Weekly Market Recap and Tom's Take October 9, 2020

Harvesting Soybeans

MARKET UPDATE:

December corn gained 8 today, closing at $3.95. That is up more than 15 for the week. March corn futures ended at $4.02 1/4, up 7 1/2 today, gaining 13 week-on-week. 

January beans added 17 3/4 today, to end at $10.65 3/4, gaining more than 40 for the week. March soybean futures gained 25 1/4 today, putting them at $10.48 1/4 and up almost 30 this week. Please note, that is 17 1/2 LESS than January futures. That inverse continues to widen for every subsequent month this crop year, before the bottom drops out for November 2021, which closed at $9.80 1/4 today, or 85 cents less than January 2021 futures. 

This week’s BIG story is undoubtedly the WASDE report issued today. For corn, they reduced planted and harvested acres, and made a slight reduction to the national yield. We also saw some reductions on the demand side, specifically for feed and ethanol demand. Long story short, ending stocks dropped a little more than 300 million from the September report. The biggest part of that was due to adjustments in last year’s carryout, as it lost more than 250 million. 

For soybeans, acres were reduced slightly, yield remained the same, while exports increased. They also reduced last year’s Ending Stocks by more than 50 million, with the result a drop of 170 million for this year’s Ending Stocks estimate, now just below 300 million. 

We discuss the WASDE details in more depth as well as other items impacting prices on our weekly podcast, The Bull Bear Banter. You can find that here: https://landusexperience.podbean.com/

TOM’S TAKE:

This week, I have a couple of thoughts that I’d like to share. The first one has to do with this INVERSE in soybeans. If you’ve read anything from me before, you know that I like to try to put things in context by looking at charts. What I know, is that prior to August 10th, the January soybean chart was almost 2 dollars below where we are today. If I didn’t know anything about the chart I was looking at, I’d take one look at that January 2021 soybean chart and pretty quickly decide I’d much rather sell whatever that chart was about than buy at that level. So, when I hear that there are people taking beans home to a bin, I just have to wonder why? With the exception of Ralston, our cash bids are the same for delivery now through January. And then, they drop about 20 cents or more for February, and that also applies to Ralston. And they keep dropping every month. So, the question for those filling bins with beans is: do you really want to “buy” beans at this level, at or above $10 cash? Because, at least in my mind, that is what you are doing if you’re not selling them at today’s cash price. I’m not talking about bringing them to town and putting them on storage. I really think you need to SELL soybeans today or have a VERY solid reason for not selling them. I also hope your time frame for emptying your bean bin is very short. PLEASE don’t carry them through this inverse. 

Now, let’s add that idea to another one. Some of you have heard us talk about our “Bonus Premium” contract. If you have 5,000 bushels of beans to sell, we can actually give you an additional 25 to 30 cents per bushel ABOVE our cash price. It does require you leaving an offer with us for next year’s soybeans. Right now, that offer would be well above $10 on the November 2021 board, which closed today at $9.80. This offer can expire at the end of July or the first part of October. Your offer would be about 20 cents higher if you choose the October expiration, but I’d suggest you use the July expiration to minimize your risk. If you have any interest, contact your local Grain Marketing Advisor or me. We really think the market is sending a clear message. We want to make sure you are hearing it. That message is “Sell Mortimer, Sell!”