Weekly Grain Update 11.20.15

There’s nothing friendly about the grain markets lately.  Board prices continue to drift sideways to slightly lower, often taking two steps forward and one step back.  Traders and producers continue to look and hope for a rally, but there is not fundamental reason to push prices higher right now.  Just one carrot in front of the markets right now and that is the lack of producer selling.  As the producer becomes more discouraged by lower prices and disengaged by the forthcoming holiday season, end users keep looking for grain.  Basis is slowing creeping higher, but basis alone cannot do all the work.  Most traders are of the opinion that board prices will have to move higher to help move the grain to market.  The big question becomes when.

This marketing year has the makings of a near repeat of the 2014-15 crop year.  The world is awash in corn and soybeans, but the producer is reluctant to sell at these prices below the cost of production.  This will keep front end basis supported and reduce some of the carry to future months.  And just like last year, barring any unforeseen weather event, we are likely to see a second harvest in late summer to make space for new crop.  When this happens, prices are likely to fall sharply.  Although this isn’t likely to happen soon, it would be best to stay proactive in marketing.  Don’t hesitate to give us a call to discuss market opportunities.

Read Full Market Update

CHS – Rochester Grain Team
Kasson: 507-634-7545 ext 7
Ostrander: 507-657-2234

Weekly Grain Update 10.30.15

Halloween Trick or Treat?

First, the treat.  November is just about to begin and, unlike last year, harvest is quickly winding down instead of just ramping up!  I would venture to guess most prefer this treat to last years tricky harvest season.

This year’s trick?  The markets.  Marketing 101 comes down to the rule of Supply and Demand.  Domestic supply of corn this year will be more than sufficient to meet demand for the year, the trouble is regional supply versus demand.  Eastern corn belt producers appear to have a less than average corn crop this year but eastern belt end-users have not seen slower demand as of yet.  Here in the western corn belt, corn yields have been average to slightly above average.  This regional supply difference is impacting market dynamics from freight costs to basis levels across the country.  Compounding the issue is the fact that a large percentage of producers are not willing to sell at these depressed level, opting instead to pay for storage while they wait for higher prices.  This lack of commercial and processor ownership in the face of stagnant board prices is pushing basis levels higher from southeast back toward the northwest.  Eventually this domino effect will hit our market and levels should improve, however, the timing and duration of basis appreciation is always the question.  At some point we will reach the target price that moves enough bushels to market and keeps the pipeline fully charged.

 

Read Full Market Update

CHS – Rochester Grain Team
Kasson: 507-634-7545 ext 7
Ostrander: 507-657-2234

Weekly Grain Update 10.16.15

Harvest rolls on in the U.S.  Focus has shifted from soybeans to corn in this part of the country.  After record breaking bean yields most producers are happily surprised with what could prove to be record corn yields as well.  Local elevators, already bursting at the seems following the huge bean harvest, are now faced with the prospect of a huge corn crop overfilling what little space remains available.  Mountains of yellow are sure to be dotting the landscape in the coming weeks, covering seemingly every available grassy patch.

As a result of ongoing corn harvest and an extended open stretch of weather, corn futures traded lower for the week.  A general lack of demand along with the big crop has had corn on the defensive.  Soybeans, not ready to give up the lime light just yet, had a strong showing in the futures market.  When the USDA returned to work after the long weekend, export inspections were well above expectations.  This, along with additional sales announced daily, was enough to provide a big rally on Tuesday, pushing November beans above the $9.00 mark.

As the week wore on, exports lost their luster as big yields continue to weigh on the market.  For the week, soybeans were able to hold some of the gains, however, November futures were unable to close above $9.00.

Local basis has held surprisingly steady through harvest pressure.  Trucks keep rolling, but producer sales are still light.  Until the commercial elevator fills allocated space and forces sales, basis should hold fairly constant.  End users are getting their fill now, but general consensus says that once harvest is done, producers will lock the bin doors for a while.  Look for potential basis opportunity at that time.

Read Full Market Update

CHS – Rochester Grain Team
Kasson: 507-634-7545 ext 7
Ostrander: 507-657-2234

Week Grain Update 10.9.15

With harvest in full swing throughout the country, one would think markets would be very quiet.  And for most of the week, futures trade was just that, quiet.  Corn tried to trade higher to begin the week, eventually stalling as the December contract neared $4.00.  Resistance in soybeans remained near the $9.00 mark.  With more concrete yield results in soybean rolling in, it is a wonder we have been able to hold as strong as we have.  Most reports in Southern Minnesota have soybeans averaging between 60 to 70 bushels per acre, well above average.  Corn yields are still too early to project with confidence, however, early reports are above average.

The latest round of USDA Crop Production and Supply & Demand reports were released to end the week.  Trade expectations had bean yields increasing and corn yields staying unchanged.  The Feds agreed, only partially.  Bean yields were increased 0.1 to 47.20 bpa while corn yields surprised at 168.0 up 0.5.  The biggest surprise of all was in harvested bean acres, down 1.1 million.  Reaction was initially lower for both corn and beans due to higher yields, but the reduction in acres and corresponding drop in production eventually pushed beans higher.  Corn was not so lucky, closing lower on the day.

In the thick of harvest, basis levels are slowly getting worse as storage space fills at the processor and local elevator both.  This serves to encourage the elevator and producer to carry grain for a later date.  However, it also serves to push more grain to open storage or warehouse storage, limiting ownership.  A lack of ownership at the end-user level will ultimately start putting a floor under basis.  Bottom line, the freefall will likely be short lived.

 

Read Full Market Update

CHS – Rochester Grain Team
Kasson: 507-634-7545 ext 7
Ostrander: 507-657-2234

Phone update:

Currently, the Rochester office phones are operating but on a limited basis. Until new equipment comes in Thursday, only part of our Rochester office will have office phones that are operating. If you need to contact someone at the Rochester office, feel free to call and we will still get you into contact with whomever you need to speak with.

Thank you for your patience through this.

Weekly Grain Update 9.25.15

After a sideways week of non-eventful trade, headline traders took control to end the week.  As has become a seemingly annual occurrence, China once again signed framework contracts to buy a specified volume of soybeans from the U.S. over the next two years.  Initially the market had very little reaction to the announcement Thursday afternoon.  However, after the Fed Chair made comments pointing to better world economic indicators and a likely interest rate hike yet this year, the “algo” traders sent the market higher on positive headline news.  Accelerating the gains on Friday morning was another announced sale of soybeans to China and a stronger tone to the financial markets.

Looking ahead, the weather looks very conducive to harvest progress.  Most of our trade territory should see new beans flowing steady by early next week, if it hasn’t already started.  Corn harvest looks to be close behind as well.  We have heard of some isolated cases of stalk integrity issues that are forcing producers to go after the corn sooner rather than later.  The big question in most areas is how much impact did the diseases have yields, in both corn and soybeans.  Only time will tell at this point.

Local basis has held mostly steady over the past week.  Some pockets of strength have been noted in the ethanol and soy crush markets.  Space constraints are likely to play a part in basis movement through the end of harvest.  Basis has the potential to stay firm until available storage space is filled, after which it is likely to fall off.  A sustained board rally could also pressure basis.

Read Full Market Update

CHS – Rochester Grain Team
Kasson: 507-634-7545 ext 7
Ostrander: 507-657-2234

Weekly Grain Update 9.18.15

This was a week of transition: Transition from trading government numbers to trading harvest activity and yield.  Early on there ideas that yields would be reduced more in the October round of reports.  As the week progressed, more and more yield results were reported from key states of Illinois and Iowa with varying results.  Keep in mind these yield reports are from early harvest activity and not necessarily indicative of the crop as a whole.  The market has agreed with that sentiment, giving up the gains from last week, realizing there is still a lot of  harvest left.  Soybean yields thus far have been  at or above average, leading traders to believe the USDA number is fairly accurate, perhaps even low.

Now that harvest is kicking in and futures have taken a tumble, market focus is shifting to two very intertwined concerns: basis and ownership.  Typically basis is falls dramatically once harvest really gets rolling.  However this year could be different.  Many elevators still have substantial inventories of old crop grain on hand as storage obligations.  And with cash prices well below cost of production producer selling is expected to be minimal, making space and ownership ongoing concerns.  Enter basis.  In this situation basis could be forced to do the heavy lifting to entice selling, thereby transferring ownership to keep the supply pipeline charged.  Proceed with caution though, as any type of rally is likely to be short lived.  One likely scenario is that elevators will allow only a predetermined amount of grain to go on open storage before forcing grain to be sold, or put on Delayed Pricing, relieving the ownership struggle.  Once the ownership struggle is relieved, basis is very likely to fall in its typical fall fashion.

Read Full Market Update

CHS – Rochester Grain Team
Kasson: 507-634-7545 ext 7
Ostrander: 507-657-2234

Weekly Grain Update 9.11.15

Market reaction to today’s USDA report was riddled with volatility but ultimately sent corn higher on the day, pulling soybeans along for the ride.  As printed the report was nothing bullish.  Corn was slightly friendly while soybeans were slightly negative.  Initially November soybeans traded sharply lower but buying in the corn market pulled soybeans back to unchanged.  As always, it is the number as printed that gets the trade reaction, not the actual number.  Headline traders rule the trade on report day.  Sunday night’s open and Monday will be more indicative of future trade direction as the numbers are digested more fully.

National average corn yield was lowered 1.3 bushels per acre to 167.5.  The corresponding reduction in total production dropped expected carryout for next year to 1.592 billion bushel, a net decrease of 121 million from last month’s estimate.

On the soybean balance sheet yield was increased 0.2 to 47.1 bushels per acre.  Given the near perfect growing conditions seen over the past three to four weeks, this small adjustment was taken mostly in stride.  Locally, some concern has surfaced regarding Sudden Death Syndrome and White Mold in soybeans and their resultant yield destruction.  Thus far though, the greater marketplace has not taken notice.

On the cash front, harvest is right around the corner which means the end user is playing a waiting game, buying only what is need to bridge the gap to cheaper, more ample, new crop supplies.  Watch for basis to continue to soften in the old crop, particularly if the board does continue to march higher.

Read Full Market Update

CHS – Rochester Grain Team
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 Rochester 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 Rochester bases its recommendations solely on the judgment of CHS Rochester personnel.

© 2019 CHS Inc.