Weekly Crop Commentary - 10/6/2023
Oct 06, 2023
Vice President, Grain Division
Good afternoon. Everyone seemed to get a good run of beans this week and yields have been somewhat better than anticipated. That is a welcomed sight as the flat price continues to work lower as harvest pressure continues to weigh on the market. The export market continues to be lackluster at best. River conditions are still working at record-low water levels, causing freight to continue higher. Sales of beans to foreign destinations continue to be weak as cheaper Brazilian beans continue to grab market share, but there is beginning to be a backlog of ships waiting to load, making us an attractive alternative if someone needs a quick ship vessel. The weakness in the export market is starting to spill its way into the domestic market as an influx of beans and crush margins are under pressure.
Corn seems to be a different story as many of the ethanol producers are paying a hefty premium for bushels delivered this week and next. Once we get into the meat of corn harvest this too will go to the wayside. The question is what happens once harvest is over? Do we see bins get locked up waiting for a more attractive flat price? Everything has a number, we just need to find the number that makes this all work. We did get some much-needed rain last evening and the newly seeded wheat crop will make good use of it. Wheat acres look to be much lower than last year as the price just isn’t enticing to the producer. As harvest continues and our markets continue to be one-dimensional I would look for basis to continue to weaken. As always have a great weekend and safe harvesting.
Director of Grain Purchasing
Happy Harvest! The majority of our western OH customers hit the ground running this week on beans and made decent progress until getting rained out yesterday afternoon. We had about .04” up my way close to Kenton. Average yields appear to be in the 55-60+ range. SX3 continues to struggle this week due to harvest progression, low river levels, and less than impressive demand, despite having decent export sales yesterday. CZ3 also failed to reach and push through the $5.00 mark today, which makes me wonder if we’re going to continue with our range-bound trend for a while yet.
One of the big topics in question is how South America’s growing season is going to progress. Currently, it’s dry in Argentina, but wetter in Brazil. Time will tell and as we know in the US, weather forecasts change on a dime, so be prepared to take advantage of any rally opportunities that may present themselves over the next few months. A reminder that markets will still be open Monday, despite the Columbus Day holiday and the October WASDE comes out next Thursday 10/12 at noon. Wishing you all a safe and bountiful harvest!
Grain Merchandiser, Marysville (Region 4)
It’s been a great first full week of harvest at Marysville. The beautiful weather allowed us to receive nearly 25% of our expected soybean harvest bushels and we’re shipping some of them out on a train today. The dual probe lanes and the new CompuWeigh system are working efficiently to get you back to the field as quickly as possible. Everyone I’ve spoken to has been very happy with yields and I’m going to guess the counties around here are looking at a record year for soybeans.
We published our Harvest rates for this year, including Delayed Price, Open Storage, Grain Bank, and Deferred Interest. They can be found on our website here: https://www.heritagecooperative.com/grain/rates-discounts. Don’t forget that grain settlements are not processed until requested, so be sure to let us know when you’re ready. To keep up with harvest hours, you can ask your branch to add you to their text distribution list, or you can download our app where hours are posted near the grain bids section. Continue to be safe out there and we’ll see you soon!
Grain Merchandiser, Canfield (Region 5)
Good afternoon, bean harvesting was starting to ramp up here in the eastern area of Heritage through yesterday but we had some rain overnight and we have come to a halt for a few days now. Yields that I am hearing seem to be between 55-60 bu per acre. There is that occasional 65-70 bu per acre but that doesn’t seem to be the norm.
I wanted to spend a little time this week to talk about what your options might be if you don’t have your corn and beans contracted ahead of harvest this year. With DP rates higher than we have seen for a while, the question I keep getting asked is what should I do? The first thing is that there’s no silver bullet out there to say this is the magic answer. But what I will also say is that there are a few different ideas that we can float around.
Everyone’s situation is different and there’s no one answer that fits all, but we do have some options. The first thing to consider is the cost of money. The last number of years money cost has been cheap, and we all know that has changed so we need to look at things differently today. Secondly, what options do we have? I’m not going to try to explain any of these in detail. But I would like to at least plant the seed for each of you to have some things to think about and then you can call and talk to us, and we can explain in greater detail.
Our first option would be a “Basis Contract”. That’s where you set the basis but the CBOT is left open to price at a later point in time. Our second option is a “Flex Floor”. That is where we have a floor so that you don’t go lower but may go higher over a specified period of time. There is a cost to this one. Our third option is a “Flex Floor with A Bullet Call”. It’s the same as a “Flex Floor” but has no cost to you the farmer but it is possible that you MAY owe some bushels for next year’s crop. Next would be a “Price Plus Contract”. This is where you spot-sell the grain when it comes across the scale, but we can sell a Call Option and add some to your flat price. Next would be “Minimum Price”. We set the floor on the crop when it comes in and can buy a call option and if the CBOT goes higher you can participate.
If you want more details on any of these options, please give us a call. Have a great weekend!!!
Read More News
USDA’s World Agricultural Supply and Demand Estimates (WASDE) report was released on September 12th and supplied some unexpected changes.