Market Update in Preparation for Planting

As the new year gets underway and preparation for planting season begins, having a trusted partner and resource is prudent in the development and execution of a 2018 marketing program for your operation.

According to Advance Trading Inc. (ATI), crop insurance is an integral part of a comprehensive production plan, but it should be incorporated in conjunction with a risk management strategy that provides market flexibility. Since February is the established price projection time period for 2018 corn and soybean crop insurance, be sure to consult with your Big River manager or merchandiser for the proper risk management strategy for your operation.

ATI has provided the initial insights into crop insurance price projections for the month of February with corn being forecasted to be the average of December 2017 corn futures, while the average of November 2017 soybean futures will generate the projected price for beans. December corn numbers could be near where they were in 2017, while November soybeans could be slightly lower. There could be much change, however, over the next several weeks considering the crops in South America are at a critical point and the weather is uncertain.

It’s also important to note that corn and soybean projected prices have been trending lower in recent years as yields recovered following the 2012 drought. Since 2013, the national U.S. corn average corn yield has increased 11.7 percent while the national average soybean yield has risen 11.2 percent.

Other current market news provided by ATI can be found below and is important to take into consideration when developing and executing your marketing plan.

  • USDA at its annual Agricultural Outlook Forum on Feb. 22–23 will release updated U.S. balance sheets for 2018/19.
  • A few well-respected sources think the USDA will need to lower its Brazilian corn forecast in the coming months.
  • Recently there has been selling pressure for soybeans from Brazilian producers.

To continue strategizing the proper market program for your operation and learning how Big River can service your needs, please contact your local Big River elevator.



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Market Update October 2017

The monthly October USDA report surprised the market with a 2.1 BPA higher yield for the U.S. national average than what analysts were estimating. According to Advance Trading Inc., there is an adage in the grain trading industry that a “big crop gets bigger.” The same however, did not ring true for soybeans as the yield came in less than expected at 49.5 BPA vs. 49.8 BPA estimated and 49.9 BPA in the September report — which rallied SX17 futures 27 cents and left the industry wondering what the USDA would do in the November report as harvest really has just begun to heavily progress across the Midwest.

ATI suggests that uncertainty within the market can be turned into opportunity by implementing a disciplined risk management strategy. Other current market news provided by ATI can be found below and is important to take into consideration when strategizing to combat an uncertain market.

  • Trust the market: prices are cheap right now during harvest relatively speaking and the CME is paying farmers to carry most commodities to a later date. For example, CZ17/CN18 spread is at a 29c carry and SX17/SN18 is at a 37c carry — futures are telling us they want the commodity “tomorrow” but that doesn’t mean prices can’t go lower yet! Use storage, but don’t forget that the USDA and even world balance sheets are telling us there are plenty of corn, beans, and wheat to go around this year.
  • Rice harvest in the U.S. is 91 percent complete.
  • Rice futures prices are expected to remain sensitive to potential developments that surface from the ongoing NAFTA discussions in Washington, D.C.
  • Through Oct. 13, the 2017 crop insurance harvest price for December 2017 corn futures has averaged $3.4953.
  • Through Oct. 13, the 2017 crop insurance harvest price for November 2017 soybean futures has averaged $9.7015.
  • Mid-October corn export sales are coming in strong, but many experts believe the USDA is overshooting exports as the U.S. continues to remain uncompetitive compared to South America and the large corn crop we saw grown down there this past year.
  • Mid-October soybean export sales show increasing demand with China being the biggest buyer, and hopefully this demand continues to ramp up into winter.
  • Weather indicates that mid-October will be a huge harvest week for the Midwest region in corn & soybeans as we are currently 28 percent harvested on corn (47 percent average at this time) and 49 percent harvested on soybeans (60 percent average).
  • Barge freight was high due to hurricane issues, soybean harvest, and low water levels but has since become stable with plenty of barges in the system. This is what drove basis down early this marketing year and again has since stabilized.
  • Soybean market strength is timely for producers with peak harvest expected. South America is expected to grow another large soybean and potentially corn crop that they are planting now, so despite lower prices, continue to take advantage of rallies and low volatility (options are cheaper than most year) to manage your portfolio.

ATI further explains with the market continuing to shift and with a larger 2017-18 corn/bean crop, this type of uncertainty could make it very challenging for producers to succeed without a risk management plan in place.

Having a trusted partner and resource can help you create and implement your strategy for your operation. Be sure to stay in touch with your Big River manager or merchandiser as the market continues to unfold.