMA has increased its presence and risk management, as I define it, seemed to never be further apart. Crop insurance has seemingly overshadowed hedging.

I define hedging as the ability to sell bushels and to lock in a futures price while still maintaining physical ownership and price flexibility. I have heard every reason (excuse) in the book for not using futures and options. Here are my responses on a few.

It costs too much.
A: It is all relative. The variable input cost to plant corn is about $350 per acre. Investing in hedging is about $25 per acre per 100 bu. Hedging is an investment as it is returned when exited, so the only real cost is the cost of money. The current margin of 5,000 bu. of corn is $1,250. Risk management should be a line item in your budget.

LISTEN to Michelle Rook’s Aug. 2 podcast with Jerry Gulke.

No one knows where prices are headed.
A: This requires an education of the importance of global supply and demand.

• Bull markets will go up until price rations demand and what is grown will be enough.

• Bear market go down to discover a price that will find new demand and clear out excess supplies.

I never make any money.
A: The point is to lock in a profit, not a loss. If prices rise, it’s an opportunity to have made more than is lost. Your tax form schedule F will likely show a profit when there are hedging losses.

I can’t sell something I don’t have.
A: The market doesn’t care what you personally grow. The market is much bigger than one person. Futures and options allow the flexibility to manage the total market risk, not just your back yard.

It requires too much time.
A: We have time to become agronomically proficient to grow the best crop we can (supply), but not enough time to understand demand. When I started farming, I forced myself spend 1% to 2% of my gross income on marketing education. That is $10 per acre minimum on $1,000 per acre gross. You are going to get an education one way or another; you might as well be ahead of the curve.

The market is “rigged” against me.
A: This is due to lack of understanding. Educate yourself or find someone who is educated in risk management, preferably someone who has skin in the game. When I buy stock in a company on the advice of my stockbroker, I ask him how much he has purchased for his mother.

What I Do
I use price charts as well as the fundamentals of supply and demand in my decisions. The chart below is of new crop December corn futures (CZ). When the current CZ expires, I chart the next year’s CZ accordingly. It reflects new corn futures over the past 17 years since ethanol became a price driver.

A cursory overview shows price evolution higher as we invited competition, then oversupply and the price of corn sank to levels of the rationale “no one knows where prices are headed” excuse above. The price road map reflects opportunity and adversity that affects our bottom line profits perhaps more than agronomy. The opportunities are obvious even if one elects to use cash forward contracts (losing beneficial interest) on 40% and manages the risk via hedging on the rest maintaining flexibility.

Price Concerns
Note that CZ24 has broken through the $4.50 level as of press time, creating concern for the future. Corn has entered a price void with seemingly nothing but air under it, especially as the media is expecting huge inventories still unsold and in farmer hands to come to market. Remember, the world won’t care if you personally grow a crop or not — using risk management flexibility has its benefits.

A Wild Day in the Outside Markets. What Could it Mean for Ag Markets?

Wed, 24 Jul 2024 21:00:53 GMT

Oliver Sloup, Co-Founder of Blue Line Futures shares his take on today’s price action in the outside markets and how that could spill into some setups in grain and livestock prices.

Grain Market Recap

It was a mixed day in the grain markets amidst the risk-off day in the outside markets. At the close new crop December corn futures were ¾ of a cent lower to settle at 418. New crop November beans settled 11 ½ cents lower to 1064 that was about 15 cents off the high of the session. On the wheat side, the most actively traded September Chicago contract settled 4 ¼ cents higher to 547.

Today’s updated 8-14 day outlook from the national weather service showed high chances for hotter than average temperatures for this time of year, not just for the grain belt but for nearly the entire country. On the precipitation side we see a divide right down the middle of Illinois. To the east, near normal precipitation is expected. West of that and below normal precipitation looks like a high probability.

We did see a flash sale in each of the last two days, today however there wasn’t much new to report on the export front. However tomorrow morning we will get the weekly export sales report, out at 7:30am CT. Expectations for old crop sales range from 200k-700k metric tons, expectations for new crop sales range from 100k-600k mt.

Livestock Market Recap

Cattle futures were mixed with live cattle squeaking out gains and feeders lower. Front month August futures tacked on 60 cents as futures and cash trade continue their attempt to converge with first notice day just about a week and a half away. October futures which is the most actively traded contract settled 15 cents higher to 186.27. On the feeder cattle side, August settled 1.62 lower to 257.12 with the next three contract months posting larger losses. Moving over to hogs, the most actively traded October contract settled 90 cents higher to 78.02, this marked the 9^th higher close in the last 10 sessions.

This morning’s wholesale boxed beef report was softer with choice cuts 23 cents lower to 313.21 and select cuts down 1.67 to 296.66. Yesterday’s daily livestock summary showed daily slaughter at 123k head, putting the week to date total at 238k. Cash trade was relatively mute in yesterday’s trade.

Outside markets were under heavy pressure today with major indices trading as much as 2 & 3 percent lower. If weakness persists in those markets it may start to raise concerns over future consumer demand, especially heading into a time of year where demand starts to dwindle as grilling season cools off.

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Futures trading involves substantial risk of loss and may not be suitable for all investors. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.Blue Line Futures is a member of NFA and is subject to NFA’s regulatory oversight and examinations. However, you should be aware that the NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets. Therefore, carefully consider whether such trading is suitable for you considering your financial condition.With Cyber-attacks on the rise, attacking firms in the healthcare, financial, energy and other state and global sectors, Blue Line Futures wants you to be safe! Blue Line Futures will never contact you via a third party application. Blue Line Futures employees use only firm authorized email addresses and phone numbers. If you are contacted by any person and want to confirm identity please reach out to us at info@bluelinefutures.com or call us at 312- 278-0500
Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program.
One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results.

Grain Markets Rally to Start the Week

Mon, 22 Jul 2024 12:20:03 GMT

Watch us on RFD-TV, today at 9:45am CT!

Corn

Technicals (December) Corn futures are making a nice push higher in the overnight and early morning trade as a wrinkle of uncertainty regarding the President’s decision to drop out may be sparking some short covering. As far as the technical landscape goes, not much has changed. The market remains mostly rangebound between 403 and 413. If the Bulls can chew through and close above the top end of the range, it could spark additional upward momentum with the next hurdle coming in near 422 and the more significant resistance point coming in near 430-434.

Commitment of Traders Update: Friday’s Commitment of Traders report showed funds relatively flat for the week, which is in line with the sideways range the market has been stuck in. The net short position stands at a whopping 352,772 futures. Broken down that is 499,028 shorts VS 146,256 longs.

Bias: Bullish
Resistance: 420-422, 430-434**
Pivot: 413-416 1/2
Support: 399-403**

Below is an hourly chart of December corn futures

Soybeans

Technicals (November) November soybeans are trading nearly 20 cents higher in the overnight and early morning trade, posting their highest prices in a week. The move higher comes on the back of a new wrinkle in the election as well as talks that China could be back for more beans this week. 1061 1/2-1062 3/4 will be a big hurdle for the Bulls to overcome. If they can chew through and close above that pocket an eventual move back near the technically and psychologically significant $11 would not be out of the question.

Commitment of Traders Update: Friday’s CoT report showed Funds expanded their net short position by about 20k futures contracts. That puts them net short 183,145 contracts. Broken down that is 243,705 shorts VS 60,560 longs.

Bias: Neutral/Bullish
Resistance: 1061 1/2-1062 3/4***
Pivot: 1046-1050
Support: 1025-1031 3/4**

Below is an hourly chart of November soybean futures

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Futures trading involves substantial risk of loss and may not be suitable for all investors. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.Blue Line Futures is a member of NFA and is subject to NFA’s regulatory oversight and examinations. However, you should be aware that the NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets. Therefore, carefully consider whether such trading is suitable for you considering your financial condition.With Cyber-attacks on the rise, attacking firms in the healthcare, financial, energy and other state and global sectors, Blue Line Futures wants you to be safe! Blue Line Futures will never contact you via a third party application. Blue Line Futures employees use only firm authorized email addresses and phone numbers. If you are contacted by any person and want to confirm identity please reach out to us at info@bluelinefutures.com or call us at 312- 278-0500
Performance Disclaimer
Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program.
One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results.

AgDay Markets Now: Rich Nelson Says Funds Sink Soybeans Pricing in Trendline Yields

Wed, 10 Jul 2024 03:54:08 GMT

Soybeans made new lows for the move Tuesday and hit levels not seen for three years.

Rich Nelson with Allendale, Inc. says funds sold hard again pricing in trendline yields based on the idea that forecasted rains for the dry areas of the Eastern Corn Belt will help that crop make up for the deficiencies in the Western Corn Belt.

The implosion in the soybean oil market also weighed on the soybean complex.

However, he thinks November soybeans are getting close to fair market value at around the $10.60 to $10.80 area on the charts.

Beyond supply he says demand is also a problem for soybeans with export pace running behind a year ago for both old crop and new crop and that will likely be reflected in the WASDE Report on Friday.

Corn and wheat staged early rallies on corrective buying but could not hold those gains into the close with the double digit losses in soybeans.

Nelson thinks corn and wheat are closer to finding a low than soybeans because the demand picture is better with exports on both commodities running well ahead of year ago pace.

He expects $4 to be good support for December corn on the charts.

Corn and Wheat Try to Recover Tuesday, With New Near Term Lows in Soybeans

Tue, 09 Jul 2024 14:45:38 GMT

Corn and wheat are higher early seeing a short covering bounce and corrective buying after the bloodbath Monday.

Kent Beadle with Paradigm Futures says the break in corn was overdone as a record crop is not made yet, but economically it puts most farmers in a position of negative profits.

He says soybeans are mostly lower with a correction in soybean oil dragging down the complex.

The forward spreads are working, an indication of old crop demand.

Meanwhile, November new crop soybeans make new lows for the move and three year lows at that.

Weather has been bearish with rains falling in dry areas of the Eastern Corn Belt as a result of Hurricane Beryl.

Plus crop ratings improved by 1% for both corn and soybeans nationally and 3% for spring wheat, which were all above expectations.

Another factor is the USDA report expectations are bearish with early estimates raising old crop and new crop ending stocks on all of the grains.

As a result funds have been massive sellers in the grain markets and have pushed to a record short position in the corn market and are also short in soybeans and wheat.

After some hedge pressure on Monday cattle are recovering with record cash trade last week for the fourth week in a row.

Funds added to their long positions in both live and feeder cattle as of last Tuesday.

Lean hogs continue to see bull spreading which Beadle says may also be some underlying demand.

AgDay Markets Now: Brian Grete Explains the Melt Down in Grain and Livestock Futures

Mon, 08 Jul 2024 23:09:55 GMT

A risk off day and broad based selling in grain and livestock futures to start the week.

Brian Grete, Pro Farmer Editor, says grains saw massive fund and technical selling and new crop corn and soybeans made new lows for the move and November soybeans closed under $11.

Grains saw double digit losses across the complex and corn and soybeans gave back Friday’s gains with favorable rains and chances for more in the Eastern Corn Belt tied to Hurricane Beryl.

Plus, traders are gearing up for USDA reports as higher quarterly stocks and higher corn acreage are reconciled on the balance sheets and could push both old crop and new crop supplies higher on Friday.

Wheat futures fell with corn and soybeans but are still seeing some harvest pressure with better than expected yields in Kansas and increasing crop estimates and lower wheat prices from Russia.

Funds continue to push to a record short position in the grain complex for this time of year.

Grete says, “Traders have no reason to buy at this point,”

Cattle futures also got caught up in the risk off session and saw profit taking despite record cash at $2.00 in the North.

The five area weighted average also came in at $197.09 which was the fourth consecutive week the cash price hit a record.

Grain and Livestock Markets Plunge on Risk Off Selling

Mon, 08 Jul 2024 19:52:56 GMT

A risk off day and broad based selling in grain and livestock futures to start the week.

Brian Grete, Pro Farmer Editor, says grains saw massive fund and technical selling and new crop corn and soybeans made new lows for the move and November soybeans closed under $11.

Grains saw double digit losses across the complex and corn and soybeans gave back Friday’s gains with favorable rains and chances for more in the Eastern Corn Belt tied to Hurricane Beryl.

Plus, traders are gearing up for USDA reports as higher quarterly stocks and higher corn acreage are reconciled on the balance sheets and could push both old crop and new crop supplies higher on Friday.

Wheat futures fell with corn and soybeans but are still seeing some harvest pressure with better than expected yields in Kansas and increasing crop estimates from Russia.

Funds continue to push to a record short position in the grain complex for this time of year. Grete says,

“Traders have no reason to buy at this point,” he says.

Cattle futures failed as well on profit taking as the market got caught up in the commodity wide selling, reversing early stength.

The market also disregarded the record high cash trade as the North saw $200 live sale prices and the Five Area Weighted Average was a record for a fourth week at $197.09.

Feeders also failed to rally in the face of sharply lower corn futures.

Lean hog futures ended mostly lower and have continued to struggle to find a bottom with the lower Lean Hog Index and softer cash.

Cattle Mixed Fading Record Cash: Grains Slide on ECB Rains

Mon, 08 Jul 2024 14:20:33 GMT

Cattle are mixed to higher after some record cash trade in the North again hitting $200.

News that Tyson in Dakota City, Nebraska has stopped slaughter due to a gas leak may be capping the rally and causing some selling.

Brad Kooima of Kooima Kooima Varilek says, "$200 was paid here first by a regional and then by one of the major and they are going today, This is the time of the year when we’d be in the heart of our calf crop and we’ve got showlists in the North that are half or less than what they normally are and the cattle on the showlists aren’t very fat. Sounds like 2014 again right? Selling every thing with a tail head and a brisket,” he says.

He adds that cattle producers have leverage due to the tight supplies. “I’ve contented for a while that the cattle aren’t there,” he adds.

Futures continue to lag the cash trade like they did in 2014 says Kooima, as the market waits for the cash to top or falter but so far that hasn’t happened.

He thinks it is just a matter of time before the live cattle futures retest the record highs set back in September of 2023.

“I think it could be fairly soon,” he projects.

Packers have been trying to compensate through heavier carcass weights but some heat moving into feedlot areas may finally stall that.

Lean hog futures are mixed, still trying to bottom. “You have a chart that is showing some hope,” he says.

Kooima says they think the numbers are starting to tighten.

Grains are under pressure on profit taking after higher weekly closes.

However, the big factor is rains forecasted for the dry areas of the Eastern Corn Belt tied to the hurricane.

There may additionally be some USDA report positioning with higher quarterly stocks likely to be reconciled in the report.

Weather and Supplies Hold Back Corn and Wheat, Soybeans Rally Following Bean Oil

Wed, 03 Jul 2024 19:14:16 GMT

Grains closed mixed Wednesday, with livestock mostly higher.

Soybeans rallied for a third day on light short covering heading into the holiday and corrective buying as the market is oversold.

Vince Boddicker, Farmers Trading Company, says soybeans also saw spillover strength from soybean oil, which has rallied over 600 points in the August contract since bottoming June 25. “Bean oil has been moving higher with Indonesia announcing import tariffs that would hit palm oil, including supplies from China,” he says.

Corn ends lower and has been down eight out of the last nine sessions. Boddicker says corn followed wheat but has also been weighed on by favorable weather for the Central and Eastern Corn Belt.

Plus, he says the market continues to digest the bearish acreage and stocks numbers from last Friday’s USDA Reports.

Wheat is struggling to confirm a low. The market had a nice rally on Monday but failed to see any follow through Tuesday and Wednesday despite U.S. harvest moving past the 50% mark.

Boddicker says the market has priced in a the global production concerns and Russia is also harvesting their crop so that is providing some pressure. He says it will likely take a supply shock like Russia banning wheat to see a rally.

Cattle futures end higher on Wednesday, despite a lack of cash trade. “I would imagine cash trade will wait until after the holiday and break on Friday,” he says.

Boddicker points out that while numbers are tight that is being offset by weight trending well over a year ago.

Lean hog futures see more forward spreading and Boddicker think the market is trying to establish a bottom.

However, the market also struggles to rally with more up front supplies as indicated in the USDA Hogs and Pigs Report.

Boddicker says demand has also stalled out especially for bellies and that has limited the market.

AgDay Markets Now: Tomm Pftizenmaier Says Corn and Soybeans See Short Covering Tuesday

Wed, 03 Jul 2024 00:12:27 GMT

Corn and soybeans close slightly higher on Tuesday with a lower day in all three classes of wheat.

Tomm Pfitzenmaier with Summit Commodity Brokerage says corn is seeing some short covering as the market is oversold and due for a correction.

Plus, he says traders were evening up positions ahead of the long holiday weekend.

The lower wheat and crude oil markets pulled corn off its highs going into the close.

Soybeans saw spillover strength from the second day of big gains in soybean oil but futures also ended off their highs as the market ran up into chart resistance and consolidated after the inability to take those level out.

However, Pfitzenmaier says the funds are short in all of the grain markets and so rallies will be hard to come by as the speculators don’t have a reason to buy the market.

Supplies are ample according to the USDA reports and weather has been favorable leading traders to adopt the “rain makes grain mentality.”

Row Crops Bounce But Grain Market Rallies Will be Tough to Sustain

Tue, 02 Jul 2024 20:26:36 GMT

Corn and soybeans end slightly higher Tuesday on short covering, while wheat gives back some of Monday’s gains.

Tomm Pfitzenmaier, Summit Commodity Brokerage, says, “Yeah, I think it was primarily short covering. Funds hold a pretty substantial short position, so maybe a little positioning ahead of this quasi long weekend where we’re closed Thursday and open Friday. A lot of traders are absent and making a long weekend of it.”

The markets are oversold so the bounce isn’t a big surprise to Pfitzenmaier.

However, funds are an estimated 316,000 contracts short in corn.

“The record is around 341,000 but they may be near record short for this time of year,” he says.

Yet, corn and beans ended off highs as soybeans went up and tested chart resistance and fell away from that area and he says corn gave up early strength with the weakness in wheat and crude oil capping the rally.

Pfitzenmaier says he’s not sure if the grain markets have bottomed or if they are just pausing.

However, he thinks rallies in the grain markets will be tough to sustain with the funds comfortable with their positions and no real weather risk to the crops.

“If we come out of the Fourth of July holiday without any threatening weather and some of these wet areas can dry out a bit to stablize ratings, it’s going to be really hard to maintain higher prices,” he states.

Also capping rallies according to Pfitzenmaier, is the fact that farmers are holding about a third of last year’s corn crop in storage yet and it will need to be marketed before the new crop comes in.

“And everybody knows it. So there’s all kind of basis risk,” he adds.

Weather problems would have to be severe to cut into the huge new crop production coming and the large quarterly stocks and that will also show up in the next WASDE.

Wheat was lower Tuesday giving back some of the gains to start the week. However, he thinks the market is starting to find some chart support with harvest past the 50% mark and after such a huge correction.

Cattle futures rebounded with record cash trade for a third week, reported at $195.81, up 97 cents.

Pfitzenmaier thinks cash will continue to hold up the futures, especially as they are trading at a discount and cattle numbers continue to be tight.

Lean hog futures saw bull spreading with the nearby contracts gaining on the deferreds. He says the market may have bottomed and will likely trade sideways until the cash or cutouts can show some upside leadership.

Corn and Soybeans Bounce, Wheat Fails

Tue, 02 Jul 2024 15:03:31 GMT

Soybeans are seeing continued short covering and corn is following as the markets are oversold.

A 2% drop in crop ratings may be helping the corn but Allison Thompson with the Money Farm is not sure this is bottoming action yet.

The weather has been a focal point but frustrating for producers with the favorable Eastern Corn Belt forecast trumping the flooding in the Northwestern Corn Belt.

Areas of Iowa and Minnesota got additional rain Monday night which will only add to flooding damage in those areas.

Thompson thinks with the funds increasing their short positions last week in the grains they may be taking some profits heading into the holiday.

Corn and soybeans are running into chart resistance, which is around $11.25 to $11.35 on November soybeans and $4.25 to $4.30 on December corn.

Yet, if the market is able to get through those levels she thinks its a good selling opportunity.

Wheat fails to see follow through after the rally Monday but she is more confident that market is trying to forge a low.

“Typically we see the winter wheat market bottom when the harvest gets past 50% and we got confirmation of that yesterday from USDA with harvest pace at 54%,” she says.

Plus, there are still lingering weather issues with the crop globally in the Black Sea.

Spring wheat is starting to also run into chart resistance around $6.50.

Cattle futures rebound on the heels of record cash trade.

AgDay Markets Now: Ted Seifried Discusses if the Grain Markets Are Trying to Bottom

Mon, 01 Jul 2024 22:58:57 GMT

Soybeans and wheat rallied on Monday, with corn fractionally lower.

Ted Seifried with Zaner Ag Hedge says corn ended well off session lows on Monday with spillover help from higher soybeans and wheat.

The corn market is overdue for a technical bounce after making three year lows and ending lower for eight consecutive sessions.

He says most of the bearish news associated with weather and the shock of USDA’s larger than expected acreage and stocks estimates has been worked into corn prices.

Seifried is hopeful the corn market is trying to bottom and with the funds near record short for this time of year he is hoping they will take profits going into the holiday as the market have virtually no weather premium built in.

Soybean futures rallied on Monday on short covering and some end user buying.

He says the forward spreads are indicating underlying demand for soybeans and the market is trying to entice farmers to sell old crop soybeans, but so far they are holding tight.

Again, Seifried is anticipating short profit taking in soybeans heading into the holiday.

However, he advises producers to sell corn and soybeans on rallies because the USDA report shows farmers are large holders of both corn and soybeans in on-farm storage which could continue to pressure prices.

Have the Grain Markets Priced in All the Bearish News?

Mon, 01 Jul 2024 20:04:18 GMT

Wheat and soybeans rally Monday, with corn just fractionally lower. Cattle fail.

Ted Seifried, Zaner Ag Hedge, says corn ended well off the retest of the three year lows the market scored on Friday.

He thinks the corn market is over sold but has digested and priced in most of the bearish news tied to weather and the USDA reports and is due for a corrective bounce.

“So you get the feeling, yeah, we’ve gotten past the shock of the USDA reports, the higher acreage, the higher quarterly grain stocks,” he says.

Funds are also the shortest they’ve been in the corn market for this time of year and so Seifried thinks this might be a good time for them to come in and take some profits on their short positions and provide a technical bounce, especially with a holiday coming up and weather still uncertain.

The caveats to corn finding a bottom include the fact that USDA will have to reconcile the higher stocks and acreage in the next WASDE report, which could push up both the old crop and new crop balance sheets.

Plus, there is the large amount of corn farmers have stored on farm and that selling has yet to hit the market.

“On farm storage on corn is up 37% year over year and we have a little over three billion bushels of corn just setting on farm. The scary part is a lot of that is going to have to move before this new crop comes in and if the crop looks good that could start to happen at the end of this month in a big way,” he says.

Soybeans were higher on short covering and corrective buying but did get some spillover support from the higher soybean oil market.

Seifried says the forward spreads or inverse also indicates there are end users, including crushers, who are trying to pry soybeans out of farmers hands.

“There is this continued tightest in the old crop market. Farmers are just not selling. On farm storage is up 44% from last year and farmers have 430 million bushels of beans in storage. Everybody’s waiting for $13 soybeans,” he says.

Wheat was higher on short covering as the market has gotten very oversold and with harvest pressure easing.

“Technically we were due for a bounce in wheat, but the fundamentals haven’t changed to provide a bullish story for wheat,” he says.

Cattle futures see profit taking with the market disappointed in the steady cash trade in the South at $190 live. However, Seifried isn’t calling a top there yet.

Is the Cattle Market Topping and When Will Corn Bottom?

Mon, 01 Jul 2024 14:47:22 GMT

Cattle lower early with hogs and grains mixed.

Scott Varilek of Kooima Kooima Varilek says cattle futures are setting back on disappointing cash in the South which came in at mostly $190, which is steady money. The North traded higher with the dressed volume at $312, up $1 from the previous week’s weighted average and $198 live.

Varilek says cattle futures are also seeing some profit taking and there have been reports of the Dodge City, Kansas plant being offline today due to flooding damage. There have also been slow downs in other areas like Dakota City, Nebraska.

The live cattle futures have been signaling the fed cash cattle market is close to topping with the discount it is holding to recent cash. So is the top close?

Varilek says its too early to call a high in the market yet.

Hogs see bull spreading despite big up front supplies in the USDA Hogs and Pigs Report.

Corn and soybeans are mostly lower, hitting 3 year lows, still digesting the USDA reports which showed higher acreage for corn and higher quarterly stocks for all the grains.

Plus the market is trading favorable weather with rains and cooler temperatures forecasted for the Eastern Corn Belt.

Varilek says the market is disregarding the flooding issues and lost acres in the Western Corn Belt and may not have a real handle on losses until much later in the season.

Regret Is An Emotion With Deep Tentacles: Thus Is the Story Of Corn in the Bin

Fri, 01 Mar 2024 19:44:08 GMT

Regret is an emotion with deep tentacles. It sets a lump in your throat and pulls at the innards unquieted by reason, sleep or acquiescence. Missed opportunities, clever retorts, last goodbyes and unintended consequences often plaster the walls of our regret filled prisons. The realization that something can’t be taken back can haunt our days and eat at our nights. Thus is the story of corn in the bin.

No fewer than five times in two days did I share a conversation with farmers at Commodity Classic about current market prices, regret about not selling grain proudly stored and ending with, “when do you think things will go back up?” It’s not an easy answer or a quick fix in 2024. The look of solemn understanding and eager anxiety was painted on every face. Family members stood quietly behind, offering support as expressions of, “I missed it,” paint colors of desperation.

Farming is hard. Managing markets is even harder. Farmers should realize they aren’t ever alone in their regret or in their celebrations. Many others have and are going through the exact same emotional roller coaster.

The experts online say there are some things you can do to help manage your regret.

Acknowledge what happened
Believe in your ability to grow/learn from a perceived mistake
Give it time
Use it as motivation
Reframe the narrative
Forgive yourself

Nobody is perfect, and no business leader is perfect. It’s unrealistic to expect perfection on every outcome. Agriculture, however, is a business of doing. You have to plant in order to harvest. Decisions will be made each and every day. The key is to make sure enough of those decisions land outside the grip of regret that confidence sprouts instead of anxiety. If a bin full of unpriced corn is your biggest mistake, understand, you weren’t the first and definitely won’t be the last farmer worried about missing a pricing opportunity. Embrace the outcome and instead, set your sights on making 2024 your best year yet.

There's More Than One Way to Raise Yields

Fri, 23 Feb 2024 21:30:55 GMT

The pursuit of higher yields is always a priority for corn and soybean growers. It’s what you do. From a marketers’ perspective, I get it and will many times offer encouragement to chase every last bushel. After all, you can’t sell a bushel you don’t grow.

However, the past few years of rising production costs are reason to question that tactic. It’s expensive to plant an acre of corn, especially when it doesn’t produce enough bushels to pay its way – and most likely hasn’t paid its way for several years. Some fields have a spot that consistently does not produce, and you probably know the spots on your farm I’m talking about.

Every Acre Matters
It might be only 4 acres in a quarter section – just 2.5% of the 160 acres, but those acres matter. If 156 acres average 200 bu. per acre, but the remaining 4 acres average just 20 bu., the yield on the entire section drops to 195.5 bu. per acre.

Treating those 4 acres the same as all the others means they’re getting a full dose of fertilizer, chemical, seed, fungicide, time and fuel. If it costs $600 dollars to grow an acre of corn that yields 200 bu., that’s pretty good. But if you’re spending that same money on those 4 acres that consistently do not produce just because “it’s easier,” you might as well throw those dollars in a fire.

At $600 per acre on 160 acres, production cost is $96,000 for that field. At $4.50 per bushel at 195.5 average yield, revenue is $140,760. You’ve made $44,760. But at $600 per acre on 156 acres, production cost is now $93,600. And at $4.50 per bushel at 200 bu. per acre, revenue is $140,400. It’s a better year; you’ve made $46,800. Net income is up $2,040 (4.6%) by taking those non-productive acres out of the mix.

How to Fix It
I know, the 4 acres that are not productive can’t, and shouldn’t, be ignored. If they are consistently too wet, look into a wetland restoration project that could help to filter runoff and nitrates from your watershed. There are federal, state and water resource district programs available to make wetlands an affordable, healthy addition to your farm.

If the 4 acres are without excess water, conservation reserve program options are available, as are efforts through organizations like Pheasants Forever. Talk with one of their biologists or with a county conservationist to better understand your options. Some of these programs offer annual lease payments, which means those acres might actually add to the bottom line.

Another benefit is a climbing Actual Production History (APH) average yield for crop insurance on the 156 acres still in production. And eliminating those non-productive acres will most likely mean new whole-field record yields and more net income for years to come.

Make Every Bushel and Penny Count

Fri, 02 Feb 2024 19:24:51 GMT

USDA revised production estimates in January showing farmers rose to the occasion in 2023, despite challenging weather conditions. Record corn yields and strong soybean performance are now helping to whittle away at winter prices. That reduction in prices has ag economists, such as Nick Paulson and Gary Schnitkey at the University of Illinois, revising their 2024 crop budgets . In early January, projections for in-state farmers showed negative returns for both corn and soybeans on cash-rented land at average levels.

Based on projected 2024 prices of $4.50 per bushel for corn and $11.50 for soybeans and using historical trend-line yields, the economists predict farmers will lose $135 to $160 per acre of corn and $20 to $107 per acre of soybeans, depending on location. Of course, there are a lot of variables to consider, and this is based on averages in Illinois, but it paints a much different picture for farm income than a year ago.

What’s a farmer to think or do when news is a punch in the gut?
The University of Illinois break-even numbers can be used as a guide if you don’t run your own budget figures, says Jon Scheve, president of grain at Superior Feed Ingredients.

“It comes down to knowing what your average yield needs to be for every crop you grow, and that number changes every year,” Scheve says. “A 1-bu. change in soybean yield will change breakeven by almost 20¢. A 5-bu. change in corn yield will change breakeven by 10¢. I find that average-size operations can probably come in with breakevens a little lower than $4.50 per bushel for corn and $11.50 for soybeans, but not always.”

Breakeven or bust
One of the biggest determinants of breakeven is the cost of land. If your land is paid for, or if you’re making payments with much lower interest rates than what the market currently offers, plug in the average cash rent value for similar land in your area. Scheve has found some farmers pay too much for rent given the average yield. As a result, each field should have its own budget to see if it pays for itself.

If you don’t know field-by-field expenses for the 2024 season, look back at the past five years of expenses, tally changes from year to year and assume the same level of change for this year. The one area that changes the most from year to year is fertilizer costs, Scheve says. If you have already bought fertilizer, plug in that number. If not, use the current price as a guide for budgets.

When it comes to equipment, don’t forget to figure in depreciation, repairs, fuel and labor. It’s not just about payments. If hiring someone else to do a job is less expensive than owning the equipment, then Scheve says make the switch to save money.

“Remember to always include cost of living in the break-even price,” Scheve adds. “You can’t expect to work for nothing.”

3 Reminders When Margins Are Tight

This year, more than ever, it’s critical to understand the environment in which you’re making decisions, as they will have long-lasting impacts. Shay Foulk, farm
business consultant with Ag View Solutions, shares these reminders:

1. Make a marketing plan.
If you make acreage plans based on input costs, you must align sales to protect your margin. When working on marketing plans, make them in conjunction with acreage, cash flow and budgets.

2. Spend money to make money.
The No. 1 way to lower your cost of production is to increase your bushels. Don’t miss the forest for the trees by abandoning good farming principles as they relate to fertility, lime and nitrogen management.

3. Talk with your crop insurance provider.
There are several options to address risks. Know them and understand them. If your insurance agent doesn’t reach out to you with options, find someone who will.

El Nino's Effect on Crop Prices

Tue, 14 Nov 2023 15:00:00 GMT

A rebound in South American crops has been anticipated by traders for a long time. The focus for months has been the “big” crop coming in the southern hemisphere and the competition U.S. soybean farmers could suffer.

Recent WASDE reports had assumed another record Brazilian soybean crop and Argentina returning to normal, but the El Niño weather pattern might have something to say about that.

El Niño causes the waters of the Pacific Ocean to warm and normally has an impact on the world’s climate. In Brazil, it usually brings a drier climate in the north and northeast and rain in the south. The effect in Argentina is a wetter year beginning with a wet spring (Sept. to Nov.)

The table below reflects the potential for an increase of 31 million metric tons (mmt) or about 1.2 billion bushels. WASDE has recognized the importance of the U.S. losing exports to a whopper crop by lowering U.S. exports this year to 1.76 billion bushels. This is compared to the past three years of exports at 2.26, 2.16 and 1.99, respectively.

Yet when supplies from all sources are put into WASDE’s global supply and demand tables, U.S. carryout is seen as 245 million bushels or about 6.5 mmt. The importance of El Niño becomes apparent.

Change in Perspective
Total 2023/24 production in Brazil and Argentina is seen at about 211 mmt. The U.S. carryover of 6.5 is only 3% of that total. If Brazil would have an El Niño production comparable to last year’s record, the 7 mmt shortfall would offset the U.S. total carryover. Suddenly, the perspective changes.

Sources in Brazil say crop potential has already been reduced by 2 mmt to 3 mmt. Further implications for replant and delayed planting suggest supplies out of Brazil will, at a minimum, be delayed.

As a result, this delays the country’s safrinha corn planting and affects their yield by 2 mmt to 3 mmt as well. Reductions due to too wet and too dry conditions is yet to be determined but is currently on the radar of global traders.

Market psychology is a big part of price discovery on a day-to-day basis. Price adjustments come quick and pronounced as well. While corn and wheat gave back all their gains realized in the two-year bull market, soybeans managed to lose only 50%.

The reason is there are only two producers who share nearly 100% of exportable supplies. For corn, there are four: the U.S., Argentina, The European Union (EU) and Ukraine. There are seven major producers of wheat: the U.S., Canada, Ukraine, Russia, EU, Australia and Argentina with India as a smaller exporter.

Generally, when a major exporter has a problem with exportable supplies, other players make up the difference. Everyone grows some wheat, but most must import some. With two big exporters of soybeans, the implications are huge, and a reduction in exportable supplies by one can significantly affect price.

Market perception (psychology) can be under appreciated when it comes to price discovery.

Chip Flory: Sell 2023 Soybeans Now and 2023 Corn Later

Fri, 20 Oct 2023 11:13:37 GMT

It’s rare when there is widespread agreement among marketing advisers on how an individual crop should be handled. If it was common, market outlook “debates” would be non-existent. That’s what makes me nervous about postharvest marketing strategies for the 2023 corn and soybean crops. Market advisers, including myself, seem to be stacked on one side of the canoe; I’m not sure what’s stopping it from capsizing.

A generally poor finish for both corn and soybeans has made the supply side of both balance sheets a moving target until the final production estimates come in January.

Sell Soybeans Now

Still, soybean fundamentals are more positive than the supply and demand outlook for corn. Soybean export demand improved as the 2023/24 marketing year started, and expanded crush capacity helped domestic demand set new records late in the old-crop marketing year.

That soybean demand makes the soybean market more receptive to a postharvest rally if production estimates trend lower into January. Soybean futures are incentivizing selling soybeans now rather than sometime in 2024. Selling soybeans “off the combine” is a consensus plan among market advisers, but only if growers are willing to maintain pricing flexibility. That means using call options to participate in a potential postharvest rally.

Sell Corn Later

Corn demand struggled at the start of the marketing year. Exports are behind last year’s pace, and the availability of Brazil’s corn continues to pull importers south of the equator. Feed use faces a headwind, but as corn-for-feed prices retreat under the weight of new-crop supplies, it should hold steady. Corn-for-ethanol use is solid, but it does not have the growth potential to offset lost export demand.

The supply-side of the corn balance sheet is a moving target for two reasons. Late-season stress threatened yield potential, but many expected USDA to add to planted and harvested acres in this fall’s production reports. It creates a nightmare scenario for corn bulls. The potential is that more acres offset lower yields, and if export demand is trimmed further, 2023/24 corn carryover could remain at 2.2 billion bushels or more.

Carry in corn futures is giving incentive to put it in the bin until delivery in the first half of 2024. At the same time, rail bids went to a new-crop cash bid on Sept. 1. That essentially makes all corn “new crop” and is likely to build more carry into futures — giving more incentive to store now and sell later.

If December corn futures fall under the weight of harvest and a lack of export demand, capture back-month premiums with forward contracts, put options or hedges. Be ready to lock in a crop insurance indemnity below $4.50 by mid-October.

Mexico Makes Third-Largest Corn Buy On Record: Here's What It Signals

Tue, 26 Sep 2023 20:16:17 GMT

The 64.5-million-bushel corn sale to Mexico was split 41.3 million bushels for the current marketing year and 24.1 million bushels for 2024-25. It’s the 11th largest daily export sale on record and the third largest sale of corn to Mexico. It was especially encouraging considering the ongoing USMCA trade dispute between the U.S. and Mexico.

As of Sept. 14, Mexico had booked more than 6.1 million metric tons of U.S. corn. That is more than the 4.9 million from last year at this time and 5.4 million from two years ago. The buy signals that despite the ongoing trade tiff over Mexico’s proposed ban of GMO corn for human consumption, end users there still want U.S. corn. They might also be concerned about the outcome of the formal trade complaint.

Randy Martinson, Martinson Ag, says: “It was huge. I mean, Mexico coming in to buy over a million metric tons of old crop corn and more than 600,000 metric tons of new crop corn. It shows that even though the press is saying we’re hearing stories that Mexico isn’t interested in our corn the private purchasers and the users in Mexico certainly want our corn, but they’re worried they’re not going to be able to get the supplies they need to be able to make their commitment so they’re aggressively buying corn out of the U.S.”

Mexico might also be worried U.S. corn yields could decline. Plus, the buy might be an indication U.S. corn prices are getting low enough to be competitive globally.

Kent Beadle, Paradigm Futures, says: “I think what it signals is that corn is in a value area. I felt that $4.50 to $4.75 would prove the value and probably is the candidate for where our harvest low is going to be, if we haven’t made it already.”

The U.S.’s main competition has been Brazil with their record Safrina corn crop and lower prices and freight rates. However, U.S. corn exports for this marketing year have been improving. Three weeks into the new marketing year sales are just 6% behind a year ago, but corn export inspections are running above last year.

Crop Conditions Put Soybeans In the Marketing Spotlight

Fri, 25 Aug 2023 20:53:23 GMT

As the two leaders of the ProFarmer Crop Tour converge, their takeaways from the eastern route and western route tell two very different stories—leaving Chip Flory and Brian Grete watching the markets with new perspective on crop conditions.

“In Iowa, there’s more uncertainty now than there was going into Crop Tour,” Grete says. “I think that it is critical when you’re talking about the No. 1 corn producing state and the number two soybean producing state.”

Flory adds the Iowa corn crop was a big question mark before Crop Tour, and now with those in-field observations it appears to be going backward in many areas of the state.

“If we can get to an average crop in Iowa and make it similar to what it was a year ago, I don’t think it changes the outlook on corn all the much,” Flory says. “We’re still going to be looking at a stocks-to-use ratio in that 14% to 15%, and I don’t see anything too bullish about a 14% to 15% stocks to use ratio.”
However, Ohio’s corn crop was the stand out result for Grete as his team covered the eastern leg.

“Ohio’s corn was impressive; it was more impressive than Indiana. We moved into Illinois and it was way more mature than we saw in those first two states, and then Iowa was just an absolute slam the door in your face type deal.”

Conditions observed on Crop Tour have the leaders thinking differently about soybeans.

“Now, if soybeans finish as poorly as I think they might, and we start taking off some bushels of Iowa, Nebraska and Minnesota, you start to take away from the national average yield,” Flory says. “And then the market is going to be much more sensitive to change on the supply side (of soybeans) than corn.”
Those soybean yield estimates have the team at ProFarmer monitoring soybean stocks even more closely.

“Corn had cushion coming in to the growing season, and the acreage gave us more,” Grete says. “Soybean acres were down, and now we have question marks, and no cushion. There may be some changes on the balance sheet that come about.”

What he says and how he’s watching the markets has Flory saying the 2023 Crop Tour will be remembered as a soybean year.

“Normally, when I’m out on crop tour, I’m thinking about the corn crop and soybeans being a secondary thought,” Flory says. “I’m gonna remember the 2023 tour because of how vulnerable this bean crop was at the end of the trip,”

Both say they think markets will present opportunities with rallies but are cautioning farmers to not get too bullish.

“If we see it, it’s because of demand,” Flory says. “If all of a sudden we see concern over the supply of corn and soybeans in the United States to the rest of the world, and if the importers step in and start buying up in a much bigger way than what they’ve been doing for that 23/24 marketing year, then you’ve got demand coming up and you’ve got supply coming down at the same time. Then maybe we can start to get a little excited about corn.”

Flory notes he’s been saying repeatedly this past week that he thinks a corn/soybean ratio is going to 3:1 and could trade there for a long time.

Grete is layering on global production and grain stocks to his takeaways.

“Brazil’s grown a record soybean crop as well as a record corn crop. Brazil’s still got soybeans left to ship. And Brazil’s got a whole heck of a lot of corn left to ship,” Grete says. “That’s going to impede on the first half of our new crop marketing year, which is one which should be strongest especially for soybeans.”

Listen Live: Full Analysis of Pro Farmer's National Production Estimates

Fri, 25 Aug 2023 18:30:00 GMT

Pro Farmer released its National Yield Estimates for corn and soybeans at 1:30 p.m. CDT today.

These numbers differ from Pro Farmer Crop Tour figures. The National Estimates reflect Pro Farmer’s view on production and yields. They take into account:

Data gathered during Crop Tour
Crop maturity
Acreage adjustments Pro Farmer has made
Historical differences in Crop Tour data vs. USDA’s final yield estimates
Areas outside those sampled on Crop Tour

AgriTalk host Chip Flory will have full analysis of the Pro Farmer National Yield Estimates live at 2 p.m. CDT. Click below to listen live!

How are your crops looking? Share your own crop reports on AgWeb’s Crop Comments forum .

What Motivates Your Marketing Strategy?

Thu, 24 Aug 2023 21:26:35 GMT

Farmers have a variety of motivations when it comes to marketing, which directs their approach and the strategies they use.

Low-cost operations. Some farms are exceptionally low cost. Land costs are likely limited to property taxes, and their motivation might be driven more by logistics, such as the time and effort required to move a crop from the farm to the next link in the supply chain.

The goal for this farm might be: Don’t mess this up. To do that, they could use a marketing strategy designed to secure a price near the average price for the year.

Highly leveraged operations. Some farms are highly leveraged with costs in the higher one-third of the national average. Land costs are likely adding to production costs, and their motivation might be driven by generating enough revenue to at least cover those land costs; profits and building working capital can wait until later. An understanding of production costs is vital for this operation, and when a low-level positive ROI is offered by the market (at a reasonable yield expectation), it should trigger sales. How aggressive the sales are will be a real-time decision, but make a sale.

Somewhere in between. Some farms are average. Land costs vary widely for the middle one-third of producers, and their marketing motivation might be driven by building working capital. In this case, an ROI marketing plan works well. Again, a complete understanding of production costs is necessary. If you know a 12% positive ROI will allow your business to make a specific investment, it’s a no-brainer to pull the trigger on aggressive sales at that point. Even if you think that could expand to 15%, this goal-based strategy should make for a regret-free sale.

Any ROI is better than no ROI
Another good reason to run an ROI analysis is to understand just how good or bad marketing opportunities are at any time. For example, if an early season weather rally drives new-crop corn futures to $6.25, it can be difficult to pull the trigger on sales not knowing if weather will result in a sub-APH yield. But if $6.25 futures represent a significant ROI at your APH, the analysis might be the incentive it takes to at least start a new-crop marketing effort.

If crops find relief with cooler temps and timely rains and prices fall back from those highs, use the ROI analysis to prevent a “bad” sale. There are times farmers must manage losses, but if prices are grinding lower, sales can become a “give up” rather than a decision. If you know $4.75 futures result in a low-level positive ROI but returns turn negative at $4.50, don’t let futures get to $4.50 before locking in a price. From there, be prepared to manage additional risk with futures or options.