Highlights
December corn gapped higher last evening for the third time since the low was made July 22nd. None of the gaps have been filled as of midnight Sunday. Repeated gaps that are not filled are bullish, and more bullish. Take a look at the daily chart:
Wayne Bacon has been involved with international grain trade for 59 years and is highly respected by us young guys. His weekly comments on Saturday included this:
There were quite a few analysts who stated new crop soybeans and soymeal are underpriced and that there is no good reason for such a high premium on the old crop. Some experts did say that rather than have old crop prices drop, the new crop soybeans should move higher since the fundamentals for soybeans are very bullish for the new crop.
The Chinese currency, the yuan, traded below 6.9 yuan per US dollar for the first time in two years today. That means the yuan is getting stronger versus the dollar. That means US exports to China get cheaper for China simply because it takes fewer yuan to buy a dollar, which has to be purchased before China can buy US products. Think of a lot of soybeans and some corn...
This fact, if correct, will change input marketing in a few years. Agri-market researcher Lana Synkovska, who we found to be a reliable source of information, reports : 90% of crop protection products are forecasted to be off patent by 2025.
From a client Sunday afternoon on the Michigan/Ohio line:
Hi roger, our local fuel company sent their tanker to the “port or Refinery” to get fuel and there was none and had to head back empty. They say it’s going to get worse going into fall. Have you heard anything like this anywhere else?
My reply was “no.”
If you have encountered anything regarding access to fuel supplies, please let us know.
The following comments are in response to our article about how merchandisers set basis. The author is a client and former grain merchandiser.
Most of everything you say on basis is true.
But I was a merchandiser for 20 plus years. In an area where production was split between spring wheat, winter wheat, corn, and sunflowers.
At one time, I wrote a power-point called advanced commercial hedging.
One of the things a merchandiser can and should do is simply be more aggressive and work for the farmer. Although me and the general manager argued about it for years; as I said we always do what’s right for the farmer.
One way that I would do it is with spreads that would help hedge any basis position I was taking. Especially for the wheats and inter market KC-CBOT-MPLS
A bigger thing that should help merchandisers be more aggressive with their basis is delayed price grain. Which should give the merchandiser the ability to sell the inverse and give some of it back to the farmer.
If a farmer works with a merchandiser that is willing to do out of the box thinking it can be beneficial.
One last thing that was beneficial I was a part of was having producers that were big enough that I could go and back-to-back offers. So as a merchandiser and as a producer it is very important to know where one could buy things. Many times, there would be overnight business and I would get offers from producers that were 10-50 cents above my bid.
Many times, in tight markets, those offers got hit (basis offers) and we never came close to actually posting or trading
Spring wheat in particular for years would trade 10-50 cents and sometimes with the spot floor over a buck a bushel more than our posted price.
Market Update
This morning:
Crude oil is at $94.29, up $1.23
The dollar index is at 109.35, up 0.55
December palm oil is at 4,265 MYR, up 72. The contract high was made April, 29th at 6,384 MYR. Palm oil owns 36% and soybean oil owns 28% world market share.
December cotton is at $116.46, down $1.22 per cwt. The contract high was made May, 17th at $133.79 per cwt. Cotton competes with soybeans and corn for acres.
December natural gas is at $9.740, up 0.267. The contract high was made August, 23rd at $10.119. Natural gas is the primary cost to manufacture nitrogen fertilizer.
December ULSD is at $3.7815 per gallon, up 0.0126. The contract high was made June, 17th at $4.0719. ULSD stands for Ultra Low Sulfur Diesel.
September Dow Futures is at 32,082, down 181. The lifetime high is 36,832 on January 5th, 2022.
Rain Days Update
The Western Corn Belt has 1 less rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 2 less rain daysthan yesterday.
The 6 to 10 day forecast updated every day at: https://www.cpc.ncep.noaa.gov/products/predictions/610day/
Explanation of Rain Days
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