It’s Harvest give me the low down!

by Greg Mockenhaupt

by Greg Mockenhaupt

With harvest upon us, if you are reading my blog it must be raining. So here is the opportunity to catch up on a few things! A quick summary to wrap up the last few days for you. Friday USDA’s quarterly stocks report was released, and for the most part was a non-event. Soybeans stock estimated at 197 Million bushels and corn coming in at 1.738 billion. Both of which were slightly below trade expectations. Grain traded up slightly on Friday and followed through into Monday slightly up. 

Fall Harvest discovery period for crop insurance began on Monday.  Harvest prices for Revenue protection insurance policies will be based on the average December corn futures price and the average November soybeans futures price. Yield protections policies on Corn are $3.68/bu, and $8.85 beans. 

December Corn has been trading in a sideways channel of $3.15-3.45 since the end of July looking to continue until the market gives traders a reason to change their strategy. Demand remains strong, and many think USDA may cut their yield estimates back 2-3 bushels per acre.  Either way big crop/big demand. Despite robust demand, the current U.S. carryout looks burdensome.  

Beans have a similar story regarding a robust demand, also trading in a sideways pattern for now. November beans trading between $9.34 – 9.90. The difference is the trade is expecting to see yield and acreage estimates work themselves higher as harvest continues. 

If there was one perk to the current markets in both corn and beans, it is the “Carry” in the market, which is simply the price difference between the current futures month and a distant future month.  In the case of corn, December is sitting at $3.40 and July at $3.63 there is a carry of +.23. November beans sitting at 9.65 and July at 9.88 there is a carry of +.23! This is guaranteed profit for producers who have sold ahead or sold contracts in brokerage. This is an easy 23 cent profit for those planning to store grain.