Market Commentary > Weekly Crop Commentary

Weekly Crop Commentary

Jan 17, 2020

Ed Nienaber
Vice President, Grain Division

The US-China Phase one trade agreement was signed this week and such China will begin to lift some tariffs off US good. In addition, the USMCA fair trade agreement with Mexico and Canada (replacing NAFTA) passed in the Senate this week and is awaiting President Trump's signature to go into law. Both agreements will open opportunities for the US to trade agriculture products with these countries, it believed to be a fair market value environment. The trade has not been as supportive in the short-term, wanting to see the action of the agreement go into place. “Show me the money”, the attitude seems to be the reaction as we’ve lost twenty cents in bean futures this week and corn has been selling off as well. As of noon today, corn is working back to unchanged on the week. Continued concerns of adverse weather and when we see adjustments made to S/D due to corn crop that hasn’t been harvested yet in the northern corn belt factors into the market. The corn basis continues to look steady as bushels find there a way to cover nearby demands. Soybean seems to have some support with continued barge demand and soymeal premiums running better than expected. Bushels continue to flow into the market place at a better clip than normal for January due to the unusual fall/spring-like weather we have been experiencing. A final note; it sounds like the third round of MFP payments will be coming out very soon according to Secretary of AG., Sonny Perdue.

Wes Bahan
Director of Grain Purchasing

Good afternoon all. What a wild week we have had. Last Friday we had a multitude of reports. Grain Stocks, World Supply and Demand, and 2019 Production summary. Then on Wednesday of this week, we had the US and China sign phase 1 of the trade deal. None of these things had a positive reflection on the Corn and Soybean markets. Corn carryout for this year is still expected to be 1.892 billion bushels, and likely to grow a bit more if exports can’t start picking up quickly. We did see an upward adjustment to corn usage for feed, which wasn’t unexpected. If we look at Ohio our corn usage for the first quarter of the marketing year was down 77 million bushels from last year, and the lowest usage since 2002-03. This would make sense with the loss of production and the slowdown in ethanol production for the period. We have seen ethanol production rebound in the second quarter, but if we don’t continue to see local demand rationing we could be deficit corn in Ohio this year. Soybean carryout for the year is seen at 475 million bushels. This is very comfortable, but still a smaller carryout than last year. NOPA crush for December was released this week, and it was a record for the month. There were 174.8 million bushels of soybeans crushed during the month. This stands second only to October 19 crush at 175.3 million bushels. Our region of OH/IM/KY/MI saw an increase of 2.5 million bushels of crush from last month and 2 million bushels more than December 2018. Even with this news, our Ohio bean usage was the lowest since 2002-03. It would appear that we are exporting fewer beans from our state than years past. The wheat market just continues to chug right along as the dryness in Australia continues, and Russia this week issued export quotas so their domestic market does not get disrupted. We are seeing some green on the screen after the real beating that we witnessed in the last 2 days. We do have a market extended weekend as Monday is Martin Luther King Jr Day, and thus no markets and government offices will be closed.


Lou Baughman
Region 1 Grain Merchandiser

“Phase One” of the tariff agreement is signed, the market wants to see some purchases. Brazil is looking at another record crop and they also have a freight ad-vantage plus no storage making it more affordable for China to buy from them. Something that caught my attention it the trade agreement, either side has 60 days to opt-out of the agreement, I don’t see that happening but you never know what China will do.
The third and last round of MFP payments are going out, Sonny Perdue said not to count on anymore for the coming year because of the trade agreement.

The market got a little bounce late this morning after a horrible two days of trading, dead cat bounce it seems. Have a good weekend and be safe.

Lisa Warne
Region 3 Grain Merchandiser

Well, we waited what felt like forever on the signing of Phase 1 with China and the traders were not impressed when the ink dried. The figures of $12.5 billion in 2020 and $19.5 billion in 2021 over the 2017 baseline were about as expected. Those numbers had already been priced into the market, so there was nothing to get excited about. As the agreement was dissected, phrases like “based on market conditions” made traders even more skeptical of China’s commitment. There is nothing in the agreement indicating timing, meaning these purchases may not happen anytime soon. I’ve seen several brokers mention that a good portion of those purchases may wait until the new crop this fall. 

Here at noontime today, the corn market does seem to be recovering from some of Thursday’s hit. However, the current lack of bullish news will restrict any large rallies, especially with Brazil looking at a potential record soybean harvest and near-record corn harvest.

Ralph Wince
Region 5 Grain Merchandiser

Good Afternoon, the long-awaited China Phase 1 agreement was signed on Wednesday and the grain markets were not excited at all. Shortly after the signing was announced we saw the bean market drop off .13 cents. Corn held off until Thursday and then March corn was off .12 cents on the day. That was corns biggest 1 day loss since the August Crop report from the USDA. Right now corn is back up .06 cents as I write this. The corn funds have worked their short position out to over 100,000 contracts short as of this morning. The bulls are having a hard time finding something to grab on to. With the carryout on corn sitting at 1.892 billion bushels today and talk of increased corn acres this spring, it is hard to get the funds excited at this point. Beans are facing a very similar story as we march ahead. The next big report from USDA that will hold any weight with the markets doesn’t come until March 31st when we get another update on Quarterly Stocks & 2020 Prospective Planting Reports. Corn basis has stayed steady here in the east but all you have to do is look in the western part of the state and see that basis has softened on corn. Bean basis has also been steady with CIF values hanging in there and processers keeping there bid strong as well. Give us a call and let us talk about putting some targets in. Have a great weekend!!!

Steve Bricher
Region 3 Grain Manager
We will have to see if the government makes a liar out me or if my crystal ball has some clarity. This was the last line of my article last week. I do think we have some clarity in the markets today. We had the Phase 1 of the trade deal signed this week. I was discussing with a colleague before the signing that this may be a good week to sell the rumor and buy the fact. The grain markets have not reacted well to the facts that we have seen from the agreement.

When looking at price objectives over the years I can say that I am very fundamental. It always gets back to supply and demand. We see local cash basis at some of the highest levels we have seen in my years in the industry for this time of year. The lack of corn acres in the eastern Corn Belt has pushed basis levels to well over historic levels. We have seen corn able to move from the west to the east because of this. The crop report told us we have adequate corn and soybeans, it will be a matter of basis to get corn and soybeans to where they are in shorter supply. When looking at price targets we have to be realistic at how much this market can move. If we plant what the market is projecting today and we have anything close to trend line yields, it will be hard for prices to move higher in the long term.

The market always gives a chance to sell our crop at levels that should make us money, the question will be, do we take advantage of these when they present themselves or do we hold out hope for something to happen to someone else that will make the market work higher. Hope and pray is not a marketing program; setting down and putting together a pricing plan will help you take the emotion out of your marketing decisions, and more than likely make your average selling price better.

Read More News

Jan 10, 2020
Crop Report Highlights
Dec 10, 2019
Heritage Cooperative Named 2019 Outstanding Retailer
Nov 13, 2019
Mid-Week Grain Wire