Market Analysis

By Jon Scheve, Superior Feed Ingredients, LLC 

Once again “free” storage is being advertised throughout the corn belt. While some also call it “price later opportunities,” “delayed pricing” or “DP” it refers to when farmers sign over their grain to an end user or commercial facility, and then wait to price the grain later, hopefully at higher values.

On the surface, “free” storage seems like a win-win for farmers and end users or buyers. These “free” storage programs are a great way for end users to procure grain supply during the winter. And farmers can move their grain now when they are not busy, and price later during a potential rally. Unfortunately, “free” storage ends up costing ALL farmers, those using it and those that do not. 

Why does “free” storage hurt all farmers?

When end users offer this program, it is usually because they are having difficulty procuring enough grain to meet their immediate needs.… Continue reading

By Jon Scheve, Superior Feed Ingredients, LLC 

The corn market might have finally found a temporary bottom, but everyone wants to know what direction corn prices will go in 2024. Weather here and around the world is the biggest price driver, but it is impossible to predict long term. Therefore, below are three charts that could provide some historical perspective for upcoming marketing plans.

Corn yields from 1975 to 2023

Since 1975, the national yield has increased from about 90 bushels per acre to nearly 180.

Over the last nearly 50 years, the average national yield has been within 2 bushels of or above the trendline yield almost 75% of the time. Using a linear trendline suggests that statistically, this year’s corn yield could be around 180.5. In most years, the weather is favorable enough to produce a normal crop across the U.S. as a whole. 

When will futures prices hit the high for the year?… Continue reading

By Jon Scheve, Superior Feed Ingredients, LLC 

There is simply too much corn in the U.S. this year. Production issues in Mato Grosso in April or May or in Iowa and Illinois in July are most likely the best chance for significantly higher prices.

Growing specialty corn (i.e. seed, white, non-GMO, high oil, silage, etc.) is popular with some farmers because there is usually an added premium to grow any corn not used for feed, export or ethanol. There can be several reasons for the premium:

• Proximity to a specialty corn buyer
• Risk of a potential yield reduction 
• Increased weed treatment and/or insect cross-pollination 
• Need for additional storage for identity preserved crops
• Harder to replace if there is a production issue at a local level.

Most farmers do not want the hassle, or risk, of raising these crops. That is why there are big premiums. If everyone was doing it, there would not be a premium.… Continue reading

By Doug Tenney, Leist Mercantile

Cindy and I were recently trying to efficiently navigate a crowded aisle at a local store. As she opted to cut to the left, I deemed right to be the faster option and chose to guide her in that direction. As per kindergarten teacher training. I heard, “uh we don’t push” with the accompanying “look.” As we left the store, she kindly reminded me, “Doug, steer your truck, not your wife.” Now that was funny, and laugher is always the best medicine. (Lesson learned).

The last 3 months of 2023 were not kind to grain prices as corn, from its mid-October high at $5.21, closed on Dec. 29 at $4.71. Soybeans had a mid-November high at $14.10, closing on Dec. 29 at $12.98. That trend continued into the first 2 weeks of January with further declines. The Jan. 12 USDA report day was a “Bad Day at Black Rock,” to borrow the title from a short story by Howard Breslin and published by The American Magazine in January 1947.… Continue reading

By Bennett Musselman, Leist Mercantile

Trade expectations: lower U.S. soybean exports, higher U.S. corn for ethanol, lower Brazil soybean production.

U.S. highlights: U.S. 2023 final corn production 15.3 billion bushels, 177.3 yield ; last month production of 15.234 billion bushels, yield 174.9. U.S. final soybean 2023 production 4.16 billion bushels, 50.6 average yield; last month 4.129 billion bushels, yield 49.9.  

Following the noon USDA report release, corn was down 11 ½ cents, soybeans down 22 ¾ cents, and wheat down 4 ¼ cents. Moments before the report was released, corn was down 3 ½ cents, soybeans up 1 ¾  cents, and wheat down 1 1/2 cents.

US 2023-2024 ending stocks: corn 2.162  billion bushels, last month 2.131 billion bushels; soybeans 280 million bushels, last month 245 million bushels; and wheat 648 million bushels, last month 659 million bushels. 

Trader estimates for 2023-2024 U.S. ending stocks: corn 2.105 billion bushels; soybeans 239  million bushels; and wheat 658 million bushels. … Continue reading

By Doug Tenney, Leist Mercantile

Thinking ahead, I installed three 4-foot orange rods along our driveway as guides for my snow plowing activities. Cindy was curious, since this was a new feature. A couple weeks had passed when she called me at work to say that the “soldier” near the road was killed. Coming home in the dark the evening before, she cut the corner short, noticed an odd noise, verified it the next morning, wasn’t able to cover her tracks and fix it. She also mentioned that her first impression of the rods was “target practice” and she knew it was only a matter of time. “One down, two to go.” No harm, no foul.

The Jan. 12 USDA Supply and Demand Report has just been published, detailing final 2023 corn and soybean production and yields. Ahead of that report, traders were expecting few changes for both corn and soybean yields.… Continue reading

By Jon Scheve, Superior Feed Ingredients, LLC 

The Mato Grosso region of Brazil had been experiencing the worst drought and heat in the past 40 years. However, recent rains and more moderate temperatures have helped the crop a little. But moisture levels in that region now are up to the same level as the worst of the last 10 years when around a 10% yield reduction happened.

Everyone wants to know how bad the soybean yields will be and if there were enough extra acres planted to offset any yield reductions. The market seems to be reacting like last summer, when timely rains throughout the U.S. helped sustain the health of the crop just enough to produce decent, but not record, yields.

It is possible farmers have “cried drought” one too many times. The market may just be tired of being fooled by social media posts of bad crops and disaster yields prematurely, and then later finding out it’s not as bad as everyone thought. … Continue reading

By Doug Tenney, Leist Mercantile

A good friend who is “all about horses” inspired me to take time to visit the Keeneland Race Course in Lexington, Ky. It was a quiet day at the track itself as all the attention was directed to a horse auction. As we meandered the grounds, a very welcoming lady staffer said to me, “Go wherever you want, no limits.” Cindy’s response, “Oh please, don’t tell him that.” She knows me…This harvest season was one for the books! The sky’s the limit! 

As the year winds down, here are some reminders for the months ahead. Corn basis will see some improvements in nearby bids compared to those seen late in harvest. As November came to a close, numerous Ohio facilities had those bids at December minus 70 cents or even wider. The December to March corn spread reached its widest levels in 15 years as it maxed out at 26 cents.… Continue reading

By Jon Scheve, Superior Feed Ingredients, LLC 

The market continues to watch Brazil’s weather. Mato Grosso and northeastern Brazil are reporting hot and dry conditions. This area produces 40% of Brazil’s corn and could mean reduced yields. However, the most crucial reproductive development stage begins next week and lasts for nearly a month.

On the flip side, southern Brazil, which was dry last year, has received a lot of rain this year. The Rio Grande do Sul, Mato Grosso do Sul, and Parana regions, where nearly 40% of Brazil’s beans are grown, just finished planting. If favorable weather conditions continue, harvest yields should be good.

Market Action — Capturing carry in the corn market

I built grain bins 15 years ago to store my entire corn crop during harvest for several reasons:

• I did not want to wait in line during harvest at the local elevator or processor.
• Local basis bids tend to be lowest during harvest, and I can usually increase my profits by holding grain and setting basis later in the year when local demand is higher.

By Doug Tenney, Leist Mercantile 

This past month I had the privilege of attending the Christmas dinner as an alumnus of FarmHouse fraternity at Ohio State University. The students had included numerous professors and even department chairs from CFAES (College of Food, Agricultural, and Environmental Sciences) in attendance. It was exciting to see the relationships among students, professors, and peers, lifelong skills which will carry them far as adults beyond their college days. Maintaining, understanding, and building traditions is always a positive. What an inspiration of hope in the coming year!

The Dec. 8 USDA Supply and Demand Report was boring with few changes. U.S. corn and U.S. wheat exports were each increased 25 million bushels. Brazil’s soybean production was reduced 2 million tons to 161 million tons. That decline was slightly smaller than trade expectations. Argentina soybean production was unchanged at 48 million tons. Brazil’s corn production at 129 million tons and Argentina’s corn production at 55 million tons were both unchanged. … Continue reading

By Jon Scheve, Superior Feed Ingredients, LLC 

The December USDA report is arguably the least important of the 15 reports released during the year. This year was no exception as there were no major changes announced in the report.

The market will now focus on the weather in South America as the soybeans there enter the critical stages of crop development for the next 6 weeks. This will also coincide with the time of year when soybean export pace out of the US should be at its highest for the marketing year.

Three sold corn calls

Last week I shared how I bought December puts that allowed me to keep a $5.37 floor price AND unlimited upside price potential through November for most of my 2023 corn crop. The following now details how I increased my final average sold price with additional option trades.

Sold call 1

My saddle strategy, as I have shared in the past, for the 2023 crop provided additional profit during a mostly sideways market throughout early summer.… Continue reading

By Doug Tenney, Leist Mercantile

Trade expectations: U.S. soybean exports and while U.S. soybean crush were both unchanged. That is a surprise. U.S. corn exports up 25 million bushels.

U.S. highlights

Few changes were expected. USDA follows the pattern of years past as  December corn and soybean production and yields mirror those of November. Corn 2023 production 15.234 billion bushels, yield 174.9. Soybean 2023 production 4.129 billion bushels, yield month 49.9.  U.S. corn exports for 2023-2024 were up 25 million bushels.      

Following the noon USDA report release, corn was up 1 cent, soybeans up 3 cents, and wheat  down 7 cents. Moments before the report was released, corn was up 2 cents, soybeans up 9 cents, and wheat down 3 cents.

U.S. 2023-2024 ending stocks: corn 2.131 billion bushels, last month 2.156 billion bushels; soybeans  million bushels, last month 245 million bushels; and wheat 659 million bushels, last month 684 million bushels. … Continue reading

By Jon Scheve, Superior Feed Ingredients, LLC 

December corn futures traded to $4.47 on Nov. 29, the lowest price of the calendar year. The massive carryout has been too much for the market to handle and export demand remains weak. Likely some added pressure came from farmers who were selling or pricing grain last week as their basis contracts against the December futures were up.

Previous 2023 corn crop sales recap: Against December 2023 futures 

• Sept. 7, 2022 — sold 10% at $6.25. 
• June 23 — sold 10% through option trade at $5.25.
• Oct. 27 — sold 10% through option trade at $4.75.

Floor protection on remaining 70% of corn

On Feb. 15, December corn was trading at $5.98. I bought downside protection with $5.70 puts for just under 34 cents on 70% of my anticipated production.

What does that mean?

If the price of December corn on Nov.… Continue reading

By Jon Scheve, Superior Feed Ingredients, LLC 

Many traders take time off the week of Thanksgiving, which can sometimes lead to increased market volatility. The price action this week does not necessarily mean a trend has formed. 

Next week December corn futures will move into the delivery period. How the market reacts during this time will probably be more telling than what the market did this week.

Why I like margin calls

As a true hedger, I dislike the term “margin call” because it is often associated with speculators who are in a trade that has gone wrong. 

However, I am not a speculator, I am a hedger. The difference is I produce the commodity that I have a futures sale for, which means grain marketing and risk management decisions are different. For hedgers a “margin call” is really just a financial decision, and not a bad thing. 

Let’s say in June, December corn futures are $5 per bushel, and I decide to sell futures.… Continue reading

By Jon Scheve, Superior Feed Ingredients, LLC 

Brazil’s weather caused some excitement in the bean market last week. One day forecasts showed no rain, and the next it did. Until late January, farmers should expect South America’s weather forecasts to have a big impact on prices. 

Unfortunately, corn hit a new calendar low this week at $4.61. While Brazil weather issues could still help corn prices, the estimated 2+ billion-bushel carryout will be hard to overcome without a big increase in export demand. 

Hedging grain — Using futures in a hedge account verses HTAs

I am often asked why I hedge my grain using a futures account instead of using HTA (Hedge To Arrive) contracts with an end user. Following are some of the pros and cons. 

Setting up a futures hedging account

This is a one time “hoop” hedgers using futures must do that selling an HTA does not require. Including a hedge line with a bank to finance the hedge account is also a good idea. … Continue reading

By Jon Scheve, Superior Feed Ingredients, LLC 

Thursday’s USDA report indicated that last summer’s corn objective yield models might have been more accurate than the subjective based weekly reports after all. This could suggest the current average corn yield, estimated to be nearly 175, may increase again in the January report, which would not be bullish news for corn. 

For beans, the USDA only increased the yield slightly and demand remained unchanged. If the estimated export numbers can be attainted, the bean supply will be tight and supportive of prices.

Moving forward both the corn and bean markets will be watching Brazil’s weather the next several months as it is the critical window for crop development. So far, the weather has not been ideal there, but it is still early and growing areas are spread out over a larger area than in the U.S. 

Market Action – Capturing carry in the soybean market

Ten years ago, I built grain bins to store my beans during harvest.… Continue reading

By Doug Tenney, Leist Mercantile

Having lost her father in July of 2022, Cindy chose to invite her dad’s lifelong best friend and his wife to our home for lunch. John is 93 years old and has an incredible memory. Growing up on a small dairy farm in Hocking County with no electricity or running water instilled in him a lifelong work ethic. John and Cindy’s father became telegraphers with the C&O Railroad, actually working at the Canal Winchester Depot with my grandfather. Both friends retired from the Chessie System as dispatchers. John recalled the excitement of having a neighbor who owned the first horse-drawn crop harvester in the area, while I shared stories about riding in the combines of today. What an interesting personal history lesson as our deep respect for the legacy of the industry grows even deeper.

The Oct. 22 Weekly Crop Progress Report detailed the U.S. corn harvest was 59% complete.… Continue reading

By Doug Tenney, Leist Mercantile

US highlights – Corn 2023 production 15.234 billion bushels, last month 15.064 billion bushels, yield 174.9 bpa, last month 173.0 bpa. Soybean 2023 production 4.129 billion bushels, last month 4.104 billion bushels, yield 49.9 bpa, last month 49.6. 

Additional US highlights – US corn exports for 2023-2024 were actually up 50 million bushels, corn for ethanol was unchanged. US soybean exports for 2023-2024 were unchanged and crush was unchanged.     

Following the noon USDA report release, corn was down 8 cents, soybeans down 23 cents, and wheat down 15 cents. Moments before the report was released, corn was down 5 cents, soybeans down 11 cents, and wheat down 14 cents.

US 2023-2024 ending stocks: corn 2.156 billion bushels, last month 2.111 billion bushels; soybeans 245 million bushels, last month 220 million bushels; and wheat 684 million bushels, last month 670 million bushels.

Trader estimates for 2023-2024 US ending stocks: corn 2.129 billion bushels; soybeans 221 million bushels; and wheat 669 million bushels.… Continue reading

By Jon Scheve, Superior Feed Ingredients, LLC 

Corn closed last week 3 cents lower than the week prior. In 65 of the last 67 trading sessions, December corn has closed between $4.70 and $5. One positive was that corn did not make a new low for the calendar year.

Beans, however, had a great finish to the week by breaking out to the high side to levels not traded since mid-September. This might be attributed to the weather conditions in Brazil that could be causing some traders a bit of concern. 

The Mato Grasso region in the north, where nearly 25% of Brazil’s beans are raised, has been hot and dry. While in the south, where another 25% of Brazil’s beans are grown, it has been very wet, which has delayed planting. However, there is a favorable weather window forecasted for next week that could allow for some planting advancement. Regardless, the southern areas still have until late November until delays would cause yields to be compromised while the northern areas are still early in the growing cycle.… Continue reading

By Jon Scheve, Superior Feed Ingredients, LLC 

Last week, corn finished down 15 cents and was nearly 30 cents off the highs from the previous week. Harvest pressure may finally be hitting the corn market. The commercial short positions in the market, which the trade usually views as farmer sales, are at the lower end of the range of the last 10 years. This should be concerning to unsold producers because it means farmers are way behind on sales and any futures rally may be met with increased sales pressure. It could also mean the low for the marketing year is not in yet.

A historical look at December corn lows

In 8 out of the last 16 years December corn has hit a low for the calendar year after Sept. 1. Half of those lows occurred in September and the other half of those lows came in November as seen in this chart:

So far, the low for the year was on Sept.… Continue reading