One of the information services we use described today’s session as “a painfully quiet session” claiming you’d have to go back to May to find a lower volume session for corn trading. The funds were virtually non-existent buying just 5 mln corn, 5 mln beans and 10 mln wheat on the day. Wouldn’t be so surprising except USDA is currently calling this year’s corn crop the second largest ever at 15.1 bln bu. A lack of farmer selling interest, plenty of storage space early in the harvest process and processing plants still bidding up for quick shipment is keeping the sellers at bay. December corn traded a very narrow 4-cent range on the day and finished 2 cents higher. Nearby wheat and beans both traded about 10-cent ranges. The Chicago December wheat contract closed 3 3/4 higher. The November soybean contact closed out the day 2 1/2 cents higher. However, it is somewhat unsettling that the contract closed under the $13 level yesterday and today. That hasn’t happened since late June.
The DJIA closed 106 points lower today which makes it four consecutive lower closes. The index is down 943 points from last week’s high close. Nearby crude oil was up 40 cents today and settled just over the $90 level. This week’s high was $93.725. That will be the next week’s upside target and then on to the century mark? The October fat cattle futures contract was up $2.10 today and nearly back to the all-time high set earlier this week at the astronomical level of $187.45!
As mentioned earlier, December corn traded a tight range today. In fact, it’s been a tight range the last 30 days at 30 cents top to bottom. You can see the tail on the right hand side of the chart below as price action has gone flat. It’s also noteworthy that a LONG-TERM downtrend line has been maintained for more than a year now! Unfortunately, if the trade wishes to test that line again, we’ll see something near $4.62 trade in the near-term (closed at $4.77 this afternoon).
In the table below, you can see where recent highs and lows have been set for a few contracts of interest. These levels will likely function as resistance or support in the coming weeks. Interesting that Dec ’24 corn has held the $5 level off and on since mid-July. We haven’t yet recommended a 2024 corn sale to date, but a $5-something sale could very well be a good sale a year from now.
What about 2023 crop sales? Are you at least 30-40% priced on new crop? Late last year we advised forward sales of $6 futures for corn and $14 for beans. No doubt, those are the best sales on the books. Wish we’d done more, but we understand it is difficult to sell that far ahead. But, the risk is the same the other direction………..that prices may slip lower from there and steal revenue from your operation. Be on the watch for a potential new crop 2024 corn sale at some point. Anywhere near last month’s high is a potential target.
Got rain? Looks like a case of the “have’s and have not’s”over the next 7 days. The tropical storm on the East Coast is holding up the system trying to move across the central U.S. right now. Those are some big rains out there at 4-7”. The potential for hail is getting talked up for parts of the western Corn Belt in the coming days. Remember, most crop ins companies will allow you to put hail coverage on this time of year. Call it in to your agent and most coverage goes into effect at midnight the same evening. And, remember hail insurance can be bought to cover particular fields. That works well if you’ve already harvested some of your beans….or perhaps you cover fields only that are 100% your interest.
Most of you reading this take Revenue Protection (RP) as your main crop insurance coverage for corn and soybeans. RP means it not only covers a lower yield, but lower prices too. In the table below you can see that the Fall price we’re using for corn is presently $1.20 lower than where it was set back in February. That means your trigger yield will move higher……if the average daily price of Dec corn the month of October shakes out at $4.71 because that’s when and how the Fall Price is set.
Look at what a difference it makes! In the first example of corn it moves the trigger yield from 164 to 206 bpa. In the second example of corn it moves it from 177 to 222!
It’s not quite the same dramatic outcome for soybeans given the fact the Nov futures contract used in the example below is just 59 cents lower than where the Spring Price was set. For now, it bumps the trigger yields about 2 bpa higher than where it was set last spring.
Ask your agent for YOUR trigger yields. Know where you stand. Claim or no claim? It will be important to do proper record-keeping if your crops are falling below trigger yields. Load logs and/or marks on a bin are the old-standbys required for claims processing….especially if you will be co-mingling units/sections in on-farm storage.
That’s all for now. Have a great, safe weekend!
9-18-23 MP commentary <<< All you ever wanted to know about Margin Protection is here!!!
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