Market Updates and a Lesson from Grandpa

I've just discovered that my/our beloved Congress is again away on recess, which I thought was odd considering they'd just returned from an 'August recess'. Is it any wonder very little legislating is ever completed - perhaps something as simple as USMCA that might be of benefit to the constituent underlings?!?!?

Upon further review, Members of Congress work about 1 in 3 days. The House has averaged 138 'legislative days' a year over the past 18 years. The Senate was in session an average of 162 days over the same period of time. Considering $174k base salary for members, or roughly 3x more than the median US household, that's a enviable job and career path. I find the current recess ripe with irony - origin traces back to observance of religious holidays. I remember my grandfather telling me as a young lad '...a fish rots from it's head.' Now more than 50 years later, I'm beginning to realize and understand what he meant.

30 Day Extension

RMA has extended the interest attach date for crop insurance premiums, in part due to the late harvest across the US, especially the Midwest. So those that have not yet sent in their owed premiums, November 1st is now the interest attach date.

ARC / PLC 

USDA will begin this payout for the 2018 crop year in mid-October, $3 billion anticipated monies to rural communities. Signup for 2019 crop year began September 3rd and continues through March 15th, 2020.
https://www.dtnpf.com/agriculture/web/ag/news/article/2019/09/30/economists-expect-producers-elect?

Best Autos 

The following link and story is an article sharing the best new and used vehicles for teens, which account for three times the number of accidents as the drivers 20 years of age and older.
https://www.propertycasualty360.com/2019/09/25/best-new-and-used-cars-for-teens-in-2019/?

Conservation Reserve Program Environmental Assessment 

USDA is seeking comments on this program...
https://www.fsa.usda.gov/news-room/news-releases/2019/usda-seeking-comments-on-conservation-reserve-program-environmental-assessment?

Dry Pea 

I held this update hoping for some news on the plight of PNW 2019 harvest; unfortunately there's nothing new or additional to report, which in a word is very frustrating. Ultimately the burden of proof will fall upon each grower to provide documentation that they were unable to harvest, due to insurable cause(s), the crop has deteriorated beyond market value or feasibility.

What you need to know and do:

1) Keep copious records, burden of proof stated above.
2) Stay in contact with us, so we can communicate with your crop insurance provider.
3) You the grower hold all the cards - coverage is in place until you complete harvest or decide it is no longer feasible to do so. Crop carrier can & will provide 60 day harvest extension if necessary.
4) if you're no longer going to pursue completing harvest, i.e. crop abandonment, we must have an adjuster out to assess the crop remaining in the field. This will include acreage determination, crop appraisal and obtaining a sample; highly recommended this to be from the combine (mechanical not hand harvested), so to closely replicate actual field results

Upon further review, research of the Loss Adjustment Manual (LAM) which is the Approved Insurance Provider (AIP/crop company) guide for crop loss adjustment procedures, found is the following language:
D. Unable to Mechanically Harvest
(1) When crop acreage which is routinely mechanically harvested is damaged or inaccessible due an an insured cause(s) to the extent that it can never be mechanically harvested with normal harvest methods/equipment, no production will be counted for such acreage.

This may be a stretch, but keeping in hip pocket nonetheless...

Fertilizer 

Trend is your friend...
https://www.dtnpf.com/agriculture/web/ag/news/article/2019/09/25/fertilizer-prices-drop-sixth-week?

Hemp 

Be ye careful, eyes wide shut...
https://www.agweb.com/article/analysis-hemp-big-risk-big-return?

Loan Deficiency Payments 

LDP have now triggered for lentils as well, so both garbs and lentils now qualify for direct payments; $.25 per cwt for garbs and $1.60 per cwt for lentils.

Markets 

With the conclusion of China's 70th anniversary celebration of the current communist government, thawing tensions a little old fashioned trade give and take seems to be happening evidenced by purchase of US soybeans. High level meetings are scheduled in the US for the 10th of October, to include China's lead trade representatives and negotiators.

Along these lines, let's not forget or dismiss the agreement in principle signed with Japan last week. This is a big deal but not yet final, Japan's parliament must first approve and they return to session October 1st; if approved, takes effect on 1/1/2020.

AFS continues is ugly spread - largest hog facility in Ukraine has infected animals (90k head), South Korea has had additional confirmed herds impacted, and now Australia is on high alert as the neighboring island of East Timor has confirmed outbreak of 100 cases.

MFP is about 2/3 paid out of this tranche, or approximately $5 billion to date.

USDA provided a market boost with today's report for corn and beans - how? Being a simple man, I find it interesting that 2018 bean yields were lowered - what, overstated production from USDA? January is the next quarterly report and this report generally trues up said prior crop year yield (2018). Perhaps a small window marketing opportunity when it doesn't matter?

The latest NASS weekly crop progress report suggests less than half of the US corn crop has reached maturity as of September 30th; whereas, just slightly more than half the US soybean crop has reached maturity as of the end of September. Some northern areas along the Canadian border will see a freeze this tonight / tomorrow evening.

Nathan's Notes 

Around the world:
• Kazakhstan gov't cut their forecast for 2019 total grain harvest to 18.0-18.5 MMT from 20.0 prior due to drought in several regions
• Chinese gov said it would exempt ~60mbu of imports from the 30% tariff. They have booked about a third of this so far. Currently helping beans rally to start the week
Close to home:
• Last week the US still had 24% left to harvest with 27% of ND and 31% of MT left to go. Canada is not in much better shape with Saskatchewan only 16% harvested and Alberta 14% harvested
• Canadian rains spelling disaster with no end in sight. As much as 20% of their spring wheat could be affected
• USDA released its September 1 quarterly stocks survey results this morning at 9am PST.
• Futures in Chicago Wheat(+10), Corn(+12) and Beans(+20) at 10am were rallying the most with wheat following the others
• Winter wheat futures followed the rest at a decent pace (+8 at 10am) and spring wheat futures lagged the rest as they enjoyed their own individual rally the last 2 weeks
• Corn stocks came in with the largest difference in what the trade thought and what number was reported
• Soybeans had a bullish number versus trade expectations with lower quarterly stocks than anticipated after they lowered 2018 production numbers
• Wheat was the only crop whose quarterly stocks # came in above the avg trade guess

Markets Opinion

Wheat: Cash White Wheat prices bounced higher last week within trading ranges to finish at 5.95. Looks like a great time to sell at least some and move closer to 2020. For those that have basis contracts waiting to lock in futures on, the rally we are seeing in the market post USDA stocks report is a welcomed sight and should be viewed with optimism and diligence. There’s still an opportunity to see futures rally that a grower should be able to keep a 6.00 base worst case scenario. Chicago Hedge-to-Arrive contracts are appreciating but not to levels where the risk is light enough to start getting creative. If HTA’s are something you’re comfortable with at lower than $5.75 levels, look towards Dec 2020 and beyond during the rallies for the highest levels. Cash wise, we’ll have to look for continued strong demand for white wheat. Corn and bean issues (frost for corn, rain for beans & corn) show potential to raise prices from a futures perspective and thus cash. Let’s wait and see if the frost issue (around Oct 5th) gains enough steam to appreciate futures much more. USD Index rally and crude oil price decline are suitable reasons for any post USDA report rally to stall. Be cautious.

Pulses: Garbs at least have caught a bit of a support due to large un-harvested acres in the northern tier of the US. Doesn’t mean they’re going to $30 tomorrow but support is what that market needed, and everyone to eat more hummus. Peas and lentils remain doggy, fighting an uphill battle of continue pet food rumors and over supply. Canada’s harvest issues will help here too but the questions are when and how much.

Top-up 

This is the name of the additional monies recently approved in the disaster bill. Growers that had qualified prevent plant payments will receive up to an additional 15%.
https://www.agriculture.com/news/business/usda-boosts-prevent-plant-payments

Weather 

Next week looks to be cooler, wet and colder upper plains, just plain wet across the corn belt. None of which is conducive for harvest small grains or row crops. If this weather pattern continues for the Midwest corn belt, it'll be a similar scenario to last year's harvest. The excess moisture and saturated ground was the beginning of the spring flooding. Currently, many areas are again waterlogged and flooding concerns abound.
https://www.dtnpf.com/agriculture/web/ag/blogs/ag-weather-forum/blog-post/2019/09/27/soil-moisture-already-place-2020?

Recent Crop Comments

29th Sep 2019 Bay County, Michigan
Harvested early planted soys looked ok but yielded half of last years crop 20 to 25% of average. Others in area same or worse yields. Later planted soys will yield less due to less pods per plant. Rain started on Saturday and is in the forecast for the next 4 days. Looks like harvest will be a challenge like planting was. Sugar beet harvest was delayed 3 weeks due to the dry weather we had. Yields from 5 to 16 ton on early delivery. Down quite a bit from last year. These rains will improve tonnage. Dry beans taken off are poor to average on yields. All depending if you got rain. Corn plot tours I went on everyone is hoping for an October late frost to get the crop mature. No one had any good yield estimates. No one thought you would see 200 bu corn this year. 166 bu ave guess for our state. Have a safe harvest!

27th Sep 2019 Richland County, Louisiana
Finished corn about 3 weeks ago, had good overall yield. Soybeans in our area are all over the board on yield, not good. Started harvest on cotton, great yields so far. Hay has been great this year with rain at the right time. Starting to get in drought situation with no rain in 6 weeks, hard on breaking plows.

24th Sep 2019 Coles County, Illinois

Started picking corn yesterday and it's worse than I expected. 30 bu/acre to 40 on low ground 90 to 230 on the high ground, blank stalks, small ears. 113-day corn planted May 7th running 18 to 20% moisture. Yields half of normal.

23rd Sep 2019 Sauk County, Wisconsin
Worst year ever since I started farming in 1995. We need heat to bring this crop in. Overall, considering the terrible weather we have had since the start of this year, things don't look all that bad. It's better than I thought when I mudded in our crops. The one constant since last year is that it will not stop raining. Two weeks ago 4 inches, last week over 2 inches. We can't buy one week of dry weather. Then when it does not rain, it is just cloudy and overcast. No sun. Another year of no summer. Maybe 2020 will be better. Seems like we have two seasons in Wisconsin anymore, winter and rain.

22nd Sep 2019 Kandiyohi County, Minnesota

Earlier this summer I stated that the corn and soybean crops at 2/3 good and 1/3 not so good. I think right today 1/3 good would be a stretch. The soybeans seem to be suffering from PBS {Podless Bean Syndrome}. Overall pod count is very low along with many pods only producing one or two soybeans each. The talk about record pod weight is absolutely laughable. The stalk quality in the corn is degrading by the day. Disease issues and lack of nutrients available to the stalk is causing extreme tip pull back, small ears, and shallow kernel depth. It is the lateness of the crop that is alarming. We have experienced a late planting season, followed by a cooler than normal summer and extreme rainfall amounts has exasperated the destruction to the crop. On a final note, is it possible that once again farmers kept planting too many acres in appalling conditions after PP deadlines. The only decision left is whether you should attend your own auction sale this winter.

21st Sep 2019 Kandiyohi County ,Minnesota
Looks like another disaster of a fall developing. Had almost 8 inches of rain in the last two weeks. Soybeans about two weeks away from combining. If it doesn't quit raining I won't be able to combine them anyway. Corn maybe 4 to 6 weeks away. Between the rain and market prices who cares anymore. Prevent plant sure looked good compared to this mess. Good luck farmers with this mess coming.

Posted in Risk Management; Posted October 03, 2019 by Curtis Evanenko