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Tuesday, October 28, 2014, 8:10 AM Submitted by: Dustin Weiner
It was another surprising night last night in the grain trade as the futures markets rallied sharply again on what looks to be a new round of fund money entering the market. The phones here have been steadily ringing with questions as to why?? These questions are valid and somewhat tough to answer because as we look at the fundamental picture laid out in front of us, we have record world stocks of soybeans and a record U.S. soybean crop in front of us – and rallying markets. It is hard to make sense of that for sure.
First glance, this rally yesterday appears driven by soybean meal. Strong soymeal basis in the eastern U.S. has helped push the December meal contract up to levels it hasn’t seen since June and Dec meal is now only $20 off the contract high! There are a couple reasons for this move, generally there is strong demand for meal but the slow pace to bean harvest in the East is making it hard to find. Yes, according to yesterday’s harvest progress report the US is 70% harvested on beans but Illinois is only 63%, Indiana is only 50% and Ohio is only 50% complete. Those three states are approximately 25% behind their average pace which has that part of the country struggling to fill the pipeline. The second factor that needs mentioned is the transportation situation. Meal basis in Illinois is over $50/ton higher than it is here in parts of Iowa. You would like to think you could just rail meal from West to East to take care of that gap. Unfortunately if you tried to do that today, you would pay big money for the cars AND with slow service you would struggle to get the cars in time to make a difference. So instead you panic a bit and pay whatever it takes to get the meal (hence the historic meal basis levels). This of course drives meal prices higher which takes soybean prices higher – then the funds get involved as they bail out of their short futures positions and here we are. High prices in a year where the U.S. looks to be flush with soybeans (eventually).
Weather… parts of the eastern Corn Belt had some small rains come through last night but overall the weather forecast looks excellent for harvest progress in the US for both corn and soybeans. The soy complex could feel a lot different later this week or early next as harvest finally pushes soybean onto the market.
Monday, October 27, 2014, 7:10 AM Submitted by: Dustin Weiner
It was a good harvest weather weekend across the Corn Belt and the weather forecasts for the week look mostly dry which should accelerate harvest as many farmers wrap up soybeans and switch turn their full attention to corn. The weekly harvest progress report will be out this afternoon, soybeans are expected to come in at over 70% harvested while corn should be over 40% harvested.
A news story this morning that could end up being bearish to corn and soybean prices is the reelection of the Brazilian President. This is expected to weaken the Brazilian currency (the Real) which would not only make Brazilian exports more competitive but it also likely to cause an increase in farmer selling in that part of the world.
Overall expect weaker markets for today and while the markets don’t appear poised to test contract lows anytime soon – an active harvest and negative fundamentals should keep things under pressure today and potentially throughout the rest of the week.
Wednesday, October 22, 2014, 7:10 AM Submitted by: Dustin Weiner
The soybean market popped higher again last night on the general slow start to harvest in the Eastern Corn Belt which is rallying spreads and basis for both soybean meal and soybeans as the soybean pipeline isn’t quite full yet. The funds also appeared to be active last night with another round of aggressive buying on what looked to be high volume (overnight volume in both Dec corn and Nov beans is estimated to be around 30,000 contracts). Farming selling of soybeans has been strong in both the US and Brazil/Argentina as most farmers are able to sift through the static and realize that these rallies are great selling opportunities in what still looks to be a great U.S. crop and overall increasing world stocks of grains/oilseeds.
Friday, October 3, 2014, 7:10 AM Submitted by: Dustin Weiner
The corn and soybean markets traded for most of the night session steady to a little higher but as the markets crept towards the 7:45am pause they turned lower, making new lows for the day. This was all done on very little volume, meaning it was a thin trade overnight.
There isn’t a lot of news to go on this morning except that the outside markets are making it awfully difficult to sustain rallies. The $US keeps getting stronger and stronger which is not good for commodities as this causes us to be less competitive in the world markets. Later this morning Informa (well followed private company) will be out with their crop production estimates. Remember, next Friday the 10th is when the USDA releases their Oct S&D report.
Thursday, October 2, 2014, 8:10 AM Submitted by: Dustin Weiner
It looks like another quiet day in the grain markets with corn and soybean futures both trading slightly lower overnight while wheat is trading higher. Yield estimates are still on the rise as another private company was out yesterday afternoon projecting that the U.S. soybean crop will be over 4 billion bushels and the corn crop will be near 15 billion bushels. Big numbers without a doubt.
Wednesday, October 1, 2014, 7:10 AM Submitted by: Dustin Weiner
The markets are all slightly lower this morning on very little news. Locally here in Iowa rains have shut harvest down in some places until early next week due to waterlogged fields. (the 24 precip and current radar maps are shown to the right). The dry, windy forecast for this weekend into next week should give producers an opportunity to dry out and get back in the fields. They may want to hustle, as rain chances perk back up a touch in the extended 8-14 day outlook…
Other than that? Not much going on. There has been a lot of negative news floating around our markets lately, whether it’s big yields or a strong $US or nasty looking charts – everyone has found a reason to sell futures. To a farmer/producer it may feel like there is no end in sight to how low this can go, but to a technical chart trader – November soybeans look to find its first level of support around 8.81 (approx. 30c lower than yesterday’s close) and its next level of major support is the Dec ’08 low of 7.76 ¼. December corn futures should find support from 3.17 down to 3.10 (10c lower than yesterday’s close) and its next level of major support is the Sep ’09 & Dec ’08 lows between 2.96 ¾ and 2.90.