Weekly Market Recap and Tom's Take, October 30, 2020

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MARKET UPDATE:

December corn was unchanged today, closing at $3.98 1/2, but that is down almost 21 for the week. March corn futures ended at $4.03 1/4, up 1 3/4 today, while losing 17 week on week. 

January beans added 4 3/4 today, to end at $10.56 1/4, dropping almost 25 for the week. March soybean futures were up 7 3/4 today, putting them at $10.48, down 19 1/2 this week. 

Please note that March futures are now about 8 cents LESS than January soybean futures, while November 2021 futures, which closed at $9.71 today, are 85 cents less than January futures.

The obvious big story is the drop in prices this week for both corn and soybeans. As noted above, the biggest losers were the front month, December corn, and January soybeans. So, the spreads to months further out have widened out a bit this week. Several things combined to push us lower this week: Concerns about the resurgence in coronavirus impacting consumption as well as concerns about the upcoming election impacting broader, macro markets, and spilling over into the grain markets. However, the one thing we want you to continue to consider is the volatility in these markets. Trading at or near the top of any market is treacherous. For further confirmation, take a look at what the stock market did this week. 

We know it’s easy to just put bushels in your bins and forget about them for a while. However, we’re going to continue to encourage you to NOT do that this year. The carry-in either the futures or cash markets doesn’t support that strategy this year. For now, there is a little carry in corn for delivery after the first of the year and into the Spring. We are encouraging the use of Futures Only contracts for bin stored corn, and we urge you to contact your local Grain Marketing Advisor for more details on this topic. For soybeans, we think you should be placing some cash offers for delivery during the early part of next year, for January or February delivery. Holding on to beans too long could be disastrous. 

For more factors impacting corn and soybean prices, check out our FREE weekly podcast, the Bull Bear Banter, which can be found here: https://landusexperience.podbean.com/

TOM’S TAKE:

Hopefully, this week’s action in corn and soybean prices served as a wake-up call for anyone with unpriced bushels. Whether they are in the elevator or in your own bins, we hope you find some time to pencil out how many dollars are currently at risk for your operation. Just a quick calculation of total unsold bushels times the current prices, less freight consideration is a good place to start. Then, do that again in a couple of weeks. How much does the move of a dime down cost you? Calculate it down to a penny movement if you want. Either way, I think it’s worth the time it will take to put it all in perspective.

Corn dropped about 20 cents this week, and beans were off about 25. If you were to cash out everything today, what would that have cost you? I once heard a well-known marketing expert say the best thing a person can do to get better at marketing grain is to increase the number of times in a year that they sell grain. If you’re used to selling 4 times per year, try to increase that to 6 times per year. Ultimately, what they have found was that the operation that sells 10 or 12 times per year is much more successful in the long run than someone that sells 4 or 5 times per year. If you can also add in a “dollars at risk” calculation once or twice a month, it further increases the potential for even more success.

Let me know your thoughts: Tom.Guinan@LandusCooperative.com