As we entered October, mother nature began to cooperate allowing harvest to proceed, in most cases right from soybeans to corn. As soybean harvest progressed, it became more and more evident that yields were much better than anticipated locally. The grain industry was faced with daunting task of putting the big crop away. Processing plants, river terminals and elevators alike were faced with long lines and limiting market outlets. As a result, nearby basis collapsed to near triple-digit unders.
Where the bean yields were consistently big from beginning to end, the corn yields have been all of the map. Some attribute the troubles to early frost and freeze last spring, while other areas suffered wind damage mid-summer resulting in green snap and yield damage. Generally speaking however, the yields have been surprisingly good, once again pushing the limits of storage capacity at the farm and commercial level. Despite the growing stock of corn, futures have continued to slowly grind higher since touching their low at the end of August. Basis levels in corn were holding mostly steady through bean harvest but are now showing some signs of weakness.
Where do we go from here? In many cases the big bean yields and favorable prices early on in harvest enticed a majority of unsold grain to be sold at the time of delivery. Conversely, corn has primarily been relegated to storage in hopes of higher prices this summer. Current board carries and dismal spot basis levels do lend some credibility to this philosophy. The current soybean rally has been attributed to, among other things, soybean and palm oil supply & demand gyrations. This type of rally can sometimes be short-lived, so be alert of opportunities in both the nearby and deferred time slots. Remember, a rising tide lifts all boats.
CHS – Rochester Grain Team
Kasson: 507-634-7545 ext 7
This Material has been prepared by a sales or trading employee or agent of CHS and should be considered a solicitation. The information contained in this presentation is taken from sources which we believe to be reliable, but is not guaranteed by us as to accuracy or completeness and is sent to you for information purposes only. There is a risk of loss when trading commodity futures and options. CHS bases its recommendations solely on the judgment of CHS personnel.