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Market Matters Blog 10/15 11:04
Rain and Snow Shattering Farmers Hopes for Decent Soybean Crop
DDG Prices Steady
Lockdown: High Water on Upper Mississippi Causes Locks to Close
It's in the Bag: Extra Grain Storage Needed This Crop Year
DDG Prices Slightly Lower
Southern Minnesota Unable to Catch a Break This Crop Year
DDG Prices Firm
Union Pacific Announces New Operating Plan; STB Asks for More Details
DDG Prices Slightly Higher
Lack of Pacific Northwest Export Bids Keeping New-Crop Soybean Basis in the
Cellar
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Rain and Snow Shattering Farmers Hopes for Decent Soybean Crop
It's been a tough year for farmers in Minnesota, South Dakota, northern
Iowa, northeastern North Dakota and western Wisconsin. Many of these areas
endured late planting due to April snows, record-setting rainfall in early
summer, hailstorms, and then rain and snow delaying harvest.
Most of the crop was looking good heading in to September, but then came
more rain, and more rain on top of that. Some of the areas even received snow
recently. It's as if Mother Nature was picking on them constantly, daring them
to harvest a good crop.
It appears she may have won the last round. Many farmers scouted their
fields after the recent bout of rain and some were disheartened at what they
saw. Social media was full of pictures of open soybean pods -- some sprouting
and some dropping beans. There were a few pictures of poor-looking corn with
bent over stalks, and cobs that had sprout and mold, but most of the focus was
on the poor condition of the soybeans.
Because of all the rain that delayed harvest, soybeans started to shatter.
The risk of shattering is especially high when soybean fields go through
repeated cycles of wet nights with heavy dew followed by dry days. Shattering
may also occur if there is a long interval between final maturity and harvest
delays, which is what they just went through. This will create yield loss and
any beans left in the pod are likely damaged and/or are starting to sprout.
I reached out to farmers who were dealing with rain-damaged fields and those
who saw their crops buried by snow. Keep reading for their comments.
CONSTANT RAIN CAUSES DAMAGE TO SOYBEANS
I am seeing between 1% and 5% split pods on my fields, said Dave Newby,
Bondurant, Iowa. "The good news is there are few beans actually on the ground.
The bean quality is quite poor in the split pods with some of the beans having
sprouted. There are some moldy and discolored beans in pods that are not split
and that is worrisome. The pods are generally tough and hard to open right now.
My concern is that when they dry out, there will be more pods that split.
"I have seen fields that you could see the split pods from the road. It's
pretty bad if you can see it from the road. I have seen fields where there is
almost no split pods. Some varieties have pods that don't split as easy. The
earlier-maturing varieties that were planted earlier seem to have more
splitting problems," said Newby.
Newby said that the cool weather should keep the beans from further
sprouting, but they need heat to dry out the beans, so they can be combined.
"It's kind of a Catch-22 situation, and we need some sunny weather, but that
has been hard to come by. Hard to tell how much loss there will be as there is
maybe 5% quality damage now, but there could be more by the time they are
combined."
According to Newby, there will be more than usual harvest loss as the beans
will be flying all over when the cutter bar and reel hits them. "We planted our
beans a little later than some did, so we may have a little less problem as
they are a bit greener. The areas that received the most rain recently probably
have the worst problem. We were a little lucky that we only got 3 inches in
October and not 5 to 7 inches like some did."
Dennis Bogaards, Pella, Iowa, said, "This sounds like it is a really big
problem across a lot of Iowa. I am guessing we will see losses from 10% to 50%.
It depends on the field and variety, and it appears that earlier beans are the
worst. I have some 2.4 beans (early maturity soybean variety) that have at
least two pods, sometimes three to four per plant, that are sprouted. Also
seeing what looks like mold on some beans when I break them open and many black
beans that have rotted.
"If we continue to get rain it will only get worse. One positive might be
the colder temps will hopefully limit germination in the pods," said Bogaards.
"Also one other thought is we might see the beans be ready to harvest before
ground conditions are fit, and the longer they sit in the field the worse it is
going to get." Bogaards said he was wondering about seed production beans, and
while he doesn't have any, he thinks seed quality for next year may not be very
good.
"The beans are a mess!" said Mike Carlson, Red Oak, Iowa. "I've had over 22
inches of rain in the last 60 days. Just way too much! Now the beans are
swelling and the pods are breaking open and the beans are falling out. Some of
them are sprouting in the pod, so I'm sure we will be dealing with quality
issues too." He said because of that, elevators will be taking discounts for
damage, which will further add to loss in the final price.
"When it dries up, the pods will be so brittle that shattering will be
terrible! We have definitely lost the top end off of the yield," added Carlson.
"We've gone from a decent crop to possibly an insurance claim. It's hard to say
until I get back out there but I would guess a 5 bushel to 10 bushel per acre
(bpa) loss at least; I just hope I'm wrong. I can't do anything about it so
it's frustrating. Trying not to dwell on it because it could get to you. It's
pretty widespread too. Everyone with beans in the field is seeing it. It is
just sickening!"
Carlson said there is also wet ground that might not even get harvested, but
he's hoping the wet areas that he can't get to don't amount to much. "If we
have to, we might come back after it freezes. The weather sounds better for
next week. Gotta take the bad with the good. It's tough sometimes, but this is
what I chose to do and wouldn't be happy doing anything else."
SNOW BURIES CROPS
"We have had 6 inches of snow and 8 inches of snow on our soys," said Dave
Blasey, eastern North Dakota. "There will be yield loss but I don't know how
much yet. Not the most optimistic fall so far."
Peter Ness, Sharon, North Dakota, told me over the weekend that he figured
half the snow melted over night with the wind and humidity. "Most crops took it
very well. For how wet it is, we'll probably have to wait till the ground
freezes to take the soybeans off. The guys with edible beans are really
worried. Some of the corn cannibalized and is breaking down." (Stalk
cannibalization happens when nutrients are "translocated" to developing kernels
at the expense of stalk health.)
Ness also noted that black birds have moved in to the sunflower fields and
are doing extensive damage. "The past month has been hell for farmers," he
added.
Andy Weisser, Roscoe, South Dakota, told me on Friday that he finally
managed to go out and access what the damage was from the snow. "I would say
the corn handled it much worse than the soybeans! The corn stalk strength was
not the best this year due to a dry August, so the wet snow and wind managed to
tip over more corn. Our yields in corn may be about 10 bpa.
"Our soybeans were not too much to brag about, maybe 30 bpa, due to wind
damage this spring and two hail storms in the beginning of July. The snow was
just more salt in the wound."
Weisser said they have only harvested 3% of their total acres this year, and
believes that progress is the same for other farmers in his area. "We did try
to harvest before all the moisture, but it was too wet to store in a grain bin.
I will say it could have been worse and we probably are lucky that we had a dry
summer, because this should soak in once it warms up. I hope to be able to try
and harvest by Monday."
Chad E. Colby, General Manager, Central Illinois AG, did a survey on Twitter
late in the week asking if recent weather will decrease yields. Of the 239 who
responded, 56% said yes, 20% said no and 21% were uncertain. "Safe to say in
many places across the Midwest yield will be affected due to weather of last
month on mature crops," added Colby.
"We thought this was going to be a fast harvest, but this weather has just
caught us unprepared! Shows Mother Nature is still the boss," said Weisser,
most likely echoing farmers in the same situation.
On Oct. 12, the University of Minnesota Extension published a blog on
"Storing, Drying, and Handling Wet Soybeans."
You can read it here:
http://blog-crop-news.extension.umn.edu/2018/10/storing-drying-and-handling-wet-
soybeans.html
Mary Kennedy can be reached at mary.kennedy@dtn.com
Follow her on Twitter @MaryCKenn
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DDG Prices Steady
OMAHA (DTN) -- Distillers dried grains spot prices from the 40 locations DTN
contacted were mixed, but the average price was steady at $133 per ton versus
one week ago for the week ended Oct. 11.
Based on the average of prices collected by DTN, the value of DDG relative
to corn for the week ended Oct. 11 was at 101.85%. The value of DDG relative to
soybean meal was at 42.52%. The cost per unit of protein for DDG was $4.93,
compared to the cost per unit of protein for soybean meal at $6.59.
DDG exporters are currently having problems moving rail cars into Mexico
because rail lines are congested, which could pressure DDG prices until traffic
improves.
On Oct. 1, the BNSF said in a service advisory that, "Due to congestion at
the FXE Eagle Pass and El Paso, Texas, interchanges, BNSF has issued a permit
embargo for all grain, dried distillers grain (DDG), wheat, soybean, soybean
meal, corn, and corn syrup shipments destined to the FXE at these junctions."
In their weekly distillers dried grains with solubles (DDGS) price update,
U.S. Grains Council noted, "Merchandisers report that, following a brisk period
of container buying, the market is relatively quiet as international buyers
assess their near-term needs. This pause should allow the U.S. river system to
clear out and more DDGS to move down to the Gulf for export. DDGS prices are
mixed this week. Prices at the U.S. Gulf fell $1 per metric ton (mt) to
$183/mt. On average, prices for 40-foot containers to Southeast Asia were up
$4/mt for October delivery."
River conditions are not likely to improve anytime soon. As of Friday
morning, the USACE had closed six locks between Lock 16 and Lock 24 on the
Mississippi River, with the likelihood of two more closures by the weekend. The
locks are not expected to reopen until sometime between Oct. 18 and Oct. 22.
The high water has caused the closures after water started to flow over and
through the lock structures, making it unsafe for tows to pass through.
https://www.dtnpf.com/agriculture/web/ag/perspectives/blogs/market-matters-blog/
blog-post/2018/10/12/lockdown-high-water-upper-causes
ALL PRICES SUBJECT TO CONFIRMATION CURRENT PREVIOUS CHANGE
COMPANY STATE 10/11/2018 10/4/2018
Bartlett and Company, Kansas City, MO (816-753-6300)
Missouri Dry $145 $145 $0
Modified $75 $75 $0
Show Me Ethanol LLC, Carrollton, MO (660-542-6493)
Missouri Dry $145 $145 $0
Wet $75 $75 $0
CHS, Minneapolis, MN (800-769-1066)
Illinois Dry $145 $140 $5
Indiana Dry $132 $132 $0
Iowa Dry $130 $130 $0
Michigan Dry $140 $140 $0
Minnesota Dry $130 $130 $0
North Dakota Dry $130 $130 $0
New York Dry $155 $155 $0
South Dakota Dry $130 $130 $0
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
Kansas Dry $142 $142 $0
POET Nutrition, Sioux Falls, SD (888-327-8799)
Indiana Dry $126 $128 -$2
Iowa Dry $127 $127 $0
Michigan Dry $134 $139 -$5
Minnesota Dry $130 $130 $0
Missouri Dry $137 $143 -$6
Ohio Dry $135 $135 $0
South Dakota Dry $128 $130 -$2
United BioEnergy, Wichita, KS (316-616-3521)
Kansas Dry $132 $135 -$3
Wet $55 $55 $0
Illinois Dry $145 $148 -$3
Nebraska Dry $132 $135 -$3
Wet $55 $55 $0
U.S. Commodities, Minneapolis, MN (888-293-1640)
Illinois Dry $130 $130 $0
Indiana Dry $130 $130 $0
Iowa Dry $125 $125 $0
Michigan Dry $135 $135 $0
Minnesota Dry $125 $125 $0
Nebraska Dry $135 $135 $0
New York Dry $140 $140 $0
North Dakota Dry $140 $140 $0
Ohio Dry $125 $125 $0
South Dakota Dry $125 $125 $0
Wisconsin Dry $130 $130 $0
Valero Energy Corp, San Antonio Texas (210-345-3362) (210-345-3362)
Indiana Dry $140 $140 $0
Iowa Dry $125 $130 -$5
Minnesota Dry $130 $135 -$5
Nebraska Dry $135 $135 $0
Ohio Dry $140 $140 $0
South Dakota Dry $125 $125 $0
California $187 $187 $0
Western Milling, Goshen, California (559-302-1074)
California Dry $194 $195 -$1
*Prices listed per ton.
Weekly Average $133 $133 $0
The weekly average prices above reflect only those companies DTN
collects spot prices from. States include: Missouri, Iowa, Nebraska,
Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan,
Wisconsin and Indiana. Prices for Pennsylvania, New York and
California are not included in the averages.
**
VALUE OF DDG VS. CORN & SOYBEAN MEAL
Settlement Price: Quote Date Bushel Short Ton
Corn 10/11/2018 $3.6925 $131.88
Soybean Meal 10/11/2018 $312.80
DDG Weekly Average Spot Price $133.00
DDG Value Relative to: 10/11 10/4
Corn 101.85% 101.33%
Soybean Meal 42.52% 43.13%
Cost Per Unit of Protein:
DDG $4.93 $4.93
Soybean Meal $6.59 $6.49
Notes:
Corn and soybean prices take from DTN Market Quotes. DDG price
represents the average spot price from Midwest companies
collected on Thursday afternoons. Soybean meal cost per unit
of protein is cost per ton divided by 47.5. DDG cost per unit
of protein is cost per ton divided by 27.
Mary Kennedy can be reached at mary.kennedy@dtn.com
Follow her on Twitter @MaryCKenn
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Lockdown: High Water on Upper Mississippi Causes Locks to Close
Rain has been relentless the past week across the Upper Midwest, causing
flash flooding and filling the Mississippi River from St. Paul, Minnesota, down
to St. Louis, halting barge traffic on the river.
This past week, the U.S. Army Corps of Engineers (USACE) Rock Island
District closed locks, starting with Lock 16 near Davenport, Iowa, and all the
way down river to Lock 24 below Hannibal, Missouri, after water started to flow
over and through the lock structures. The estimated time to reopen the locks is
uncertain, but likely not before Oct. 18.
American Commercial Barge Line reported that Lock 20, north of Quincy,
Illinois, may have sustained damage after the river topped the lock wall, and
may not open until Oct. 24 or 25.
Farther south in St. Louis, the water has risen above 25 feet, causing
transit only during daylight hours there. That will not change until the river
falls back below 25 feet. As of midday Thursday, the river had risen to 29.26
feet above flood stage, with expectations for it to rise to 34.9 feet by Oct.
14, close to the major flood stage of 35 feet, according to the National
Weather Service.
"The October forecast predicts above-average precipitation in all areas of
the country, with the Midwest and South expected to experience
well-above-average rain," said Tom Russell, Russell Marine Group. "Concentrated
heavy rains over the past week has resulted in high-water conditions on the
Upper Mississippi River from Cairo to Minneapolis and on the Illinois River.
Areas of both rivers are at or above flood stage."
While the St. Louis Harbor has reached flood stage, Russell said that the
harbor is expected to remain open with safety protocols, such as tow size
restrictions and daylight-only movements.
"More rain is expected in the area this week, which will make the situation
dynamic," he added. "The situation will certainly delay delivery of barges out
of St. Louis."
Russell said that the Ohio and Lower Mississippi Rivers are currently in
good shape without any delays to traffic.
"Long-term November to December forecasts call for normal precipitation in
the Northern-tier states and above normal for Midwest and South," said Russell.
"If rain forecasts hold true, the river systems could remain charged at higher
stages for the next few months."
Should the locks remain closed if high-water conditions continue or if the
locks become damaged, final dates for barges leaving the Upper Mississippi
River ahead of the winter closure could become an issue. Nov. 18 is the final
departure date for barges to leave St. Paul, Minnesota, and pass through MM640
north of Prairie Du Chien, Wisconsin. As of Nov. 25, all barges must be through
MM521 south of Dubuque, Iowa.
Mary Kennedy can be reached at mary.kennedy@dtn.com
Follow her on Twitter @MaryCKenn
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It's in the Bag: Extra Grain Storage Needed This Crop Year
It's not very often you see wheat stored in silo bags in farmers' fields and
outside elevators in North Dakota. In fact, some farmers and elevators actually
loaded wheat out of bins and put it in silo bags to make room for their soybean
harvest because they have lost their new-crop market that normally ships to the
PNW. Because of the current trade war, the only home for soybeans is either a
processing plant or heading south to the Gulf or St. Louis. However, that
market could fill up fast with the added traffic, leaving soybeans homeless.
Storing any grain in silo bags requires the grain is as dry as possible
before storing it. While silo bags are sealed, they can leak if there are any
tears or punctures in the plastic and/or if the bags are stored on wet ground.
If animals break in to the bags, moisture could get in and spoil the grain.
It's not just North Dakota looking for extra storage. Elevators and farmers
in the Midwest have been getting creative in finding storage space such as
renting empty warehouses, adding concrete slabs, then adding aeration and
covering the pile. Some farmers are even using machine sheds on the farm. It's
pretty much the "any port in the storm" theory this year.
In the case of the farmer, storage costs this crop year will increase. Their
local elevator may increase the cost of delayed price (DP) contracts, if that
elevator will even issue one this harvest. A DP contract allows the producer to
establish a final price at a later date. DP contracts usually have service fees
based on length of contract, space availability, rail performance and market
conditions. Once delivery is made to the elevator, title of grain passes to the
buyer and has no price protection. DP contracts are not considered "storage" or
issued a warehouse receipt. This contract is also referred to as NPE, no price
established, or PL, price later.
A shuttle loader in North Dakota told me he has heard of "some pretty high
DP charges in southern Minnesota and further, with large drop charges (flat
fee) of 20 cents per bushel." At his elevator, during harvest, soybeans and
corn will be cash or basis only, while one of his stations has some room for DP
at 5 cents per month, but farmers need to call ahead.
At Sun Prairie Grain in Minot, North Dakota, their website posts a soybean
DP charge of 8 cents per month with no minimum until July 31, 2019. They also
offer DP on sunflowers, but of their seven locations, only one location is
taking any DP at this time. Wheat, corn and all other commodities are cash only.
Valley Ag Partners, with five locations in western Minnesota near the North
Dakota border, posts on their website that their storage charge for soybeans is
a flat fee of 10 cents per bushel and then 5 cents per month after that.
Minn-Kota Ag Products in Brekenridge, Minnesota, also near the North Dakota
border with five locations, has posted this on their website:
"MKAP's 2018 Soybean Storage Program is effective September 10, 2018.
*10 days free storage from date of delivery.
*$0.15 minimum charge through December 1, 2018 (flat charge from 10 days
post-delivery through Dec 1, 2018)
*$0.07/month after December 1, 2018 until beans are sold
*For example, beans delivered October 5, 2018 and sold on January 1, 2019
would have a total storage of $0.22 ($0.15 minimum + $0.07 = $0.22)."
The Arthur Companies, Arthur, North Dakota, with seven locations in North
Dakota said this in their harvest letter posted on their website concerning
soybeans:
"We have little recourse for (soybean) shipments in the near-term. The Gulf
market is a possibility, but there is a "wall" of soybeans to get past if we
want to ship down there, and transportation costs are not conducive for
favorable sales values (the reason we don't typically ship down there). To
start harvest we will be running a price-later program for soybeans. We will be
charging 8-cents/month with no minimum charges. This is higher than our typical
5-cents/month charges. We want to be as fair as possible. With large futures
carries, uncertainty of future shipments, a finite amount of bin space, and
incurred costs of piling and bunkering beans we believe this to be an equitable
storage program for this fall. If/when the marketplace resets we will readjust
DP grain programs."
Farmers need to check with their local elevator before they haul any grain
in they may want to place on a DP contract, to be sure space is still available.
FARMERS FACE FINANCIAL UNCERTAINTY
I asked George B. Sinner, senior vice president ag & business banking,
Cornerstone Bank, Fargo, North Dakota, about the storage situation and
uncertainty facing farmers this crop year.
"Regarding storage, my experience is that most lenders will extend operating
loans based on inventory being stored," said Sinner. "In most cases, the farmer
will take a CCC loan on farm stored bushels, giving the operating lender some
comfort that the bushels are there. Most prudent lenders will likely require
that CCC loan proceeds be used to pay down the operating loan but those same
lenders will often release some funds for expenses."
Sinner said he thinks there will be a great deal of consternation over
proceeds this year (and next) "as farmers come to realize that there won't be
enough funds to cover all the bills. I have encouraged our lenders to meet with
farmers as soon as possible so that we can develop a plan."
On another note, Sinner pointed out that Dr. Frayne Olson at NDSU Extension
put together a great spreadsheet to analyze the costs of storage, how much
"carry in the market" or "rise in the price" the farmer will need to come out
even. https://www.ag.ndsu.edu/farmmanagement/tools
Sinner said at the conference he attended where Olson spoke, Olson made it
pretty clear to a group of bankers there are not many options this year and
storing corn and beans could very likely cost the farmer more money than
selling now.
If you look at the current DTN soybean basis map and the daily DTN national
average soybean basis, you will see soybean basis is at its weakest level in at
least 11 years. Moreover, since soybean harvest is not in full swing yet due to
weather delays, that basis could weaken even further as harvest pressure sets
in and end users get their fill.
"The long and short is (in my opinion) that today's farmers need 1) A risk
management plan that fully understands their costs and breakevens; and 2)
Professional marketing adviser that works with them daily," said Sinner.
"Today's farmer could be going into an extended period of low prices where
best management practices will be the key to survival."
Mary Kennedy can be reached at mary.kennedy@dtn.com
Follow her on Twitter @MaryCKenn
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DDG Prices Slightly Lower
OMAHA (DTN) -- Distillers dried grains spot prices from the 40 locations DTN
contacted were mixed, but on average $1 per ton lower at $133 per ton versus
one week ago for the week ended Oct. 4.
Based on the average of prices collected by DTN, the value of DDG relative
to corn for the week ended Oct. 4 was at 101.33%. The value of DDG relative to
soybean meal was at 43.13%. The cost per unit of protein for DDG was $4.93,
compared to the cost per unit of protein for soybean meal at $6.49. Some
maintenance shutdowns are keeping supplies in balance with demand so far, and
prices remain range-bound. Wednesday's EIA report showed weekly ethanol
production for the week ended Sept. 28 was down from the prior week.
In their weekly distillers dried grains with solubles (DDGS) price update,
U.S. Grains Council noted, "DDGS prices are mixed this week. On average, prices
for 40-foot containers to Southeast Asia were up $3/metric ton (MT) for October
delivery, with containers to Vietnam seeing the largest increase (+$6/MT).
Container rates to Japan were steady. DDGS at the Gulf fell $1/MT from last
week to $185/MT while indications for rail-delivered Pacific Northwest fell
$3/MT. This week, merchandisers reported a general pickup in demand from Asia,
with sales reported to Southeast Asian markets Indonesia and Thailand."
The U.S. Census Bureau said Friday that U.S. exports of DDGS totaled
1,155,961 MT in August, up 52% from a year ago. Mexico, South Korea, and
Vietnam were the top three destinations in August, accounting for 35% of the
total. The first eight months of U.S. DDGS exports were up 9% in 2018 from a
year ago.
ALL PRICES SUBJECT TO CONFIRMATION CURRENT PREVIOUS CHANGE
9/27/
COMPANY STATE 10/4/2018 2018
Bartlett and Company, Kansas City, MO (816-753-6300)
Missouri Dry $145 $145 $0
Modified $75 $75 $0
Show Me Ethanol LLC, Carrollton, MO (660-542-6493)
Missouri Dry $145 $145 $0
Wet $75 $75 $0
CHS, Minneapolis, MN (800-769-1066)
Illinois Dry $140 $140 $0
Indiana Dry $132 $132 $0
Iowa Dry $130 $130 $0
Michigan Dry $140 $140 $0
Minnesota Dry $130 $130 $0
North Dakota Dry $130 $130 $0
New York Dry $155 $155 $0
South Dakota Dry $130 $130 $0
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
Kansas Dry $142 $140 $2
POET Nutrition, Sioux Falls, SD (888-327-8799)
Indiana Dry $128 $132 -$4
Iowa Dry $127 $130 -$3
Michigan Dry $139 $142 -$3
Minnesota Dry $130 $132 -$2
Missouri Dry $143 $147 -$4
Ohio Dry $135 $138 -$3
South Dakota Dry $130 $130 $0
United BioEnergy, Wichita, KS (316-616-3521)
Kansas Dry $135 $135 $0
Wet $55 $55 $0
Illinois Dry $148 $148 $0
Nebraska Dry $135 $135 $0
Wet $55 $55 $0
U.S. Commodities, Minneapolis, MN (888-293-1640)
Illinois Dry $130 $130 $0
Indiana Dry $130 $130 $0
Iowa Dry $125 $125 $0
Michigan Dry $135 $130 $5
Minnesota Dry $125 $120 $5
Nebraska Dry $135 $135 $0
New York Dry $140 $140 $0
North Dakota Dry $140 $145 -$5
Ohio Dry $125 $125 $0
South Dakota Dry $125 $125 $0
Wisconsin Dry $130 $125 $5
Valero Energy Corp, San Antonio Texas (210-345-3362) (210-345-3362)
Indiana Dry $135 $135 $0
Iowa Dry $130 $130 $0
Minnesota Dry $130 $130 $0
Nebraska Dry $130 $130 $0
Ohio Dry $135 $135 $0
South Dakota Dry $125 $125 $0
California $187 $187 $0
Western Milling, Goshen, California (559-302-1074)
California Dry $195 $197 -$2
*Prices listed per ton.
Weekly Average $133 $134 -$1
The weekly average prices above reflect only those companies DTN
collects spot prices from. States include: Missouri, Iowa, Nebraska,
Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan,
Wisconsin and Indiana. Prices for Pennsylvania, New York and
California are not included in the averages.
VALUE OF DDG VS. CORN & SOYBEAN MEAL
Settlement Price: Quote Date Bushel Short Ton
Corn 10/4/2018 $3.6750 $131.25
Soybean Meal 10/4/2018 $308.40
DDG Weekly Average Spot Price $133.00
DDG Value Relative to: 10/4 9/27
Corn 101.33% 102.86%
Soybean Meal 43.13% 43.48%
Cost Per Unit of Protein:
DDG $4.93 $4.96
Soybean Meal $6.49 $6.49
Notes:
Corn and soybean prices take from DTN Market Quotes. DDG price
represents the average spot price from Midwest companies
collected on Thursday afternoons. Soybean meal cost per unit
of protein is cost per ton divided by 47.5. DDG cost per unit
of protein is cost per ton divided by 27.
Mary Kennedy can be reached at mary.kennedy@dtn.com
Follow her on Twitter @MaryCKenn
******************************************************************************
Southern Minnesota Unable to Catch a Break This Crop Year
Even though it was three months ago that a state of emergency was announced
because of weather challenges in Minnesota, conditions haven't changed much as
of Oct. 1 and are stalling harvest.
On July 5, Minnesota Governor Mark Dayton signed an Emergency Executive
Order to proclaim a State of Peacetime Emergency in numerous Minnesota
communities that were affected by significant torrential rains, flash flooding,
high winds and tornadoes.
"Some sections of southwest and southcentral Minnesota and northwest
Wisconsin have picked up three times the average amount of moisture in the last
30 days, with southern Minnesota receiving up to three months' worth of rain in
that timeframe," noted Minneapolis-St. Paul meteorologist Paul Douglas back on
June 26.
Strong storms, including 10 tornadoes, moved through southern Minnesota on
Sept. 20, destroying some farms and crops along the way. On Sept. 21, the
storms continued with wind gusts of 70 miles per hour reported in Mankato and
63 mph in Red Wing, with other areas reporting gust above 40 mph, according to
the National Weather Service.
In a news column from the University of Minnesota (U of MN) Extension,
Claire LaCanne, Agriculture Extension Educator in Rice and Steele Counties
reported recent storm damage in those counties. "The National Weather Service
(NWS) reports 10 tornadoes struck parts of southeastern Minnesota on Sept. 20
and that preliminary information indicates Rice County was hit by six
tornadoes. The storm zone included Waseca, Owatonna, Faribault, Northfield, and
Cannon Falls, plus surrounding towns.
"Soybeans are leaning, but look okay in general. They are lodged but holding
onto their pods. Sweet corn in affected areas was completely lodged and lying
on the ground. Field corn in the most severely impacted areas was mostly busted
over, with ears hanging close to the ground."
According to Shane Bugeja, agriculture extension educator in Blue Earth and
Le Sueur Counties, "Corn damage included breaking of stalks above the ear (20%
to 30% of fields observed), with one field near Morristown flattened. Wet,
low-lying spots also had completely downed corn. Likely this was due to a
combination of restricted root growth, pathogens, and internal weakening from
translocation. Soybeans were relatively unscathed, but had a noticeable lean to
them."
Liz Stahl from the U of MN Regional Extension Office in Worthington,
Minnesota, told DTN by email Sept. 28 that, "I do not have a good feel for how
big the area was where corn and soybeans were blown down. That is another story
as yield impacts could be significant, depending on if the crop is flattened
and not able to be harvested, or if it is just lodged and they can still
combine it."
Stahl noted that the recent rains did not really affect yield in most of
southwest Minnesota and much of south central Minnesota, since areas where
water ponded had already drowned out earlier in the year. "If wet conditions
persist and people can't get into the fields before we have a lot of downed
corn or pod shatter in soybeans that is another story. But fortunately we
haven't had much rain recently, and hopefully the weather will cooperate so
harvest can continue. I did see some corn getting combined this morning, so
that is a good sign."
Here is the link to a blog posted on Sept. 26 by the U of MN Extension about
harvest considerations for storm-damaged corn and soybean:
http://blog-crop-news.extension.umn.edu/2018/09/harvest-considerations-for-storm
.html#more
I spoke with some farmers that I had talked to in July when their fields
were inundated with rain, wondering how things look now after the recent
onslaught of storms.
Jerry Demmer, a corn and soybean farmer from Clarks Grove, Minnesota, said,
"There has been very few fields of beans harvested in our area; there are beans
that are ready, but the sun needs to stay out for field drying in order for the
beans to be delivered to the elevator or for bin storage. While that was not my
picture, there are pockets in the fields here that have standing water waiting
for the system to catch up from the last 5-inch rain event. So far, there is no
quality or yield concerns for either crop, but as we continue to have wetter
conditions, and the later we get, the concern is for stalk quality in corn and
the potential for wind damage."
Chad Schmidt, of Alden, Minnesota, told me on Sept. 27 that, "There are a
couple neighbors starting harvest this afternoon. A couple more will try
tomorrow if rain stays away. Most beans need another week to mature and dry.
Still water standing in a few spots. Some corn got hit pretty hard from high
winds with the storm we had last week. Guessing if beans won't go next week or
in the next 10 days, we will see corn harvest start on those fields. Lodged
corn appears to be the worst of the problems right now."
When I spoke with Lyn Wessel who farms in Watonwan County, Minnesota, at the
end of June after heavy rains hit, he named his area the "I-90 corridor mega
swamp." He told me this past week that they had started on soybeans, but his
corn has large areas drowned out or is "just crap." Wessell said that there is
a lot of corn in the area going down. Stalks were cannibalized because they ran
out of nitrogen in July and it was too muddy to apply more even if he wanted to
do it. (In response to stress, corn plants will mobilize sugars to fill the
kernels, resulting in reduced sugar content of stalks. This process is referred
to as stalk cannibalization.)
"My neighbor combined 140 acres of a 240-acre corn field, tore it up pretty
bad and quit," said Wessel, adding that he hoped he can do the soybeans until
it rains.
"There is a corn crop out there," said Wessel. He said it is impossible to
estimate his yields, but gave me this estimate. "Best field actual production
history yield (APH) 220 bushel per acre (bpa) maybe make 170? (Corn) broke off
pretty bad already, so how much harvest loss? Worst field APH 208 bpa maybe 70
bpa? Eighty-four acres, about 30 will be zero, another 30 won't make 100 bpa.
"Watonwan County average last year was 218 bpa. Whole farm yields of 240 bpa
common on good ground, best areas of fields were 285. This year maybe 160 bpa
county average? You tell me how NASS can estimate this mess any better than you
or I can. So, total disaster? No. Financial disaster? Yes. A consistent high
yielding area, with very high land rents; profit was gone before we got the
crop in the ground." Wessel is referring to the fact that the crop was put in
late and was way behind. He told me at the end of June that, "We have had big
rains over and over and over again for two months. I've had 19 inches of rain
since mid-April and you'd be hard pressed to find anyone in a 50-mile radius
who has had less."
Wessel added, "I've always said if southern Minnesota and northern Iowa was
one state we'd average just as good of corn as Illinois; but not this year."
FINANCIAL IMPACT
Corn or soybeans that have been damaged or drowned out will be devastating
to farmer's bottom line, as mentioned earlier by Wessel. Besides yield losses,
damage discounts for mold or other weather-related issues will cause additional
monetary losses to the farmer. For soybeans, shattering will cause yield
losses. Shattering, the splitting of pods and loss of seeds, occurs in mature
beans and increases with repeated cycles of wetting and drying. Prolonged
wetting due to submersion may amplify shattering losses.
"Most farmers I know have drowned out spots this year, and for some, the
amount is significant. This will drive down average yield (as well as total
yield) from the field," said Stahl. "As far as the "tariff relief" payments, I
understand that is based on what you produce this year too, so growers would
not see anything from these payments where they were not able to produce a
crop."
I asked Keith Newman Grain Department Manager for New Vision Co-op in
Brewster, Minnesota, what he was seeing in his draw area as far as damage and
crop losses. He told me that, "With the recent storms in the past couple weeks
we are seeing a lot of lodging in the corn. We are not seeing much sprouting,
but are seeing some mold in corn that had been hailed on in the last month. Any
additional heavy wind will cause more damage to the corn. We have some
producers combining corn right now instead of beans because of the potential
damage to corn if we have any heavy winds. I'm estimating that 1% to 2% of the
crop has been zeroed out."
As for soybeans, he told me that harvest has gotten off to a slow start.
Newman estimated about 6% of beans have been harvested and less than 1% of
corn. "The quality of bean is OK, and most beans being harvested right now are
wet, between 13% and 16% moisture because weather conditions have not given
beans the opportunity to dry down. Bean yields will vary from 40 bpa to 65 bpa,
down 10% to 15% from a year ago."
I asked him if damage or other discounts may change if a lot of the new crop
hauled to the elevator has significant damage or is too wet, and he told me
that, "New Vision's discounts are always subject to change and could
potentially change if we start to see more damage to crops."
Sadly, farmers who experience losses due to the poor 2018 growing season,
will see another lost year of profits. In a March 27 news release, U of MN
Extension reported that Minnesota farm income took another dip in 2017. "For
the third consecutive year, Minnesota farmers produced bumper crops of
Minnesota's primary cash crops, corn and soybeans. But, as has been the case
each year, high yields did not produce high profits. The median crop farm
earned $23,722, down from $46,831 in 2016."
See more on farm incomes at
https://twin-cities.umn.edu/news-events/farm-incomes-take-another-dip-2017
The news release also noted that "crop farmers are a little more optimistic
about this next year (2018 crop)." Apparently, Mother Nature didn't get the
message.
Mary Kennedy can be reached at mary.kennedy@dtn.com
Follow her on Twitter @MaryCKenn
******************************************************************************
DDG Prices Firm
OMAHA (DTN) -- Distillers dried grains spot prices from the 40 locations DTN
contacted were mixed, but on average, were $1 per ton higher versus one week
ago at $134 per ton for the week ended Sept. 27.
Based on the average of prices collected by DTN, the value of DDG relative
to corn for the week ended Sept. 27 was at 102.86%. The value of DDG relative
to soybean meal was at 43.48%. The cost per unit of protein for DDG was $4.96,
compared to the cost per unit of protein for soybean meal at $6.49.
DDG spot prices were mixed this week, but slightly higher on average as
higher corn and soymeal prices supported the market. Wednesday's Energy
Information Administration report showed ethanol plant production declined 4%
last week, helping to keep DDG supplies in line with the demand.
In its weekly distillers dried grains with solubles (DDGS) price update,
U.S. Grains Council noted, "On average, DDGS prices for 40-foot containers to
Southeast Asia fell $1/metric ton (MT) for October delivery. Containers to
Vietnam fell $3/MT and DDGS at the Gulf fell $4/MT from last week to $186/MT.
International demand is expected to eventually push DDGS values upwards,
following corn futures."
ALL PRICES SUBJECT TO CONFIRMATION CURRENT PREVIOUS CHANGE
COMPANY STATE 9/27/2018 9/20/2018
Bartlett and Company, Kansas City, MO (816-753-6300)
Missouri Dry $145 $140 $5
Modified $75 $73 $2
Show Me Ethanol LLC, Carrollton, MO (660-542-6493)
Missouri Dry $145 $130 $15
Wet $75 $70 $5
CHS, Minneapolis, MN (800-769-1066)
Illinois Dry $140 $140 $0
Indiana Dry $132 $132 $0
Iowa Dry $130 $130 $0
Michigan Dry $140 $140 $0
Minnesota Dry $130 $130 $0
North Dakota Dry $130 $130 $0
New York Dry $155 $155 $0
South Dakota Dry $130 $130 $0
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
Kansas Dry $140 $140 $0
POET Nutrition, Sioux Falls, SD (888-327-8799)
Indiana Dry $132 $135 -$3
Iowa Dry $130 $130 $0
Michigan Dry $142 $142 $0
Minnesota Dry $132 $130 $2
Missouri Dry $147 $150 -$3
Ohio Dry $138 $140 -$2
South Dakota Dry $130 $130 $0
United BioEnergy, Wichita, KS (316-616-3521)
Kansas Dry $135 $130 $5
Wet $55 $40 $15
Illinois Dry $148 $147 $1
Nebraska Dry $135 $130 $5
Wet $55 $40 $15
U.S. Commodities, Minneapolis, MN (888-293-1640)
Illinois Dry $130 $130 $0
Indiana Dry $130 $127 $3
Iowa Dry $125 $125 $0
Michigan Dry $130 $130 $0
Minnesota Dry $120 $120 $0
Nebraska Dry $135 $135 $0
New York Dry $140 $140 $0
North Dakota Dry $145 $145 $0
Ohio Dry $125 $130 -$5
South Dakota Dry $125 $130 -$5
Wisconsin Dry $125 $130 -$5
Valero Energy Corp, San Antonio Texas (210-345-3362) (210-345-3362)
Indiana Dry $135 $135 $0
Iowa Dry $130 $125 $5
Minnesota Dry $130 $120 $10
Nebraska Dry $130 $130 $0
Ohio Dry $135 $140 -$5
South Dakota Dry $125 $125 $0
California $187 $185 $2
Western Milling, Goshen, California (559-302-1074)
California Dry $197 $192 $5
*Prices listed per ton.
Weekly Average $134 $133 $1
The weekly average prices above reflect only those companies DTN
collects spot prices from. States include: Missouri, Iowa, Nebraska,
Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan,
Wisconsin and Indiana. Prices for Pennsylvania, New York and
California are not included in the averages.
**
VALUE OF DDG VS. CORN & SOYBEAN MEAL
Settlement Price: Quote Date Bushel Short Ton
Corn 9/27/2018 $3.6475 $130.27
Soybean Meal 9/27/2018 $308.20
DDG Weekly Average Spot Price $134.00
DDG Value Relative to: 9/27 9/20
Corn 102.86% 105.64%
Soybean Meal 43.48% 42.71%
Cost Per Unit of Protein:
DDG $4.96 $4.93
Soybean Meal $6.49 $6.56
Notes:
Corn and soybean prices take from DTN Market Quotes. DDG price
represents the average spot price from Midwest companies
collected on Thursday afternoons. Soybean meal cost per unit
of protein is cost per ton divided by 47.5. DDG cost per unit
of protein is cost per ton divided by 27.
Mary Kennedy can be reached at mary.kennedy@dtn.com
Follow her on Twitter @MaryCKenn
******************************************************************************
Union Pacific Announces New Operating Plan; STB Asks for More Details
Union Pacific (UP) has announced a new operating plan to implement Precision
Scheduled Railroading principles. Soon after, the U.S. Surface Transportation
Board wrote a letter to UP requesting weekly phone calls about the
implementation of its operating changes and any impacts to its customers and
others.
"Unified Plan 2020 will launch Oct. 1 and will be rolled out in phases
across the entire Union Pacific (UP) rail network," UP said on its website
Sept. 17. "Effective Oct. 1, 2018, this plan will combine Precision Scheduled
Railroading principles with our UP Way best practices by involving our
employees closest to the work, taking a thoughtful and deliberate approach to
phasing in the roll out, and communicating thoroughly with you, our customers.
By fundamentally shifting our focus from moving trains to moving cars, we will
be better able to place an emphasis on reducing car dwell," said UP.
The company said under the new plan Union Pacific customers can expect to
see:
-- More reliable and predictable service offerings
-- Improved availability of crews and locomotives
-- Potential for improved customer asset utilization
-- Direct communication in advance of changes.
UP said that this plan will first be implemented on its North/South
corridor, creating more streamlined operations from Wisconsin to Texas.
"Further roll out will occur in phases with initial implementation across the
entire rail network expected by 2020. We will closely monitor the impact of
these changes to align our strategy with our overall goals to improve network
performance and provide the reliable service you have come to expect," added UP.
Three days later, on Sept. 20, the Surface Transportation Board (STB) sent a
letter to UP, asking for weekly conference calls for briefings with UP senior
management on the carrier's plan to implement its version of the precision
scheduled railroading, an operating plan made popular by the late railroad CEO
E. Hunter Harrison.
In the letter to UP, the STB said "We are well aware of UP's service
challenges this year and believe that it is essential that all carriers strive
to provide efficient and reliable service to their customers."
The STB reminded UP in the letter that the CSX Transportation, Inc. (CSX)
last year experienced serious service disruptions for its customers, and for
other railroads as well, when CSX implemented the same program. "In light of
those events, we trust that the UP will work in a transparent manner to avoid
similar disruptions in the nation's rail system," said the STB.
The STB asked UP to keep the Board fully informed about the implementation
of its operating changes and any impacts to its customers and others and to
begin holding weekly phone calls with the staff from the Board's Rail Customer
and Public assistance office. The letter also noted that UP Executive Vice
President Kenny Rocker will meet with Chairman Ann Begeman and Vice Chairman
Deb Miller and agency staff in October to provide more detailed information on
UP's planned operating changes.
In response to the STB letter, UP said that it is "happy to accommodate the
request of weekly calls" and added the company has already started scheduling
the calls.
The National Grain and Feed Association noted, in a Sept. 21 press release,
that UP said its "version" of precision scheduled railroading (which Harrison
implemented at the Illinois Central, Canadian National, Canadian Pacific and
CSX during his respective tenures as their CEO) will consist of:
1) Shifting the focus of operations from moving trains to moving cars
2) Minimizing car dwell times, car classification events and locomotive
power requirements
3) Utilizing general-purpose trains by "blending" existing train services
4) "Balancing" train movements to improve utilization of crews and rail
assets.
NGFA President Randy Gordon commended the STB for its enhanced monitoring of
UP and said NGFA will follow up with the agency on ways NGFA can continue to
relay "ground-truth information" from its members on UP's service performance
as it implements precision scheduled railroading.
(To read about the issues affecting the performance of the CSX after it
implemented precision scheduled railroading, here is the link to the DTN blog
on it from Aug. 28, 2017:
https://www.dtnpf.com/agriculture/web/ag/perspectives/blogs/market-matters-blog/
blog-post/2017/08/28/transportation-board-csx-get-service)
Mary Kennedy can be reached at mary.kennedy@dtn.com
Follow her on Twitter @MaryCKenn
******************************************************************************
DDG Prices Slightly Higher
OMAHA (DTN) -- Distillers dried grains spot prices from the 40 locations DTN
contacted were mixed, but on average, were $1 per ton higher versus one week
ago at $133 per ton for the week ended Sept. 20.
Based on the average of prices collected by DTN, the value of DDG relative
to corn for the week ended Sept. 20 was at 105.64%. The value of DDG relative
to soybean meal was at 42.71%. The cost per unit of protein for DDG was $4.93,
compared to the cost per unit of protein for soybean meal at $6.56.
DDG prices were under pressure earlier this week as corn prices continued
last week's trend lower, but Thursday's near-7-cent recovery in the futures did
take some of the pressure off DDG prices in some areas. DDG supplies remain
plentiful as ethanol plant production increased last week. The EIA on Wednesday
showed a higher-than-expected plant production increase last week, while market
discussions pointed to thinning margins that have prompted some plants to
consider reducing plant run rates.
In its weekly distillers dried grains with solubles (DDGS) price update, the
U.S. Grains Council noted, "DDGS export prices were generally down across the
board. A continued pickup in interest from international buyers is being
reported as prices are nearing the market's bottom. On average, prices for
40-foot containers to Southeast Asia fell $4/metric tons (MT) for October; FOB
Gulf indications and U.S. rail rates were down as well."
ALL PRICES SUBJECT TO CONFIRMATION CURRENT PREVIOUS CHANGE
COMPANY STATE 9/20/2018 9/13/2018
Bartlett and Company, Kansas City, MO (816-753-6300)
Missouri Dry $140 $145 -$5
Modified $73 $75 -$2
Show Me Ethanol LLC, Carrollton, MO (660-542-6493)
Missouri Dry $130 $140 -$10
Wet $70 $75 -$5
CHS, Minneapolis, MN (800-769-1066)
Illinois Dry $140 $142 -$2
Indiana Dry $132 $135 -$3
Iowa Dry $130 $135 -$5
Michigan Dry $140 $142 -$2
Minnesota Dry $130 $130 $0
North Dakota Dry $130 $125 $5
New York Dry $155 $162 -$7
South Dakota Dry $130 $125 $5
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
Kansas Dry $140 $140 $0
POET Nutrition, Sioux Falls, SD (888-327-8799)
Indiana Dry $135 $136 -$1
Iowa Dry $130 $135 -$5
Michigan Dry $142 $142 $0
Minnesota Dry $130 $132 -$2
Missouri Dry $150 $151 -$1
Ohio Dry $140 $144 -$4
South Dakota Dry $130 $135 -$5
United BioEnergy, Wichita, KS (316-616-3521)
Kansas Dry $130 $130 $0
Wet $40 $40 $0
Illinois Dry $147 $147 $0
Nebraska Dry $130 $130 $0
Wet $40 $40 $0
U.S. Commodities, Minneapolis, MN (888-293-1640)
Illinois Dry $130 $130 $0
Indiana Dry $127 $127 $0
Iowa Dry $125 $125 $0
Michigan Dry $130 $130 $0
Minnesota Dry $120 $120 $0
Nebraska Dry $135 $135 $0
New York Dry $140 $140 $0
North Dakota Dry $145 $130 $15
Ohio Dry $130 $130 $0
South Dakota Dry $130 $120 $10
Wisconsin Dry $130 $130 $0
Valero Energy Corp, San Antonio Texas (210-345-3362) (210-345-3362)
Indiana Dry $135 $125 $10
Iowa Dry $125 $115 $10
Minnesota Dry $120 $120 $0
Nebraska Dry $130 $135 -$5
Ohio Dry $140 $135 $5
South Dakota Dry $125 $120 $5
California $185 $185 $0
Western Milling, Goshen, California (559-302-1074)
California Dry $192 $200 -$8
*Prices listed per ton.
Weekly Average $133 $132 $1
The weekly average prices above reflect only those companies DTN
collects spot prices from. States include: Missouri, Iowa, Nebraska,
Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan,
Wisconsin and Indiana. Prices for Pennsylvania, New York and
California are not included in the averages.
**
VALUE OF DDG VS. CORN & SOYBEAN MEAL
Settlement Price: Quote Date Bushel Short Ton
Corn 9/20/2018 $3.5250 $125.89
Soybean Meal 9/20/2018 $311.40
DDG Weekly Average Spot Price $133.00
DDG Value Relative to: 9/20 9/13
Corn 105.64% 109.91%
Soybean Meal 42.71% 42.40%
Cost Per Unit of Protein:
DDG $4.93 $4.89
Soybean Meal $6.56 $6.55
Notes:
Corn and soybean prices take from DTN Market Quotes. DDG price
represents the average spot price from Midwest companies
collected on Thursday afternoons. Soybean meal cost per unit
of protein is cost per ton divided by 47.5. DDG cost per unit
of protein is cost per ton divided by 27.
Mary Kennedy can be reached at mary.kennedy@dtn.com
Follow her on Twitter @MaryCKenn
******************************************************************************
Lack of Pacific Northwest Export Bids Keeping New-Crop Soybean Basis in the
Cellar
The trade war between the U.S. and China has now gone on for over two
months, and while recent reports say there are expectations for another meeting
"soon," between the two countries, no meeting has been officially announced.
Now, with President Donald Trump planning to impose new tariffs on about $200
billion of Chinese imports this week, that meeting may not happen. Still, there
are many who believe that China will have to come back for U.S. soybeans
regardless of any resolutions.
But not so fast.
Red River Farm Network reported on July 12 that a key China National
Cereals, Oils and Foodstuffs Corporation (COFCO) official said in an interview
with China's state-run newspaper, that China will be able to replace U.S.
soybean exports with alternative sources. That includes an increase in business
with Brazil and Argentina. The senior COFCO official also said China can buy
more soybean meal, sunflowers and sunflower meal, canola and canola meal and
fish meal to fill its needs. COFCO is one of China's state-owned
food-processing holding companies.
It's clear that Pacific Northwest (PNW) exporters have no expectations for
China business. Since mid-June, as the trade war talks heated up, PNW export
bids disappeared -- not just for harvest time, but also for the first quarter
of 2019. An exporter recently told me that any pre-contracted soybean sales had
been shifted to other destinations.
Frayne Olson, a crops economist/marketing specialist at North Dakota State
University, said, "We have missed our peak sale season for new-crop soybeans,
as PNW exporters will book October, November, December shipments in July,
August and September."
Olson said that, even if the China tariffs "went away" in the near future,
"It would take at least three months, if everything works perfectly, to get
soybeans efficiently moving in to the PNW export channel." Olson said he has
told the farmers he has spoken to at various meetings that they need to
"prepare to store this year's soybean crop until at least mid-summer 2019."
I reached out to a few elevators in North Dakota and was told that some
exporters on the PNW have been asking elevators to roll September-October
shuttle sales to December-January, while others just want to buy the contracts
back. I was also told that country elevator bids will continue to vary widely
based on what positions the elevator is in. One elevator manager said he was
unaware of anyone at "no bid" except possibly some non-shuttle elevators.
Without the PNW market, the market for North Dakota right now is mainly at
the Gulf. However, Gulf- and St. Louis-delivered shuttle markets are at a
negative basis, record lows for October, reflecting farm bids in North Dakota
in the negative $1.80s. A shipper told me that it feels like the wide country
October basis levels could easily push forward into November-December, and
maybe further, without China. Friday's cost, insurance and freight (CIF) Gulf
basis was at a seasonal low of -8X (November futures), and the rail bid
delivered to St. Louis was -68X.
Just recently, BNSF Railway extended the temporary rates out of North Dakota
to St. Louis through March. Nevertheless, as the Northern Plains soybeans flow
to those destinations, traffic will likely become congested, probably causing
those markets to go to no bid or even cheaper bids if they fill up.
Olson told me that, if soybeans make a mad dash for the Gulf, it could turn
into a "no room at the inn" scenario. "We can only push so many soybeans into
the pipeline at a time," he said.
Keith Brandt, general manager of Plains Grain and Agronomy LLC in Enderlin,
North Dakota, said, "We have been telling our growers for a long time that our
space for soybeans this fall was going to be limited. We will take the
contracted soybeans, but beyond that, there is no guarantee. We will have some
space now for price later, but it won't get us through harvest. Once that
price-later space is filled, it's cash or basis fixed. However, farmers have
done a good job of making space at home for those extra beans."
Brandt said that a good carry in the market is a big help. "Local processors
have a better basis, but there is a long wait in lines, and $7.00 beans isn't
friendly to the farmer."
"It will be just another chapter in the book for another harvest," added
Brandt.
Cory Tryan, manager of the grain department and logistics at Alton Grain
Terminal LLC in Hillsboro, North Dakota, said: "Bean harvest has started, but
at a slow pace for deliveries against contracts, some are binning the early dry
stuff (9-11% moistures) on farm in case we get wet. Most of the beans are too
green yet, but we could see harvest pick up around the 20th (of September). The
first beans coming off are lower 40s (bushels per acre), on average, or around
5 bushels per acre better than projected after the heat and lack of rain late
July and first half August. So far, this is a couple of bushels over an average
year's crop."
Tryan said that pre-contracted beans will still come to town; however, most
of the overrun will have to be stored on farm. The options to do this include
older bins, buildings, newly added bins and more bags. The last choice would be
to pile beans on the ground.
Piling soybeans is a big risk and could degrade the oil in their seeds,
which is a crucial part of their value. Also, because of that oil, piled
soybeans could rot faster.
Ken Hellevang, an NDSU Extension grain management specialist, told the
Bismarck Tribune in August that farmers shouldn't store soybeans in exposed
piles. "A 1-inch rain can spoil the top 2 to 3 feet on a pile, which is
'devastating' in most farm operations," Hellevang told the Bismarck Tribune.
"Storing grain in silo bags on the ground is preferable to exposed piles, but
the beans first should be dried to 11% moisture. Drying beans will reduce
pounds for sale by roughly 2% and can cause breakage. The bags aren't aerated
and moisture can collect and move in them."
One shuttle loader told me that soybeans are in "new territory" for everyone
involved on both ends of the supply chain. Each has different positions and
space to manage their risks, which are much higher this year at every stop
along the chain for the harvest window.
CAN CORN SAVE THE DAY?
Olson said that, for now, corn would replace the normal harvest flow of
soybeans to the PNW from North Dakota and other Northern states that typically
ship harvest beans west.
The PNW supplies corn buyers in Japan on a regular schedule and also
supplies South Korea and the Philippines. Still, posted corn basis bids for
delivery to the PNW have been slipping lower ahead of harvest, with
expectations that more corn will move there due to the lack of soybean bids.
Friday's basis for BNSF shuttles delivered to the PNW was at +65Z/+70Z for
October. Similar to the Gulf and St. Louis for soybeans, if the PNW market gets
flooded with corn, that basis could drop as well or limit delivery time.
Other shuttle loaders in North and South Dakota agree that corn will be the
main commodity shipped at harvest in order to keep space open for beans on the
farm and at the elevator.
"Our farmers will lean on us for dumping their corn, and we will pile corn,"
said Brandt. "The basis isn't too bad for corn, and freight should be available
so that we can ship corn at harvest and not get too upside down."
As of Friday, BNSF secondary shuttle freight bids for September and October
were at no bid and offers were at -$100 per car under tariff, prices unheard of
as harvest nears but good for shippers who need freight.
Nevertheless, do not forget the one red light that is suddenly flashing:
USDA recently forecast a record U.S. corn yield of 181.3 bpa, with production
totaling 14.8 billion bushels. If that forecast comes true, we will have more
corn than homes available for it at harvest and well in to next year.
Stay tuned. This story is far from over.
Mary Kennedy can be reached at mary.kennedy@dtn.com
Follow her on Twitter @MaryCKenn
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