Tuesday, February 13, 2018

Grains closed mixed today, with soybeans closing 5 to 10 cents higher, corn closing ¼ to 1 cent lower, and wheat closing down 3 cents. In the outside markets, crude oil traded 35 cents lower, the dollar index traded 0.500 points lower, gold closed $5 higher, and the Dow Jones index closed up 39.2 points today at 24,640.

Soybean Meal….we don’t talk very often about soybean meal in our commentaries, but we can thank the meal complex for the rally in soybeans the past couple of days. Soybean meal has been on a good run, with a gap higher open yesterday, followed by a $7 per ton move higher today. Nearby soybean meal futures are trading at their highest levels since July 19, 2016. At that time, soybean meal was coming down from the $420-$430 per ton levels, which was helped by the weather scare in June of 2016. Below we show the March 2018 soybean meal chart going back to the fall of 2016. Note that meal broke thru the triple top on the charts. Also, note that the meal chart has a gap below yesterday’s open and Fridays close. A test to fill that gap would pressure old crop beans.

Crop problems in Argentina have helped the soybean meal and soybean markets rally over the past couple of weeks. The market views about 50% of Argentina soybean growing regions as critically dry. Extended forecast maps have not been very reliable on rainfall chances beyond five days, adding to the uncertainty. Argentina is a major exporter of soybean meal, and traders are concerned with their current weather problems. China will need to source soybeans and meal from places besides Argentina, which opens the door for more export demand from Brazil and hopefully the US. It appears the end users were under-priced and are now trying to get covered with physical meal. As the old saying goes, the market takes no prisoners fits here!

The rally in the grains is getting us closer to some of our targets that we have had on corn and beans. For new crop corn, we are just 3 cents away from the target, while soybeans are still 18 cents away on old crop, and 6 cents away on new crop. Talk to your consultant if you have any questions on the advice.

Recent Un-filled Advice

  • Sell 10% new crop corn @ $3.99 Dec ‘18 or $4.07 Mar ‘19 futures both tracks. Use HTA contracts if available. (Unable as of 2-13-18)
  • Sell 10% old crop soybeans @ $10.30 Mar ’18. – This sale would take us to 70% priced
  • Sell 10% new crop soybeans @ $10.25 Nov’18, $10.30 Jan ’19, or $10.34 Mar ’19 – This sale would take us to 20% priced

Crop Insurance Update

With February almost half over, we are only 29 days away from the March 15th crop insurance deadline.  Policy changes and coverage levels will need to be decided by then. Updated crop insurance prices are $3.94 for corn and $10.04 for soybeans. Below we show the history going back to 2000. It’s interesting how close we are to the 2017 price averages. If November soybeans trade here or higher, the monthly average could come in above $10.12. Corn could match the 2017 price if we close the remainder of the month out strong.

 

That’s all for today. See you here tomorrow.

This material should be construed as market commentary, merely observing economic, political and/or market conditions, and not intended to refer to any particular trading strategy, promotional element or quality of service provided by AgriSource Inc. The information contained herein was obtained from sources believed to be reliable but is not guaranteed as to its accuracy. These materials represent the opinions and viewpoints of the author and do not necessarily reflect the viewpoints and trading strategies employed by AgriSource, Inc. AgriSource, Inc. is not responsible for any redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this material. It does not constitute an individualized recommendation or take into account the particular trading objectives, financial situations, or needs of individual customers. Contact AgriSource, Inc. designated personnel for specific trading advice to meet your trading preferences or goals.

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