Grain Exchange – 3-23-2021
Happy National Ag Day!
There has been a lot of grain movement in the countryside in the last month with the feel of harvest at the elevators. The heavy amount of logistical movement is what this market continues to demand and has been demanding since harvest last Fall. Trucks, rail and barges – as fast as they can be loaded and shipped to the end user the better. As of late there has been a lot of attention around the May to July corn. The May to July corn spread was around a 10-cent inversion last week and this week the spread is now at an 18 ¾ cent inverse. See this in Figure 1.
Now looking at Evansville cash price there has been a major difference in the basis from May to July. The basis is still encouraging the farmer to haul corn in July, but the better opportunity would be presented in March, April, and May before the futures contract switches to the July. Encouraging the farmer to sell soon than later. Also, there are always the additional costs to get that grain to stay in condition out to that time. Depending on your risk tolerance and logistic capacity you may not want to sell now and want to hold. The key tools to be using is HTA and lock futures in now if you are bullish basis, Basis contract if you are bullish futures, or simply a cash contract to secure bushels in a high price market environment.
Using Evansville as an example, but this holds true for most Countryside Landmark elevators.
Looking at some different graphics, in Figure 3 it displays May 2021 corn. There continues to be a steady trend of up and down days there has not been any extreme jumps in this market in the past month. Still a good opportunity to place offers so when the market hits a higher level the opportunity can be seized and capitalized on.
The next Figure 4 is new crop corn futures showing a cycle phase where the high was hit and now there has been pull back. It’s still presenting an opportunity to sell at a profitable level. Having the ability to sell at profitable levels is something farmers would have loved at this time last year. If bullish, get those offers in and let the market work to those levels. Also, do not let this opportunity slip to find a base to get started. I was always told never put all your eggs in one basket.
Looking at new crop beans in Figure 5, most of the beans currently are out of the countryside and have been for a few months. There are still some beans that trickle in, but the focus has heavily turned to new crop. New crop beans seem to reflect that same market cycle look like new crop corn. Presenting profitable sales and giving opportunity for the farmer to place offers in the topside. Using offers allows one to meet their marketing goals without having to panic sell.
The wheat market has been a monster of its own with large price swings, ups, and downs. When working with the farmer in the first wheat rally the conversation seemed too constant, they were all grateful to sell $5.00 wheat and now there is still the chance to sell $5.50 July wheat. Now that the snow has disappeared, there has been opportunity to see what the wheat crop is like. This is a determination for most producers to book more or to hold and wait. The way this market moves make sure you are utilizing all your marketing tools available.
Thank you for feeding our nation!