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Highlights, Jake Kubela, Weather, Markets & Rain Days Update 12/24/22

Hello everyone, my name is Jake Kubela with Kubela Hedging in balmy Wahpeton ND. Its -15 with a 40-mph wind outside. Dang near shorts weather.

I want to start by saying that I am humbled Roger gave me the opportunity to write his morning newsletter while he was away. I don’t typically write a lot of commentary, because there are people like Roger that do it so much better that I can. Besides that, it’s not where I provide the most value to my guys.

I was born and raised in ND and have been around farming all my life. I am an active participant in our family farm South of Wahpeton, ND. I was an Ag Lender for 12 years, and a Grain Marketing Consultant for 5 years. Basically anything that keeps me as close to the farmer as I can get.

My company Kubela Hedging LLC was founded because I saw a need that farmers were looking for simple, effective, and most importantly transparent marketing guidance. They wanted someone that would use simple tools that they could understand. If they didn’t understand, they wanted someone who would take the time to teach them, not just sell them on the position. They didn’t want a broker that would try to speculate the market and increase risk. There is already enough risk in farming.

There are a lot of brokers out there that give out sell signals and recommend complex futures and options strategies that the farmers don’t really understand. Combine that with the liquidity needed to fund those positions and the potential for a margin call once the position is in place. It was very intimidating for a lot of guys, so they just would get any help.

There was a disconnect between what the farmer wanted versus what they were getting, but they didn’t know of any alternatives to that model.

Kubela Hedging’s focus is on the following:

  1. Using market knowledge, technical analysis, and opinions of people we trust (Roger Wright) to help us make better selling decisions.

  2. Creating marketing plans that take estimated breakevens into account to help create farm accountability when sales opportunities arise.

  3. Utilizing our unique cash tools to help us separate futures and basis on sales to maximize both sides. They also give us the ability to keep upside/downside if we see the need.

  4. Utilizing carry in the market to create a return to storage on farm stored bushels.

  5. Utilizing bushel volume in geographical areas to help push basis.

  6. Working with a small number of clients per consultant to make sure that we know each operation on a deeper level to help them maximize their strengths.

  7. Helping our farms reduce stress levels when it comes to marketing by helping execute all of the above.

We do not use futures and options accounts. Our cash marketing tools allow us to sell without the risk of margin calls or expensive position costs. They make it easier for our customers to understand what we are doing and create a level of transparency that our customers are looking for. We are still able to be flexible when selling and do most things that we could do in a futures account without the margin calls or upfront position cost.

We are unique in the service we provide, but also in our experience and passion for your operations. My life’s work has been helping my farms exceed their goals, and I hope the good Lord allows me to do that until I choose not to.

 

Highlights


The morning weather maps reduced rains for Argentina again this morning which is mostly a bean story. These maps were the same reason that the markets were pressured yesterday when they came out and called for more rains in Argentina. Lower volume due to the holiday season created more volatility, which is why there was a 10+/- cent move each day. It looks like dryness is scheduled to return for Argentina.


Below zero temperatures dropped all the way to Texas and Oklahoma which will likely kill some winter wheat. The expanding drought, crazy cold temps, and continued stock reduction might make for an interesting wheat market.


The USDA announced the sale of 124,000 MT’s of soybeans to “unknown” and 150,000 MT’s of corn to Mexico.


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