1/22/18: Mark's "Market Talk" Blog

We finally ended a week with both corn and beans higher. March corn was 6 cents higher and March soybeans ended almost 17 cents higher. There may have been several reasons for the advances.

On the corn side the weather subsided enough to let the ethanol plants return to full production. Export business for both ethanol and DDG’s have increased a lot in the past few weeks. For those that are using DDG’s locally we have found the supply tighter and the price higher. Lower priced corn and meal have reduced the advantage to include DDG’s in hog rations so some producers are dropping it out.

Corn basis levels have narrowed in some locations as cold weather and a lack of desire to sell corn has many farm trucks parked. However it was interesting how much corn started flowing this week when producers were given an extra 10 cents from a higher board and tighter basis.

Farmers continue to hold a large amount of corn captive. At some point as much as 50 percent of these bushels will need to move before midsummer. Spring crop expenses will push many to raise cash from their bins. The carry into summer just isn’t there this year as end users are looking to buy grain now and worry about the summer months later.

The funds are still quite short the board on both corn and beans. This should set us up for some good rallies but there is a reason they are big time short right now. These fund managers spend all day studying numbers and forecasts and right now most of what they see is negative so they have to ask why we would want to own a position at this point.  Farmers on the other hand spend most of their time figuring out how they can raise more bushels per acre. As a group producers need to spend more time watching the markets and capturing the extra nickels that are out there from time to time.

Friday morning beans were up almost 10 cents for a short time. Those that grabbed that price got a 6 cent bonus for the day as beans ended up closing 4 higher. 6 cents may not buy much but it might give you bragging rights to the best sale of the week. In some neighborhoods that is priceless.

The strength in  beans this week was led by stronger meal prices. The weather in South America remains a question mark but today it appears the good areas will make up for the poor crops in some areas. They still have a couple of months or so to finish this crop so there is still time to lose some yield. There is also time for better weather to make bigger yields.   

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