Grain Market Update – September

Aurora Cooperative 3 months ago

Over the past few years, the most commonly used word by market analysts has been “volatile.” Volatile markets, volatile weather, and volatile input costs have been the talk of the town. However, over the past 45 days, December corn futures have been anything but volatile, trading between 5.00 and 4.70 every single day since 8/3/2023. We are currently near the low end of that range at 4.77. Most days, I’m talking to both end users and producers, and unsurprisingly, opinions vary. One phone call might think corn is too cheap, while the next thinks it’s too expensive – that’s why we have a market!

On one hand, we are potentially facing a 2024 carryout of over 2 billion bushels. On the other hand, early Nebraska harvest has not met our expectations. The USDA estimates the national corn crop at an average of 173.5 bushels per acre (bpa). While I can see this number decreasing by the time harvest wraps up, I can also argue that we could lose a similar volume in corn exports alone.

Beans have had a wider range. Since August 1st, November beans have traded as high as 14.09 and as low as 12.82. Currently, November bean futures are also at the low end of that range, 12.96. Returning to the topic of volatility, bean yields have been quite varied based on the conversations I’ve had. I’ve heard of near-record yields and some low single digits bpa beans already in early harvest.

Both corn and bean futures have the potential to pick up some action as harvest starts. We have officially taken a new crop load of both corn and beans at every location, and harvest is approaching full speed almost everywhere. To protect against the risk of futures sliding lower but still leave the opportunity to take advantage of a futures rally, producers may want to consider locking in a cash price today and buying a call option to capitalize on that rally. Options are currently relatively cheap, (due to lack of Volatility) a December 5.00 Call could be bought for around 7c during the trade hours today.

We want to wish you a very safe and successful harvest season. If there is anything we can do for you, as always, let us know.

Sam Johnson

Hedge Desk