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MARKET COMMENTARY

Weekly Market Recap November 21, 2018

Wednesday, November 21, 2018, 8:11 PM
Submitted by: Landus Cooperative


Please note: The Landus Cooperative podcast will be released later today.

 

For the week so far, December corn is down 1 1/2 and January soybean futures are off 9 1/4.

 

No trade tomorrow, for the Thanksgiving holiday, and a shortened trade Friday, ending at Noon.

 

The main features this week:

  • The back and forth on “news” regarding U.S. and Chinese relations
  • Continued pressure for crude oil  

 

After various reports indicating that China wanted to make a trade deal, and finishing last week on a high note, we moved quickly back to reality Sunday night and into Monday. Many are starting to realize that a resolution is not going to happen quickly. The longer this goes on, the more likely it becomes that we’ll be talking about this through the winter and into spring, if not summer. The closer we get to spring, and a South American harvest, the more emboldened the Chinese will become. There were also various reports that China is working to establish more trade flows from others in South America besides Brazil and Argentina.

 

On the crude oil front, things have not gotten any better this week. In three days of trading, West Texas Crude is off more than $2. Since the most recent high, on October 3rd, it is down more than $20, or about 28.5%. Add that to a spike in natural gas, up more than 35% since early November, and it does not bode well for the ethanol industry, and also puts a lot of pressure on the corn market.

 

Other outside markets are also in turmoil, with major stock indices giving up most, if not all, of the gains for the year. Typically, when this happens, we see funds flow out of the stock market and into commodities, but, so far that has not happened. Probably with good reason, with regard to the 2 bullets above. There continues to be a lot of prognostication out there with regard to the stock market for the balance of the year, and no clear direction indicated as of yet.

 

So, now what? How do you approach grain marketing, given all of the above? We continue to stress the importance of knowing your cost of production. Once you know that, you can act from a position of strength, remove emotion, and when there is an opportunity to price above that level, sell a percentage. When possible, look at the cash bids for further delivery periods. Very few people like cleaning out bins in the heat of the summer, but if you can pick up a return of 7 or 8% to do it, you need to consider it. We also continue to encourage looking at different marketing alternatives. This comes with a precaution: none of these tools are designed for a home run. When used correctly, though, they can enhance the bottom line. We encourage you to start small, learn about them and then, as you know more, employ the one(s) that best fit your operation. 

 

In the next few weeks, we will be rolling out our 2019 New Crop Opportunity Programs:

  • Our traditional averaging program for both corn and beans
  • A 3rd party managed marketing program for both corn and beans
  • A “Landus Cooperative” Managed Marketing Contract for corn

 

We believe that all of these have merit, and we’d love to be able to explain any or all of them to you. if you are interested in knowing more about them, please contact your local Grain Marketing Advisor, or call 877-778-2226 to schedule a face to face meeting.

 

Finally, as we head into Thanksgiving, we’d like to take a moment to thank you for business, and your ongoing support. It has been a long year, and one that few of us will look back on with a lot of fondness. But, we still have a lot to be thankful for.  Whether this holiday for you is about football, shopping, over-eating, or simply a time to gather with family and friends to reflect on your blessings, we wish you nothing but the best!

 

 

 

 

 

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2321 North Loop Dr., STE 220
Ames, IA 50010
515-817-2100
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