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Mark's Market Talk

September 21, 2020

Not sure where to begin this week as most of the news has been positive. Beans continued their rapid price accent last week finishing 47 cents higher. The Chinese made daily purchases prompting the funds to add to their already long position. It was predicted Friday that they are long the bean market an estimated 234,000 contracts. The record long is 254,000 set in 2012 and it appears they may exceed that this week. This is not the first time we have rallied hard into harvest, but it may be the first time we did it without a major crop issue limiting the supply. Right now, this is a demand led rally with China being the primary purchaser. Since harvest is just getting started yield data has been slim. We should see more yields this week and that can easily influence this market. A perceived reduction in yield would add more fuel to this rally as it could switch to a price rationing move. On the other hand, if early yields look to be better than expected it might be the news that starts a sell off that would put the rally fire out. It may not be the time to sell all your beans, but it is a good time to get some sales on the books. Local prices in the high 9’s look really good when just 2 months ago we were hoping to stay out of the high7’s.  Producers need to reward rallies and not worry about missing the high. A lot of people let that fear restrict their thinking during a fast rally and in the end, they will miss the high because it will come and go so fast. The corn rally continued last week at a snail pace compared to beans as it was 10 cents higher. The trade is still thinking we will harvest a large crop so even with a huge export demand they have been reluctant to get over bought. However, it could be a sleeping market right now and if early yield reports continue to come in on the low side, we may see corn catch fire during harvest. Many farmers are already looking to sell beans off the combine and stash their corn in a bin. With the increased bean income and another CFAP payment on the way this may allow them to sit on their corn for a while. We are already looking at an interesting basis situation in our area. The crop damage in central Iowa will have the Cedar Rapids market going out farther than normal to feed all their corn plants. The export demand will keep the river terminals going strong till freeze up. That means the local markets will have to compete with both factors to keep corn in the area. This all bodes well for farmers. Perhaps we have began the climb out of the darkness that 6 years of depressed prices put us in. If so, make sure you take advantage of the opportunities the marketplace is presenting you. We know in agriculture the good times never last as long as the bad times.  
Posted: 9/21/2020 1:25:13 PM by Rob Matherly | with 0 comments

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