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November 4, 2019: Mark's Market Talk

November 4, 2019

We have turned the calendar forward to November, gotten our hour of morning light back, and harvest drags on. The common theme all fall from producers has been that they can’t wait till this season is over. It seems they have had to fight not only the weather this year but also trade wars, ethanol waivers, and global competition. The fall weather to this point has been challenging to say the least. Good bean cutting conditions has been limited in our area. We also have lots of late planted crops that have been slow to mature which is delaying harvest even more. We are due for some better weather, lets hope it comes soon. The markets this past week were lackluster. December Corn and Jan beans both ended the week up 2 cents. Local prices advanced a little more as basis levels improved for both crops. We have a strong domestic demand right now and with slow farmer sales the end users are bidding up to get needed supplies. It appears the industry in general is not overly bought for future delivery. This should keep basis levels stronger than normal for the near term. The funds are still looking for a reason to get bullish. The lack of positive news of late has the board of trade in a holding pattern. The USDA releases their November report this Friday and all eyes will be on the yield numbers for both corn and beans. If they lower the yields as expected it might be the boost, we need to ignite the markets. However, if they don’t do this it will take a signed trade agreement plus better enforcement of the RFS to move us higher. Corn exports have really dragged this fall as we are currently priced too high in the world market. Argentina is our biggest corn competition and they are hard up for money, so they are willing to price their commodities wherever they must to move them. With a new government taking over this may change as they increase export taxes to raise money. The US is the most proficient producer of grain in the world so given an even playing field we should be the best priced also. This past week the USDA released their baseline projections for next years acreages. They currently predict US farmers will plant 94.5 million acres of corn and 84 million acres of beans. If you put trendline yields against these numbers and use current usage numbers we get a corn carryout of 2.754 billion bushels, ouch. The bean carryout would be a more manageable 518 million bushels which is still too high. A lot can and will happen in the next year but the take away from this is producers need to be looking to start marketing some 2020 crop if the opportunity to do so profitably presents itself.
Posted: 11/4/2019 6:00:00 AM by Rob Matherly | with 0 comments

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