Market Analysis

snow farm scene

The benefits of selling options explained

Last week’s USDA report showed an increase of just over one bushel per acre in the average yield to 176.6 bushels per acre. Despite a slight decrease in the harvested acres in the report, there will likely need to be a supply disruption sometime in the next eight months for a significant rally to happen. [...]

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Beans 2012

Bouncing back from a worst case marketing scenario

While it’s a new year, there is nothing new for corn prices. A sideways market for the next three months seems likely. There are indications that farmers would be willing to start selling as futures approach $3.60 to $3.70, but many seem to be refusing to sell below $3.50. On the flip side, end users indicate [...]

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Grain bin sunset 1-6-14

Setting basis on beans

Largely due to great weather in South America, soybeans have steadily declined every day since their high on Dec. 5 losing nearly 65 cents. However, there is still plenty of time left in South America’s growing season. If there is a weather issue, $10 is possible again, if good weather continues, sub $9 could be likely. [...]

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frost corn

Understanding how to capture market carry

This week the USDA report and the markets were uneventful. Farmers aren’t selling and corn export demand is pacing slow. Good weather conditions in South America eroded bean market premium.   Understanding how to capture market carry I recently attended a grain marketing conference where the presenter discussed ideas for farmers to be more profitable [...]

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bins

Don’t give your storage away

The markets continue to go nowhere. Corn exports are pacing slower than what USDA is forecasting but farmers aren’t selling. Beans earlier seemingly had upside potential due to South American weather, but couldn’t sustain it. Beans still have some potential in the short term if there is a weather scare in South America, but no one knows how [...]

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winter barn

Capturing market carry

With too much supply in the U.S. and around the world, corn isn’t likely to move in the short-term without a big event. With 30 to 45 days of the major soybean producing areas of South American growing season left, there is still a lot of weather premium potential left in beans right now.   [...]

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Should my hedge account show a profit or loss at the end of the year?

As harvest finishes with record yields across the Midwest, corn prices fell below $3.40. However for the week it was nearly unchanged. Many farmers have struggled to sell at profitable levels, and while higher than average yields help offset lower prices some, it hasn’t been enough. Also contributing to lower prices, funds continue to hold [...]

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Straddles vs. accumulator contracts

The USDA announced a record yield resulting in a 2.5 billion bushel carryout. Therefore, I think it’s unlikely that corn will sustain a major rally until summer 2018. A soybean rally won’t help corn prices either unless there is a devastating drought in South America. If there is a 2 million- to 4 million-acre switch [...]

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The Leffels farming in Auglaize County (Greg and son Luke; Doug and son Derek). Photo by Joan Leffel.

Selling calls

The markets didn’t move much this week. Harvest pressure continues to limit corn upside potential. Beans at first looked like they may take off as harvest slowed, but on Friday, Brazil’s currency fell against the dollar. This meant a price boost for Brazilian farmers who sold some beans, putting pressure on futures prices. The 30-day [...]

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reese1

Benefiting from puts, calls and straddles

Corn The market continues to be uneventful. End users want to buy $3.40 Dec futures and farmers are hoping for $3.60 to sell some excess production. Slow exports aren’t helping. Realistically farmers may need to plant 1 million to 2 million fewer acres next year to see $4 by next summer.   Beans With bean [...]

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