Market Analysis




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

Read More »

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

Read More »

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

Read More »

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

Read More »

Where will futures go in 2015?

Corn

Why is it so hard to predict where futures will go next year?

Largely, because, it’s impossible to predict what all U.S. farmers are going to do and what the weather will be like in the future.

  • Will farmers have time to complete fall tillage – they didn’t complete all of it last month
  • When will the fields be ready to plant – it was a late plant last year
  • What will farmers plant – many Iowa farmers are having trouble maintaining yields with corn on corn
  • What is the financial situation of farmers – there are rumors credit will be difficult for some farmers, they might plant more beans because of less input costs
  • Will the new farm program change planting intentions – farmers still don’t know which program is best for their operation yet

 

Ultimately it usually comes down to breakeven prices in the spring when the farmer has to put seed in the ground. … Continue reading

Read More »

Planning for tough 2015 corn and soybean markets

Most of my clients are priced for all of their 2014 AND 2015 corn and soybean production. I’ve been urging them to be prepared for heavy supply and stagnant (if not falling) prices going into the 2014 harvest. All the experts are assuming U.S. farmers will produce about two billion bushels of corn above the 2014/2015 marketing-year demand (yearly demand averages around 12-13 billion). The market typically prefers when farmers produce only a billion bushels more than is needed, to “feel comfortable” one year to the next. Many also suspect the USDA will revise and increase last year’s total production number in the upcoming Sept. 30 report, which would put more pressure on prices to decrease.

 

This means 2015 demand needs to dramatically increase (say a 10% increase) to keep prices from falling. What could cause this to happen?

· Ethanol – It is currently already running at full capacity.… Continue reading

Read More »