Published

There’s Still Time

To say grain markets are volatile right now would be an understatement.  Let’s start with corn.  In the May WASDE report, we got our first look at the 2021/2022 balance sheet. This first look at the carry out for next year came in a 1.5 billion bushels, 250 million bushels than the current carry out for this fall.  This was accomplished by using a trend line yield of 179.5 bushels per acre.  Since that report corn futures have lost nearly $0.60 in both old crop and new crop.  From a basis perspective, there have been wild moves there as well.  Demand for ethanol continues to pick up pace as more driving picks up across the country. On the other hand, river and export facilities have seen their demand slip some as lower priced South American supplies start to fill the global market.  Despite the 1.2 billion bushel estimated carry out projected for this fall, the market feels tight, meaning there is potential for the market to recover a portion of the recent losses.

On the soybean balance sheet, very little has changed: soybeans are in very short supply.  Just a few weeks ago many domestic soybean users were very concerned with supply for this summer which was reflected in the strongly positive basis values paid throughout the area.  However, as the futures market put in new highs in early May, producers rewarded the rally and sold more beans than expected. This resulted in a precipitous drop in basis values as crushers became more comfortable with ownership and have opted to slow their purchases. 

In spite of the dramatic loses in futures prices recently, it is worthwhile to remember there is still opportunity to protect a profit in this years crop.  There is still time. While it is late May, there is a lot of weather to get through before the crop is in the bin.  Bullish markets like we have been experiencing recently often give us more than one chance to participate. There are plenty of tools available to help protect these profitable prices, in many cases for more than one crop year.  Contracts such as the CHI Foundation contract can protect a floor price while also participating in upside market movement.  Other available compass contracts can allow bushels to be priced at a premium to the current market, provided the market stays above a predetermined trigger value.  For more information on any of the available contracts CHS has to offer, and how we can help protect these attractive prices, reach out to your local grain originator.  We are here to help you.

Written by Aaron Ulland 

Published

Don’t get Left Behind


Grain markets since the beginning of the year have been on a tear. Opportunity has been abundant to retain profits, forward contract new crop for profitable values, and to manage risk. The recent planting intentions report from March 31st paints the picture of continued tight stocks for the 21/22 growing season. Both domestic and export demand continues to be strong for corn and soybeans as we enter the planting season. All signs point to steady/ firmer markets. But also keep in mind a good growing season should bring quality yields. With the recent rally we may see the planting report on June 30th show larger planted acres of corn and soybeans than were noted on the March 31st report which might bring pressure to markets come late June into July.

The next big wild card is weather. A lot of conversation of drought pressure and warmer temps throughout the summer which could put pressure on pollination. As we can’t predict the future, one thing we can do is protect profits. There are certainly contracts available to protect profitable values as well as leave room for further improvement. Our Compass programs can bring added value like the foundation, price builder, and daily price contracts. Min price contracts could be used to open up participation in any rally to come. Min/max offers a floor to protect profitability today, but allows room for further participation in any rally. Bullish markets are exciting and fun. Don’t let the party end and be left without a way home. Sales in the next 60 days should be considered as we begin to finalize some unknowns like planting progress, export demand strength, feed usage, and early growing season moisture levels.

You can contact our grain team to help you decide what contracts would fit best for you!

Written by Brady Beyer, Grain Originator

Published

Marketing 202

Join us as we take the next step in our grain marketing journey.  We will review the basics of grain marketing as well as take a more in-depth look at options and compass contracts.

WHEN:    Tuesday, February 20
WHERE:  CHS
23142 Hwy 74
St. Charles, MN 55972

TIME:       9:00 am

RSVP to your local grain merchandiser:

Aaron Ulland in Kasson at 507-634-7545 ext. 7
Jared Schaefer in Ostrander at 507-657-2234
Ken Garness in Kasson at 507-634-7545 ext 7

Published

CHS Average Price Contract

Announcing CHS Average Price Contract for 2018

Diversify your marketing strategy with CHS average pricing.  Daily pricing for old crop futures will begin March 1 and end June 15.  Daily pricing for new crop futures will begin March 1 and end August 31. Sign up is open now through February 23.

Contact your local CHS merchandiser for more information and to sign up:

Aaron Ulland in Kasson: 507-634-7545 ext. 7

Jared Schaefer in Ostrander: 507-657-2234

Ken Garness in Kasson: 507-634-7545 ext. 7

Published

Marketing 101: Back to the Basics

MARKETING 101: BACK TO THE BASICS

WHEN:
TUESDAY, DECEMBER 12

WHERE:
CHS
23142 HWY 74
ST. CHARLES, MN 55972

TIME:
2:00 PM

Join us for as we go back to the basics of grain marketing.  There will be a review of the basic terminology and key components of a successful risk management plan.  We will also dive into different contracting opportunities available to help achieve higher prices for the grain you work so hard to grow.

Space is limited, so please RSVP to your local grain merchandiser.

Aaron Ulland
Kasson, MN
507-634-7545 ext. 7

Jared Schaefer
Osterander, MN
507-657-2234

Ken Garness
Kasson, MN
507-634-7545 ext. 7

 

Published

Grain Market Update 9.13.17

Market Snapshot:

For those of you who haven’t seen the numbers, Tuesday’s USDA report was surprisingly bearish, yet again.  Yields and production for both corn and soybeans were raised again this month.  Just like last month, the market was expecting a friendly report with lower yields based on less than stellar crop conditions.  Unfortunately, with the market caught leaning the wrong way, we saw a rather dramatic collapse after the report.  At the end of the day, both commodities managed to recover some of the initial loses with corn closing down six and beans down nine.  One of the key points from the report yesterday, the USDA numbers may not be right now but the potential for corn yield to drop dramatically, is diminishing.  Until a new source or huge increase in demand shows up, corn prices are going to struggle.

Harvest is starting to progress through the corn belt with some local activity reported in isolated areas.  In our trade territory it seems beans are anywhere from 10 days to three weeks away from maturity.  Corn will need all the time it can have to finish.  This week’s heat should help the process immensely.  So far the end users have not shown any signs of being concerned over a late harvest start.  Bean plants are still showing a mild inverse for quick ship bushels, but nothing as dramatic as seen in years past.  The bigger carries are shown from October to November at the river terminals.  If you have the ability to hold beans for even a couple of weeks until corn harvest starts, at this point it appears the market will compensate you for the extra handle.  The ethanol plants are still showing significant carry from spot delivery to October.

  9/12/17 Pre-report range of estimates Previous Estimate Change Market Impact
Corn Production (bil bu.) 14.184 13.878 – 14.249 14.153 + 31 million BEARISH
Corn Yield (bu/ac) 169.9 166.7 – 170.9 169.5 + 0.04 BEARISH
Bean Production (bil bu.) 4.431 4.179 – 4.417 4.307 + 124 million BEARISH
Bean Yield (bu/ac) 49.9 47.1 – 49.8 49.4 + 0.05 BEARISH

Read Full Market Update

 

Aaron D. Ulland

 

Kasson: 507-634-7545 ext 7
Ostrander: 507-657-2234

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.

Published

Grain Market Recap 9.11.17

Market Snapshot:

Mixed trade to start the week.  Corn was fractionally higher while beans settled down two cents.  The market is waiting with bated breath for tomorrow’s USDA monthly Crop Production and Supply & Demand reports.  The market is looking for lower yields in both corn and beans.  Traditionally the September report wouldn’t be considered a major report, however with the surprising yields reported in August, there may be more attention paid to the numbers tomorrow than normal.  Look for sideways trade until the numbers are released.  Post-report, the market will initially trade the number as printed, but it won’t take long for the market to realize we need more concert yield evidence to determine price direction going forward.  With the Corn Belt weather fairly conducive to finishing the crop, we may not have to wait long, combines are already rumored to be running in southern Illinois.  As the rigs, and yield reports, creep north, we will start to have a better handle on what we will have to work with for the next twelve months.

With harvest in sight, basis values are starting to trend toward new crop values.  In the case of corn, the trend is actually showing slightly firmer nearby bids in some areas.  Beans are showing the opposite, with stronger nearby bids weakening to eventually match new crop values.

Looking ahead, ProAdvantage contracts will be completed this Friday.  If you haven’t already locked a basis value for those futures, there is still time.  Depending on your cash needs, it may also be beneficial to roll the futures to July of next year while the carry is still at or near $0.26.  This roll can be locked in even before the Friday completion of the ProAdvantage contract.  Give us a call if you would like to set some price or roll targets.  We can also get started with bushels for next year as well.

Crop Production released 9/12/17 Average Guess Pre-report range of estimates Previous Estimate
Corn Production (bil bu.) 14.035 13.878 – 14.249 14.153
Corn Yield (bu/ac) 168.2 166.7 – 170.9 169.5
Bean Production (bil bu.) 4.328 4.179 – 4.417 4.381
Bean Yield (bu/ac) 48.8 47.1 – 49.8 49.4

 

Aaron D. Ulland

Read Full Market Update

Kasson: 507-634-7545 ext 7
Ostrander: 507-657-2234

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.

Published

Grain Market Recap 9.1.17

Market Snapshot:

Mixed markets to start the new month and new market year.  Corn had a solid performance on Thursday but failed to follow through today.  One year ago yesterday, 8/31/16 was the low for December corn which provided just enough chatter and just enough of a reason for a short-covering rally.  Whether or not the lows from yesterday hold remains to be seen.  There is a long way to go before we get deep into harvest and have a solid feel for production potential.  Beans were able to rally to end the week, closing higher for the third week in a row.  New export sales announced this helped support the market.

Going forward, the market is still trying to estimate production potential in the US for this year.  Some private analysts have started releasing their yield guesses this week, ahead of the USDA on September 12.  If you remember, the USDA last gave us a 169.5 corn yield but the market has generally been trading something closer to 166 to 167.  The first look this week showed a range of 166.7 to 169.2.  Some are starting to think the Feds might not be too far off which could limit the upside potential on corn.  Bean estimates have also slowly increased with some estimates coming in better than 49 bushels per acre.  While this would probably pressure the markets as well, demand has been steady enough to give the market some hope.

Further confounding the grain markets are some very early looks at the acreage mix for 2018.  Here in the US one survey shows intended corn acres to be up something close two million acres while bean acres are projected to drop roughly the same.  The first look at South American acreage shows bean acreage will likely drop as well.  Yes, these are very EARLY estimates and are very likely to change between now and then, but they are factors to keep in mind as we evaluate marketing opportunities for both old and new crop.

Beyond the board, basis values have continued to very slowly improve.  The dramatic drop in futures through the last half of August brought cash selling to a hard stop.  As a result end-users were forced to slowly improve basis to keep grain moving and maintain ownership for production.  Supplies are still are plentiful nearby, keeping a significant carry in the market from old crop to new crop.  This is something to keep in mind for those who still have old crop grain left to unpriced.  With our harvest seemingly two to three weeks behind normal, there could be opportunity to contract old crop grain for early October shipment at new crop prices.  Of course, this opportunity could be short lived, and some nearby bids could even improve enough eliminate that carry.  Be alert and ready to pull the trigger for the right opportunity.

 

Aaron D. Ulland

Read Full Market Update

Kasson: 507-634-7545 ext 7
Ostrander: 507-657-2234

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.

Published

CHS Grain Market Recap 8.30.17

Market Snapshot:

Another day lower in grain markets.  Traders and producers alike are waiting and hoping we are nearing a bottom in prices.  With the exception of Hurricane Harvey, a majority of the US growing regions are enjoying benign weather to help crop development.  There is some concern about the lack of heat to help the crops finish maturing in the coming weeks.  However, the market will continue to trade USDA yields until they are proven wrong, which is not likely to happen for more than a month.  A bear market, such as the one we seem to be in, tends to be slow to alter course.

Consider this… Recently, prices have been trending lower, with little sign of improvement.  The funds have continued to sell commodities with their estimated position thought to be net short.  Looking at charts, it also seems this market is thin, oversold and due for some kind of bounce.  The big question is when and how much.  If you have old crop grain left to sell, consider taking advantage any price strength.  With new crop, there is a case to be made for being patient to see what yields truly develop as we get further into harvest across a broader production area.  At the same time however, any strength in new crop should not be ignored either.  One option would be a minimum price contract, which would set the cash price for your grain but still keep you open to upside.  With this contract, be sure to manage the call and put in a target to exit the option.

Don’t keep wondering…  ASK A MERCHANDISER!

Is it better to use a minimum price contract or cash plus at these low prices?

The best route to take will depend on your personal market bias.  A minimum price contract will be best suited to the producer who might need cash now, but believes we are due for a significant futures rally.    For the producer who feels the market is not going to move much in the foreseeable future, a cash plus contract might be best.  One key with the cash plus contract is to pick an offer price that still makes sense in your marketing plan, and pay attention to which crop year you are working with on the firm offer.    Also keep in mind with the cash plus, you need to hold bushels off the market until you know for sure if the offer will fill.

Aaron D. Ulland

Read Full Market Update

Kasson: 507-634-7545 ext 7
Ostrander: 507-657-2234

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.

Published

CHS Grain Market Recap 8.28.17

Market Snapshot:

Farm Journal Midwest Crop tour completed last week failed to provide the friendly market input producers were hoping to see.  It seems many producers throughout the Midwest have gotten stung by backyard syndrome, confident their crop was no where as good as the USDA was predicting and even more confident the croup tour would verify this opinion.  Unfortunately, the Crop Tour seemed to verify the current USDA opinion, pressuring markets to life-of-contract lows.  When it was all said and done, the Farm Journal Midwest Crop Tour came out with an estimated national corn yield of 167.1, roughly two bushels per acre better than the USDA, but also roughly two bushels per acre above the implied market consensus.  The Tour average bean yield came in at 48.5 bushels per acre, below the USDA.  The corn market didn’t take the results well and have traded lower for 8 of the last 10 sessions.  As for beans, the market seemed to take the information in stride.  In broad terms, the market is not confident in bean yield estimates this time of year, especially in light of the unseasonably cool weather we have seen recently.  One of the recurring themes last week throughout the Tour was lower pod counts in many areas.  Anecdotal evidence in our neck of the woods seems to verify lower pod counts along with the need for heat to help fill out the beans before harvest.

On the basis front, most markets have softened corn basis.  The ethanol plants are able to source ample supplies simply by keeping the doors open.  Each day that goes by puts us one day closer to new crop and a potential space crunch.  Bean basis has improved in recent days, particularly at the processor level.  The steady demand for beans to be crushed for meal and oil is supportive to basis in the short term.  The bid structure is very quick-ship oriented with inverted markets to new crop.  The new crop basis values for both corn and beans have been mostly steady.

Consider this… Before we get fully engulfed with harvesting this year’s crop, take some time to start thinking about next fall.  An easy way to take some of the emotion out of marketing your grain is to commit a portion of your production to CHS ProAdvantage.  Sign up for the program is coming up quick.  Don’t miss out on the opportunity while you are in the field, give us a call to walk through the ProAdvantage program details and get started.

Aaron D. Ulland

Read Full Market Update

Kasson: 507-634-7545 ext 7
Ostrander: 507-657-2234

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.

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