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Grain Update

Nov 02, 2020

By: Matt Rettmann & Brett Annexstad, Grain Merchandisers

2020. What a year it has been. Everything has been turned upside down in today’s world, and the grain markets have not been immune to this madness. We began the year with “decent” commodities prices that were quickly erased when the country was slowed to a halt. The ethanol industry applied the brakes and soybean processors followed suit with little gasoline usage and issues in the meat supply chain. In early spring, local prices dipped to as low as $2.75 per bushel on corn, and $7.70 on soybeans. We spent the rest of the summer digging out of this proverbial hole that was dug, trying to regain all the demand that was lost in commodities. There is good news, however. All is not lost!

Fast forward to late summer as we moved into the start of harvest. We saw export sale after export sale made in soybeans for fall/early winter shipment, with most sales being tagged for China. So much so, that we also jumped in on the fun, and sold beans shuttles to travel to the PNW post- harvest. This export business led to an unforeseen soybean rally as we approached our time to get the combines rolling. Corn, for the most part, cooperated and joined in on the price jump, with feed usage, exports, and ethanol grind all pitching in to pull their weight. All and all, this contributed to, locally, adding around .75 cents on corn and well over 2 dollars on soybeans.

Harvest began early and the weather allowed for crops to come off at a record pace. This was a welcomed change from the past few strung out seasons. Our trade territory seemed to be in the sweet spot for yields, with the exception of a little hail and heavy rain. With the large amounts of inventory to move at a quick pace, combined with prices rallying, we dumped a record amount of cash corn and soybeans across the scales.

So...what do we do with the rest of the bushels that got tucked away nicely in a bin? In soybeans, the market continues to tell us to move soybeans now, and as fast as we can. There is no carry in futures past January. Now, this is not to say that the price of soybeans can’t go up even higher, but the market structure is telling us to move physical beans and own them a different way if you are bullish futures. “Why is there a bean inverse come March?” one may ask... well the world knows that there will be South American beans around that time frame; so the tight US supply will somewhat be supplemented at that time.

Moving on to corn, there is currently a small futures carry in the corn market but not nearly what there has been the previous years. USDA printed a carryout number below 2 billion bushels for the first time in a few years so if we can keep export and ethanol usage strong, it should help keep corn futures sturdy. It will be interesting to see what both commodities do as we move closer to spring and the fight for acres happens. Something that we haven’t had to think about with robust carryouts for a few years now.

If you have any questions on these above topics, want to make a sale, put in target prices that can hit if the market rallies, the UFC Grain Department is here to help you with all of your grain marketing needs. Contact our grain office at 507-647-6601.

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