Grain Market Update – November

Aurora Cooperative 4 weeks ago

As I type, we are seeing a soybean market that is supported by less than ideal South American weather.  We started the week by adding weather premium to these markets, and word that China bought 20 US cargoes in the last week for the months ahead gave it another boost higher.  Soybean values have gained over $1.00 since the harvest lows just 4 weeks ago, and are less than 50c from the highs made this summer.  Corn, on the other hand, has leaked lower over the last week and are on the low end of a 4.70-5.10 range on Dec futures.

For those that listen to Brandon Hamer on his Bushel Up, I have the same advice: harvest is over, but there is a lot of decisions to be made now before we can take that well deserved break.  Main decisions would include:

  • This year’s grain marketing
  • Next year’s grain marketing
  • Crop and seed decisions
  • Fertilizer plans
  • Fuel needs
  • Banking and interest costs

Looks like a short list written here, but it is overwhelming and difficult to know where to start.  From an elevator manager point of view, interest costs are the greatest determining factor on what to do with grain.  I would challenge you to take the same vantage point and think about how much that grain is worth and compare that to what you realistically want to see for a return.   Next is to determine what can be done with the cash from that sale.

Ex.  NH3 right now is $835/t with prepay, cash corn is $4.80, 16 ac/t NH3 is about 100# N/acre, APH 225

$835/16 acres = $52/acre

$52/$4.80 = 11 bu/acre, or 5% of corn sold to finance some fall fertilizer

This idea can be used against any of the inputs or combination of.  This also breaks the daunting list of decisions into steps that can show accomplishment.  As one of these steps is cleared it is important to set a goal to help accomplish the next goal.  Firm offers on the grain are a great way to make those goals actionable – let our merchandisers help with some of it by watching those prices daily.  Even if you decide not to put them in as firm offers, bringing those prices forward may help merchandisers bring other contracts forward.  Additionally, on a year like this it helps to define a local/regional market; feeders are looking for corn and may hit some offers on small lots of grain to get by.

Mike Rennau

Director of Ingredient Trading