Market Analysis

Saving money to make money


For corn, a significant rally will be difficult with the amount of unpriced old crop and another good growing year. End users tell me any board rallies will continue to shake some bushels loose. Many unpriced farmers continue to wait, because they don’t have an exit strategy.

Some farmers (who don’t have marketing plans) asked me recently what I would do if I were them. Most are shocked when I suggest forgetting about their 2014 crop, and instead focus on 2015 and 2016. Farmers can still get premiums in the market if they shift their focus more long-term. The 2014 crop has no real story left, and by continuing to ONLY focus on it they are giving away profits and potential on 2015 and beyond. Too many farmers focus short-term without looking forward. Savvy farmers are planning years in advance.



Informa reported more bean acres than the USDA.… Continue reading

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Precision grain marketing

While planting last week I looked at all the technology in the tractor cab, as auto-steer guided me down the field. It amazed me how sophisticated precision planting is. Farmers now use technology that puts the ideal number of seeds based upon field conditions with such precision to optimize yield. Despite how complex and complicated the technology is, it has become quite popular as more farmers are using it.

It made me think about the basic principles of our farm’s grain marketing strategy. It has a lot of similarities to precision planting that I should be calling it “precision grain marketing.”

Precision planting takes historical data that matches up many variables (i.e. the right hybrid, seed trait, seed count, etc) to maximize farmers’ yield potential. Why don’t farmers extend this level of attention to maximize their grain marketing profits too?

Within grain marketing there are three basic facets that work independently of each other — futures prices, basis and market carry.… Continue reading

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Corn basis strategy


The Tuesday USDA report didn’t hold any surprises last week. However, the Monday afternoon report showed farmers planted 40% of acres in one week. Some Chicago analysts say there is a downside to this quick corn planting. Weather within days of July 1 now becomes extremely critical for pollination across the Midwest. Weather variances in this single week could swing the national bushels per acre by five, or corn futures from $3 to just short of $5. So much money could be made if we knew what the weather would be in just that one week. Preliminary El Nino reports indicate good weather is a higher probability than bad in early July.

On Thursday last week wheat rallied 30 cents on rumors Russians are going to stock pile grain and freeze potential in the Dakotas. Speculators have a huge short position on, so when they go to cover those positions the market gets very volatile.… Continue reading

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Three basic market factors behind understanding crop prices

There was no bullish news last week. Without a large-scale weather issue, Chinese analysts are expecting a 7% increase in corn production next year, which would lower demand overseas for our product.  In the U.S. weather so far has been the right mix of rain and sunshine, which will provide a good start to the growing season.

Low prices on the CBOT allow the U.S. to be more competitive in world markets, which may generate a buying opportunity and allow prices to increase a bit in the short term.  However long term, if weather conditions stay favorable, it will be difficult for new crop corn to stay above $3.50.  It may even mean, similar to 2014, falling prices into harvest. A bumper crop followed by a bumper crop is extremely bearish for futures prices.



Beans can’t seem to pick a direction.  There were some new crop cancellations this week, however soy meal demand remains strong domestically. 

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Selling calls can boost profits

The market is quiet this week. Farmers are busy. Planting started in the west, while farmers in the east and south are waiting for soil to dry and the weather to warm.

As always there are many “levers” affecting grain prices. Arguments and estimates can be made regarding many factors towards prices.


Reasons to be bullish

  • The soy crush is strong and could generate demand in the U.S. feed markets.
  • Crude oil has moved off the bottom and the driving season is ahead. This is positive for ethanol demand.
  • Spec traders have a bean short position on, which they may cover if weather dynamics change.
  • Farmers aren’t selling during planting.
  • DDGs are too expensive for U.S. feed rations, which may drive up demand for corn and soymeal domestically.
  • Its still too early to rule out weather issues.
  • If the U.S. dollar were to drop in value, exports could receive a boost.
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Are you speculating or hedging?


There was another USDA report last week estimating usage and carryout. It had few surprises; corn carryout raised slightly (this was projected in the March 31st stock reports), which means there is more corn stored on the farm than the trade previously estimated.

Expect little corn excitement in the next two months. With plenty of old crop corn, the U.S is not competitive in the world markets as prices approach $4.00. On the other hand, farmers won’t sell below $3.75. A large weather event in May or June would probably be the only reason this trading range would change in the short-term.



It’s hard to be bullish beans. The U.S. and the world for that matter has a mountain of beans in storage and plans to plant record acreage this year are forecasted. The only potential is that it’s a long time to August and making the crop is still open to weather issues.… Continue reading

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Break even price a vital number in crop marketing

Until there is something big to trade, corn will remain range-bound between $3.75 and $3.95 on the May futures. Farmers are not facing cash-flow issues, so selling slows as prices fall. Because the farmer still holds massive amounts of corn it keeps pressure on prices at the top end of the range. I expect this trend to continue for some time.

Beans continue to surprise the trade. Huge harvests in both North and South America created a world record carryout, but prices have not been hit as hard as many expected. While prices were down 50 cents for last week the market is still trading in the upper 9s. Lack of farmers selling in Argentina has helped. Driven by high inflation Argentina farmers are waiting for more stable prices, and since they can’t buy U.S. dollars, soybeans are the next best thing. However, reports indicate the government may put a tax on silage bags to encourage more bean sales.… Continue reading

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Join Ohio Ag Net, Ohio’s Country Journal and Archbold Equipment Co. to learn about grain storage marketing strategies

Ohio’s Country Journal and Ohio Ag Net are teaming up with Archbold Equipment Co. to bring some valuable grain storage marketing strategies to northern Ohio’s corn and soybean growers.

On Thursday March 12 at the Archbold Equipment Admin Office at 4982 St. Rt. 66 in Archbold, long-time grain merchandiser Jon Scheve, with Superior Feed Ingredients, LLC, will be sharing some successful tips for maximizing profitability in the challenging months (and years) ahead.

“I’ve made it my mission to educate farmers on more sophisticated grain marketing strategies. These opportunities are not only more profitable, but reduce farm operation risk. I’ll demystify the grain hedging process, explain how paying attention to basis and market carry can keep farmers from leaving money on the table, and provide a cost-benefit analysis on grain storage,” Scheve said. “Finally, I’ll provide a market outlook for 2015 and share some ideas on how producers can use options to protect prices while allowing for upside potential.”… Continue reading

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More grain bin economics

Holidays around the world caused trading to slow last week, which may be why the markets were up one day only to fall the next. The U.S. celebrated President’s Day on Monday. Carnival was Tuesday throughout South America. And, the Chinese Lunar New Year fell on Thursday and celebration continues into this week.

Brazil reports indicate farmers are 40% sold for 2015 (last year they were 60% sold). Lack of farmer selling is doing more to support prices than many in the trade thought. A U.S. planting intentions survey indicated that bean acres would increase to very high levels this year. However, it also indicated that 60% of farmers may change their mind at planting. Government forecasts indicate that corn and bean acres could be relatively close to 2014 acres.

It may be a wild ride between the March planting estimates and the June post-planting report. Now more than ever it’s important that farmers know their breakeven points and have profit goals.… Continue reading

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Grim outlook for crop prices

There are many eyes watching the near future of the crop markets and they nearly all agree that the outlook is grim for the short term but strong over the long term.

Mike Mock from The Anderson’s, Inc. recently talked about the market outlook and some strategies for farms to weather the tough times.

“You know that when you are selling corn for $7 or $8 that there are going to be problems. The next time that farm income will be as good as it has been, I won’t be here to talk about it,” Mock said. “Prices were too high for too long and we invited everyone to our corn growing party. We are in the process of a global reset that will hurt some and create opportunities for others. Some areas and growers have costs that will be too high given the current outlook.”

Crop prices have a significant downside risk in the next couple of years.… Continue reading

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Does adding storage pay?


In general, the markets tend to trade sideways in February. And, with no big surprises in the February USDA report, everyone is looking to the March 31 report for market direction, which will estimate corn versus bean acres. Summer weather will then be the big market driver after March. For a $4.50+ corn rally, there will need to be big surprises in the March report. To reach $5, weather-related conditions are likely necessary this summer. On the bright side, it will be hard for the market to trade near $3, unless we get a bumper crop like 2014 again.



This month I worked with a client who was interested in putting up more storage. Currently, they were able to store 50% of their crop on the farm and they wanted to store 100%. To get financing, they asked me to help them show how storage was a good investment to their banker.… Continue reading

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USDA offers few changes and several yawns in report


Today’s report was pretty boring, a few changes, nothing major. No big price movements followed this report.  Corn ending stocks were lowered 50 million bushels to 1.827 billion bushels. Corn for ethanol was increased 75 million bushels but feed demand was lowered 25 million bushels.  Ending stocks for corn were less than traders had expected. That along with higher ethanol numbers is a small positive. Soybean ending stocks stand at 385 million bushels, down 25 million bushels from January. Crush was increased by 15 million bushels while soybean exports went up 20 million bushels.  Soybean imports went up by 10 million bushels. US ending stocks at 385 million bushels would be a positive. Brazil’s soybean production was lowered by one million ton to 94.5 million tons. That decline was offset by higher production from Argentina of one million tons to 56 million tons.  Wheat ending stocks were up 5 million bushels to 692 million bushels.Continue reading

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Take time to analyze your farm as a business


For those who have never seen the Chicago Board of Trade trading floor, your time is limited. On July 2, 2015 all futures pits in Chicago will be closed, due to a lack of use and it will save stock holders $10 million per year. Computers and electronic trading have replaced humans for 99% of futures trades. Options pits will remain open for now because 50% of the trading volume is still done as open outcry in the pits. If you don’t have time to travel to Chicago, you can always rent the movie “Trading Places” off Netflix and let Eddie Murphy and Dan Akroyd show you what the trading floor was like at it’s prime during the 80s.


Which way is the market going?

There was significant volatility in the grain market this week. Monday the market was down. Tuesday there was a big rally. Wednesday and Thursday swings offset each other.… Continue reading

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Margins continuing to tighten in 2015

Spring is just around the corner. It is hard to believe that in 70 days or so, spring planting of corn and soybeans could be underway across Ohio and the Midwest. Many producers have already made decisions regarding the mix of corn and soybeans to be planted this spring. Margins and profits per acre are under strong pressure as producers head into the spring planting season.

Gone are the profits seen in past years when money was made in a big fashion. At that time producers had the advantage of locking in lower input costs while selling revenues increased as prices moved higher due to drought conditions or strong demand. Fast forward to 2015. Corn and soybean prices have fallen sharply compared to previous years. Input prices for fertilizer and seed remain high with little retreat lower. Many analysts are calling for prices to move lower in coming months for corn and soybeans.… Continue reading

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Prepare to battle the bear

Corn highlights

Last week corn dipped below the 100-day moving average, which usually indicates the market will move lower going forward. However, farmers aren’t selling, so many are unsure what to expect. Corn exports are difficult due to lower priced corn coming from the Ukraine. Warm weather in the South last week was hurting feed demand, especially in the cattle markets. Ethanol plants are still strong buyers, but margins are tight.

Bean highlights

Bean prices continue to decline as the strong South America harvest begins (10% complete last week). Some reports indicate Brazil’s economic problems could cause the Brazilian currency to drop in value, which may lead to more farmers selling their beans. Export vessels are lining up; however, the number of ships waiting to load is lower than last year. This may suggest lower demand than previously estimated and fewer logistical issues, which would mean less need for load outs from the U.S.… Continue reading

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Selling forward with a production budget in mind

Where will corn and bean prices go?

Corn has a big technical resistance at $3.77 (100-day moving average). So far, the market has held this price as a floor. Some still estimate $4.25 as an upside target. Fundamentally, farmers haven’t been sellers much below $4, so with the board around $3.85 some end users can’t source corn without increasing basis. This could indicate a sideways trade the next few weeks with a $3.80 to $4.10 range on March corn futures.

Soybean prices continue to be susceptible to South American weather reports and China cancellations, which are both bearish prices right now. I still estimate beans are in a downward trend for a few weeks, if not longer.

The benefits of selling forward

Again this week a farmer told me that he doesn’t like to sell forward. His reason — it’s difficult to plan all of his future input costs right now.… Continue reading

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It’s taking $4 cash to open bin doors

Jon Scheve, a grain merchandise with Superior Feed Ingredients, says that ethanol plants are having to raise corn basis to get farmers to load up a truck for delivery. He says some farmers are holding on for dear life until they see prices around the $4 cash mark or higher. Hear more of his comments about cash corn and why weather in the U.S, not Brazil, is moving markets as of late.… Continue reading

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January report offered news for bulls and bears

Maybe the most anticipated USDA report of the year was published last week. The biggest take away in the report was carryout bushels. Carryout is the amount of unused grain from one production year to the next, which helps traders to determine if the market is trading at the correct price.

The bullish news was that corn yields and carryout were reduced, causing corn prices to close positively on the day of the report. While reduced carryout estimates are good, there is still 1.87 billion bushels of corn carryout compared to 1.2 billion last year. So, the carryout combined with outside-market pressure and increasing ethanol stocks contributed to a corn sell off the net day.

As I expected, there was little good news in the report for soybeans. The carryout is estimated at 410 million bushels (compared to the tighter 92 million last year). The market was anticipating a slight carryout drop, thus the big drop.… Continue reading

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Will glut of supply mean $9 soybeans (or less)?

After USDA’s January supply and demand report, the soybean markets felt a lot of downward pressure and flirted with resistance levels at the end of the week. Jon Scheve, a grain merchandiser with Superior Feed Ingredients says that downward trend may continue and really put the pressure on the bean markets at harvest time. He talks with The Ohio Ag Net’s Ty Higgins about how low the markets can go.… Continue reading

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The importance of setting marketing goals

The market appears to be trading sideways until the New Year when traders get back to a full week of trading. Also, many in the industry are waiting for direction from the January USDA report.

With the market volatility facing producers in 2015, there will be opportunities to maximize profits, but farmers need to be prepared to take them when they become available. How does a producer do that?

Set goals

The most important (and profitable) preparation farmers can do is determine their operation’s goals. Smart farmers determine in advance what price they need versus the price they want. Typically the questions I ask my farmer clients are:

• What price do you need and why?

• What price do you want and why?

• What price will you settle for and why?

The answers to these questions provide an outline for me and my clients for the upcoming year as well as the next few years (for many of my clients we are working through 2016 plans and looking as far out as 2017).… Continue reading

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