While devastating flooding takes place in the Midwest it has a ripple effect on the market. Full losses in livestock and grain are not yet known—and could take even a year to uncover—but there are key factors to watch in the market even now.
Ethanol: “Pay attention to what’s taking place with ethanol capacity,” says Angie Setzer, vice president of grain for Citizens LLC in Michigan. “A good percent of production is offline or damaged in the short-term and because of that we did see ethanol futures jump mid-week and help margins for plants not effected.”
Logistics: “They can’t ship grain if rail is damaged,” Setzer says. “There are significant logistic disruptions and how that plays out is yet to be seen and it could affect basis. The Mississippi River is expected to see major flooding and it’s a significant grain mover—what does that mean for export ability.”
Destroyed stored grain: “The million-dollar question is how much grain storage is impacted and what does that mean,” she says. “You can’t blend off flooded grain. Nebraska stored grain in bags at record levels, how much of that has been lost? Nebraska is estimating $440 million in crop losses.”
While the weather might not have a big effect on the markets yet, it likely will.
As with every year, the excitement for planting season begins to build in March. With planting right around the corner, farmers are finalizing their 2019 crop plans. The goal of every farmer is to get the most economical yield possible from their crop. Most of the time, the financial woes of the previous year are forgotten with the optimism for the new season. However, because of the current state of the agricultural economy this year may be a little different. Over the past few years there has been a significant reduction in the availability of capital. Some farmers are realizing that they may not have the funds available to obtain the most profitable crop. By utilizing your Ag supplier and the special financing programs they can provide; will be of value to you and your business.
Verity Business Solutions, LLC is here to help. Verity has partnered with Landmark Services Cooperative to provide crop operating loans that will help you maximize every acre. Because of our relationship with Landmark we understand production agriculture. Verity understands the fact that sometimes things come up in-season that will make the difference between a good year and a great year. Landmark and Verity are committed to provide our members with the competitive advantage. By working together, it sets them apart from their competition to provide a wide array of financing options.
Verity currently provides Landmark Services Cooperative members with Crop Operating, Machinery, and Real Estate loans, along with Leasing and Crop Insurance. Whether it is helping you determine your breakeven or providing a Crop Operating loan to get that extra 10 bushels, we are here to provide solutions. Whether you are a dairy producer or a crop producer, Verity along with Landmark have options along with programs to fit your needs.
Milk prices are forecasted to be about $0.60 per cwt higher than originally projected by USDA in the March World Agriculture Supply and Demand Estimates report. The all milk price has been elevated from an average of $17.00 to $17.60 per cwt. The price was elevated after USDA projected less milk to be produced.
Exports of U.S. dairy were up 9% by volume in 2018 compared to the previous year, setting a record according to the U.S. Dairy Export Council (USDEC). The sales value was up 2% from 2017 reaching $5.6 billion and putting the U.S. as the largest exporter of cheese in the world.
Despite those gains exports end the year on bad note. In December, sales volume declined 21% and the value of sales fell 9%. November saw sales volume was drop 12%, while fourth quarter 2018 sales volumes ended the year down 11%.
Yesterday saw heavy fund selling that pushed the markets sharply lower with beans leading the way! Corn and wheat slide lower following the beans as the funds baled and went to the short side of the market. The Argentine Peso is at a record low vs. the dollar. The fall in the South American currencies has the effect of raising the price of soybeans to their farmers since world soybeans are priced in dollars.
Weekly ethanol production fell by 29,000 bpd to 975,000 bpd. Ethanol stocks were unchanged at 24.4 million barrels, but still an all-time record. Margins fell 4 cents/gallon to a positive 3 cents/gallon. Weekly production this marketing year is down 1.7% from a year ago levels. Many anticipate a cut in corn for ethanol usage on future S/D balance sheets.
High-level U.S. officials, including U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, are headed to China today to resume trade negotiations between the two countries. Earlier this week, Lighthizer told reporters: “If there’s a great deal to be gotten, we’ll get it. If not, we’ll find another plan.” And President Donald Trump told Republican lawmakers on Tuesday that the U.S. will settle for nothing short of an “excellent deal.”
Corn prices dropped yesterday around 1% on technical selling and positioning ahead of Friday’s USDA reports. May and July futures each lost 3.5 cents to close at $3.73 and $3.83.
Soybean prices yesterday for May and July futures both tumbled 13.25 cents lower to land at $8.87 and $9.01.
Wheat prices firmed slightly yesterday on general U.S. export optimism after Russian supplies have tightened somewhat. May Chicago SRW futures ticked 0.25 cents higher to $4.69.
This year has seen a record amount of marketing plans put together for our customers by the grain marketing staff at Landmark. We are the best at what we do, so give one of us a call to help put a plan together for your specific operation and financial needs.
Welcome to planting intentions and quarterly stocks report week! The market is quite ahead of this so far. The last two years we have seen a big shift to soybeans from corn. The market is indicating more corn acres (91 million acres) and less beans (86 million acres). With the weather, time will tell the true story and maybe the June 28th report will be a more of a market mover. Make sure to have offers in on both corn and beans.
Corn has been quietly moving up; a couple of cents a day add up. Make sure to be selling or offering old crop, new crop and Fall 2020. Selling at a profitable level never makes more sense than in this market environment.
Beans continue to trade all over. Exports still behind the average needed to meet the UDSA estimates. We need to pace 33.5 million metric bushels through the end of August. Typically, we export 24.5 mmb going forward for the rest of the marketing year.
Wheat continues to move up on the board. We wait to see if our crop in this area will grow with our late planting and extreme conditions. If you have wheat or are planting wheat this fall, make sure to get offers in. Wheat trades faster than beans these days.
Thursday and Friday this week will see the USA meeting with China again. USTR Lighthizer, Secretary Mnuchin and Vice Premier Liu are meeting. So, the end of the week will be full of surprises and a lot of unknowns. Make sure to have offers in and working for all crops!
This week’s soybean export sales numbers where a disappointment as China bought just 142k tons of old crop and cancelled 65k tons of new crop. Rabonbank estimates China’s pig herd fell 15% in 2018 and their 2019 pork production could fall 20% and predict China will buy two mmt of U.S. pork in 2019 which is double this year’s number. China says top U.S. trade officials to visit Beijing March 28-29. Trump says U.S. ‘will never catch up’ without a great trade deal with China. As Trump speaks on enforcement of the China trade deal. The focus of conversation seemingly is switching to the EU. As the EU wants to exclude Agriculture from a trade deal. EU is positioning, saying a deal with the U.S. could lead to lower food standards because American products aren’t safe. We as American agriculture producers know this to be just untrue and a U.S. trade representative calls this “non-science-based” and “backward-looking”.
Flooding in the Midwest continues to hamper grain movement as reports of $1.5 billion in damages have occurred in Nebraska alone. EPA is likely to grant partial waivers from U.S. biofuel laws for 2018. Nebraska and Iowa spot ethanol margins are now in the green.
Spring is coming in like a lion, hopefully that means there will be calmer weather ahead. Although market chatter has been somewhat dull there are a few topics to talk about. As you know across the U.S. major flooding is occurring. Corn, beans, and wheat are up just a smidge this morning. Then there is South America’s harvest. All of which can drive the markets and here is why.
Flooding through the Midwest and the South have turned tragic. The South is having issues getting corn planted. If corn is not planted in the south, they will be forced to plant other short crops like beans or cotton. The Midwest is seeing flooding as well, but thankfully there is still time to dry out before planting season arrives. There are a few ways flooding can affect the market. One way is less acres of corn planted therefore driving price of corn up. Also, more beans planted driving bean price down. The impact of this “weather scare” typically will not reflect in the market until July time frame when agronomist start predicting yields.
Yesterday prices were down after a pretty strong ending to the week last week. This morning prices are up just a little. Corn is up a penny for current price through fall. Beans are also up a penny for current price and fall. Wheat (SRW) is taking about a nickel jump north. While markets are up, it is the time to continue forward contracting grain. We have seen countless time this year markets are up slightly and then plummet down, especially on beans.
R.J.O’Brien released updates for South America. Although there was somewhat of a drought in Brazil this year their numbers are still looking promising. Above average on soybeans harvest, not good for our record high Stocks. 1st crop corn harvest is above 2018 so far. To top if off, South America is starting 2nd crop corn planting.
Although there could be some drivers for the markets both positive and negative, don’t forget to stick to your marketing plans. Your marketing plan should be designed to beef up your average price on grain, not just hit highs. If you do not have a marketing plan contact one of us and we will help you create one.
Our goal is to do what we can to help our customers save on feed costs. Watch John Schmidt, Business Development Manager at Landmark Services Cooperative, explain the features of the Fall River Commodity Facility. Landmark is able to trans-load bulk commodities off the rail into the facility and direct ship to farms, customers or other feed mills.
Currently all markets are trading higher. Reports are coming out that Trump/Xi won’t be meeting until April at the earliest. There is a huge storm system moving across the middle section of the country with high winds in some areas, blizzard conditions to flooding in other areas, making our weather look fantastic. Trade will start focusing on weather. The weather looks to be drier for much of the U.S. next week.
Corn prices are trading higher this morning. Export sales out this morning were disappointing at less than 15 mln bu. There have been some rumors that China may purchase more that 3 million metric tons of U.S. corn. The last time China purchased more than three million tons was in 2011/2012 crop year.
Soybeans are holding up a little today. Export number was on the high side of estimates. Some are talking of a U.S. and China agreement coming in the next three weeks. The markets are slow to react to China news and are waiting to trade when it actually happens.
Wheat is significantly higher today. Wheat is seeing some upside movement mainly on technical maneuvering.
Our Average Price Contract deadline for Soybeans and Corn is Friday, March 15th. Keep working with your grain marketing specialist with putting in offers and getting some new crop bushels sold. Take a look at our specialty contract for some of your bushels. Things may get volatile as we get closer to planting season and offers are a great way to capture a profitable price. We look forward to working with you. Have a fabulous day and stay safe.
Forecasts for the week are bringing more precipitation to the southern Plains and the Midwest. While many of us are welcoming the warmer weather, we are also bracing ourselves for flood like conditions as we expect more rain and the meltdown of piled up snow. The extended forecast is calling for dryer weather toward the end of March and above average temperatures in the Great Lakes Region. Planting in the South seems to be below average as cold weather is slowing down farmers in Texas.
Grain markets are neutral to higher on this turnaround Tuesday as markets are trying to rebound from the lows that hit yesterday. The U.S. corn market is still struggling to improve as there are much cheaper sources for corn around the world.
Soybeans also hit new lows in the overnight trade and are having more trouble than corn rebounding into the morning trade session. News of phone conversations between U.S. and Chinese negotiators hit the stands this morning, but we’re still not expecting a deal to be made before President Trump and President Xi are scheduled to meet later in March. Chinese exports are already running 20% behind the projection that the USDA released on the March 8th report as China accounted for just 14.2 million bushels of year-to-date shipments.
As we get closer to spring, continue to get your orders working to price old and new crop. If we can help with anything, give us a call!