Like many in the industry, our grain merchandising team is working remotely to help flatten the coronavirus curve. While we may be in our home offices, we’re feeling the impact of this “panic-stricken” grain market which seems to be bombarded with hour-by-hour news updates. We’re working to offer some refuge in the marketplace.
What is Landus Cooperative Doing?
One of the immediate impacts we’re monitoring has been the change to the ethanol market. Ethanol is blended into gasoline, and when we don’t drive our cars there is naturally less demand for ethanol. Refineries take in ethanol and blend it into their gas supplies, and when demand decreases, ethanol backs up and in some cases, ethanol plants have no destination for their product.
This is already occurring, and it is our understanding that the East Coast is the most problematic at this time. We have seen some ethanol plants announce their intention to stop running until the supply chain needs ethanol again.
With the slow (or stop) to local/regional ethanol sales, the Landus Cooperative team is working with a variety of domestic and international end-users to find new homes for your corn. In many cases, this means shifting corn from a truck house sale to a rail house sale to meet this export demand and continue to provide the best markets available for our farmer-members.
Just like in any sale, there has to be a customer on the other end. As we collect intel from across the country, we hear that buyers may be waiting for prices to drop even further, so we’re working to identify which markets are going where in the next 14, 30, 60, 90 and more days out to balance the scales.
What Should Your Play Be?
Through all of this market volatility, we’re also trying to understand your operation’s needs and wishes to market grain. Honestly, now might be the time to let the markets settle down and focus on getting the crop in the ground.
Any insights into your operation’s goals are helpful as we work to merchandise your grain in a new environment. Please stay in contact with your local Landus Cooperative location and Grain Marketing Advisor for any questions we can answer. We are here for you today and will still be here when COVID-19 is behind us.
Impact on Soybean Meal
Meanwhile, many feed rations utilize DDGs and the threat of reduced supplies has firmed up the market for both DDGs and soybean meal. This has resulted in improved soybean crush margins in the near term. The Iowa corn basis has dropped 20 to 30 cents per bushel as the uncertainty of corn demand for ethanol has increased sales into other markets where buyers are not sure how corn will ultimately be consumed.
Bright Note: Grain Quality
On a brighter note, China has confirmed the purchase of 30 million bushels of corn for summer delivery and is rumored to be purchasing an additional 8-15 million bushels; China buys U.S. #2 yellow corn which means minimum 54#, maximum 5% damage and maximum 3% broken corn and\or foreign material. This year’s corn quality across the U.S. corn belt has seen issues with both test weight & broken kernel screenings; this is important to end-users looking for a quality product to feed their livestock.
Fortunately, Iowa—and specifically Landus Cooperative territory—has yielded relatively good quality this year. The Landus Cooperative grain team has been actively working to make sales through our rail houses to meet this export demand and continue to provide the best markets available for our farmer members.
We continue to work closely with the Iowa Institute of Cooperatives, Sec. Mike Naig’s office, the Governor’s ag liaison, and our national policy groups (NGFA and NCFC) to advocate for your businesses.
We’ll share information about an MFP program as soon as its official.
We are living through a stressful period with challenges coming from uncertainty all around. Thank you for your business and please stay in touch!