MARKETS PUT BANDAID ON THE BLEEDING

Written By Sebastian Frost

AUDIO COMMENTARY

  • Crop conditions improved yesterday yet markets were able to trade higher

  • We have built in a lot of negativity in the markets

  • Don’t think everyone wants to be short going into the report

  • We have had nearly perfect weather

  • Have grains made their lows for now?

  • Starting to gain demand for corn and beans

  • Beans 30 cents off lows today. Good action

  • Corn has held last USDA reports lows

  • Could we see a 50% retracement to the upside?

  • What helps you be comfortable

  • Taking advantage of corn basis

  • What should you price first? (Scroll to read)

Listen to today’s audio below

What Should You Price First?

From Wright on the Market,

The cash price paid to farmers is a function of futures and basis. You need to separate the day you price them because the basis is usually weak when futures are strong and basis is strong when the futures are weak.

It does not matter which one you price first.

If you must deliver corn and/or beans at harvest, you need to set the basis this week for at least half of your fall delivery bushels if you think the basis at the peak ten days of harvest will be weaker than the current bid for fall delivery basis.

Some of you are dragging your feet on making the fall basis decision even though you agree the basis will be weaker this fall. Monday was probably the low day for corn and bean futures before harvest and very well maybe the low for the rest of 2023. The weather cannot get any better for soybeans in  August. Last evening’s 8 to 14 day forecast reduced the percentage of the soybean area that is expected to cool & wet: Forecast Link

Set some fall delivery basis now. If futures do not go to the moon before harvest, deliver the bushels, get your cash advance and wait for the futures to rally into 2024.        

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We tend to agree with mostly everything Wright on the Market talks about. But we wanted to be clear on the portion that says “it does not matter which you price first”. But it does matter if you use an HTA because you have lost your negotiating power that you would’ve had if you used a futures contract.

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Sebastian Frost
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