Grain Market Update: Trade Talks, Stocks Report & Marketing Options

Zack Gardner 
Grain Marketing & Origination Specialist
 

A Quick Market Update

• President Trump’s Meeting with President Xi Jinping of China: The Trump and Xi meetings have just concluded and, so far, there has been no mention of China wanting to buy U.S. corn (yet). The “trade truce” was extended to January, but that just means China will continue buying their commitment of 25 MMT of new crop soybeans. As we sit today, they are roughly half bought on that commitment. There was mention that more details may be released in the coming days on certain goods that will have a “carveout” and not be subject to any future tariffs.  
• September 30 Stocks Report: After the meeting between Trump and Xi, all eyes will turn to the USDA’s stocks report at the end of the month. Based off what the cash market is telling us, I am expecting higher old crop corn stocks which could send us into a typical harvest lull for prices. Some of my reasons for thinking this is because we have a really low Mississippi River basis, implying low export demand for corn, as well as a lack of rail bids for September and October, which implies the beef belt doesn’t need our corn as they have higher old crop stocks out west from last year’s good yields. As for soybeans, some of these recent September basis levels tell me that the pipeline has run dry and we are out of old crop soybeans, so prices could get crazy if the USDA lowers soybean stocks on September 30.

Marketing Options

This marketing year has been one for the record books! It's been as clear as mud with high volatility and full of black swans. So, here are some marketing options to help.

• Cash Sale: This is a great tool if you’re feeling undersold and just want to reward the market while both corn and soybeans are significantly above the prices we saw last year at this time. This is also a great way to generate cash and pay down interest.
• Offers: If you’re not liking today’s cash prices, we can put in an offer for a price that you would be happy to sell at. Offers also work in the overnight sessions while China trades and we sleep.
• Storage/Price Later: If you don’t want to sell at today’s prices, we can utilize open storage or price later. Both are similar in that they come with a monthly fee, but have some slight differences in shrink and ownership of the bushels that should be considered when choosing one over the other.  These two strategies also allow producers to potentially capture both higher basis and futures prices post-harvest.
• Buying it Back on the Board: If you’ve already sold and are interested in capturing a potential post-harvest price increase, we have two options. The first one would be a Minimum Price contract, where we sell cash and buy a call option, which would increase in value if the futures market rallies down the road. The second option, which would need a brokerage account set up, would be to sell cash and buy a futures contract. This one exposes us to both upwards and downwards market swings, whereas with the minimum price contract, we pay a premium to only have upside potential (hence the name “Minimum Price”).

If you're interested in these marketing options and want to talk further about which contract might be best for your operation, please give our Grain Team a call! 

• Zack Gardner | Grain Marketing and Origination Specialist | 641-521-1834
• Greg Artz | Field Marketing Specialist | 515-215-0062
• Linda Kuhl | Grain Marketing and Origination Specialist | (641) 750-0633
• Kolby Winter | Grain Originator | 515- 686-0291