Content ID

335283

The market is telling you it needs the grain now

Don’t get caught in the day-to-day headlines

Tight production supplies, lower yields, and uncertain exports out of Ukraine have kept markets in a sideways trading range for two months, allowing producers to harvest grain and take advantage of elevated prices.

Nearby corn futures have traded between $6.60 and $7 since early September. Exports are slow and half what they were a year ago, but lower than expected yields, ethanol demand and feed use have managed to keep prices from falling even during harvest.

The strong dollar and lack of exports along with slower barge traffic due to lower Mississippi River flows have kept prices from climbing above the $7 mark. Also, providing resistance is a good start to the South American crop, especially in Brazil.

Nearby soybean futures have traded between $13.50 and $14 all fall. Slow demand and slowing economy concern worldwide along with the low river level have kept prices from pushing through resistance. Crush and lack of nearby supply and lower than expected yields provides support.

Markets will only trade sideways for so long and trading ranges have become tighter and tighter which means technical pressure is building for them to break either to one side or the other. Historically $14 beans and $7 corn are on the high side and will need a more significant increase in demand or weather problem to likely pull through those levels at this time of year. The funds are also long these markets and should they start to liquidate and exit those positions, the fall in prices could be dramatic and fast. We also tend to drop harder and faster than we rally prices.

That means as producers you have a greater risk management concern. Be on top of your sales. With little to no carry in these markets, storage costs should be limited. The market is telling you it needs the grain now. The window for sales is getting smaller, with the potential for the river to close and as we get closer to winter when South American crops will be available.

Also, ahead in November we’ll see a new monthly Supply and Demand Report. On November 9th Russia will decide if the corridor for exports out of Ukraine should remain open. There could be a risk of a rail worker stoppage or slow-down. Also, let’s not forget economy concerns and the political impact of an election.

So, harvest could start to wind down, but marketing risks could go up. Don’t get caught in the day-to-day headlines. Stick to your plan and manage your risk with puts or if you want to own grain, buy calls for re-ownership. Be safe and try to enjoy the beauty of the season in between runs to the field and elevator.

cathy ekstrand
If you have questions, you can reach Cathy at cekstrand@s-pelmwood.com or visit www.TotalFarmMarketing.com.

Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Past performance is not indicative of future results. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.

Read more about
Loading...

Tip of the Day

Belt sander cart

Belt sander cart, Johnson The wet/dry vacuum that sits on the bottom shelf of this belt sander stand we built sucks up all sawdust and metal filings. The drawer on... read more

Talk in Marketing

Most Recent Poll

Will you have enough on-farm storage for harvest?

I just want to see the responses
45% (30 votes)
Yes
37% (25 votes)
No, it’s going to be a bin-buster
9% (6 votes)
Maybe, depending on yields
4% (3 votes)
No, I am looking at new bins or temporary storage
4% (3 votes)
Total votes: 67