Farmweek Markets | November 21, 2019

Farmweek Markets | November 21, 2019


MIKE ON TO A BRIEF MARKET SECTION — AND TO A SUBJECT ON A LOT OF MINDS LATELY, AND THAT’S LOW TEST WEIGHT. THE QUESTION CAME IN, “WITH LOW TEST WEIGHTS, WILL THE MARKET EVENTUALLY REFLECT THOSE CLAIMS AND HOW LONG WILL IT TAKE US TO SEE IT ON THE MARKET?” HERE’S ANALYST MATT BENNETT — ALWAYS LOOKING AT THE FUNDAMENTALS — WITH AN ANSWER. SOT MATT BENNETT, ANALYST: “You are heavily reliant upon mother nature to be able to help you get this crop to the finish line. And we know in the Western corn belt in the upper Midwest, it simply hasn’t been the case. And so whenever you’ve got low test weights, it takes awhile to get to where you actually see how that impacts the market. What your order conversion factor is going to look like on corn usage for ethanol? What are conversion factors going to look like on feed usage and they’re not going to be good whenever you look at low test weight. So hopefully producers are able to move the low test weight corn. But the bottom line, they got to get out of the field first. And so how long is it going to take, to answer the question? I think that you might learn more about this in the March quarterly so you’re not going to get it in January. I think that June quarterly stocks number though, that’s a place where I think that could definitely rear its head. The thing is we’ve got to see this thing get, we’ve got to see harvest happen first. We’ve got to see it come out of the field first. It’s really hard to get a handle on it, though. Whenever you’ve got a harvest this late in the game, it’s pretty tough for anybody to be able to figure out exactly what are we dealing with. Are we going to come down from a 167 yield? Test weight is going to affect things as far as usage, but that’s going to take a while to get your handle on. So are we looking for any sort of a big rally anytime soon? I think in the absence of some sort of a trade deal, it’s pretty tough to ask for that going into the end of the year.” MIKE NOT FAR BEHIND, A DISCUSSION ON SOYBEANS, ESPECIALLY WHERE BASIS IS CONCERNED — SO MANY PRODUCERS HOPING TO TAKE ADVANTAGE OF BASIS, SPECIALLY WHEN IT’S STRONG. AND IN THE SOYBEAN WORLD, MATT SAYS, THE SWING IN BASIS HAS BEEN NOTHING SHORT OF PHENOMENAL. MORE. SOT MATT BENNETT, ANALYST: “Early in harvest, we were telling producers, you know, at least if you’re hauling in across the scales, we felt like the huge carry in the market’s telling us. The market’s telling us whereas on the corn market, the market is saying we want the corn right now. Early in harvest, I think the market was telling us we really don’t want the soybeans right now. And so we were putting them in commercial storage, even whenever we were hauling them into the elevator. And the thing is the basis has gotten so much better that it’s paid for that storage out to the springtime frame if not even farther. You look at for instance, on the river in St Louis. In the last six weeks, we’ve seen basis improve over 60 cents– basis alone — which is unheard of, especially this time of year. And so at this point, if I’m hauling in beans and I know there’s not near as many beans relatively speaking as what there is with corn… At this point, I’m gonna go ahead and reward the market on those beans going in across the scale as well. This trade deal continues to just be a cloud over our head. Are you going to see anything happen there? And to me, I think it’d be remiss to think that this soybean market is gonna rally substantially, Moving to the January, unless we see something again that none of us are, are necessarily looking for now. It was kind of a rough week early on for soybeans where we broke through some support, but really beans kind of acted fairly good towards the end of the week, which for me is encouraging. But I’m not looking for any sort of large scale rally anytime soon either. If you would stay with between that $9 and $9.45, $9.50 area, that’s probably an area that I feel okay. If you get below $9, I’m very concerned. Okay. And so — but for me personally, I think that if you do get into that $9.40 level, I’m definitely going to be

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