Play Turner’s Take Ag Marketing Podcast Episode 262

If you are having trouble listening to the podcast, please click here for Turner’s Take Podcast episodes!

New Podcast

The January WASDE was bullish across the board for the grain markets.  Soybeans, corn and wheat all closed higher. Corn finished the day limit up. In this podcast we take a look at the numbers and what we think it means for old crop and new crop.  Below we have our updated supply and demand tables a few trade ideas.  Make sure you take a listen to this week’s Turner’s Take Podcast!

If you are not a subscriber to Turner’s Take Newsletter then text the message TURNER to number 33-777 to try it out for free!  You may also click here to register for Turner’s Take.

Supply and Demand Tables

CORN

Below are my updated supply and demand tables for both corn and soybeans.  The columns on the left are old crop per the USDA report yesterday.  The middle column is my estimates for old crop.  The right column is for new crop.

We see corn ending stocks coming down to 1.3 billion bushels. This justifies corn prices at current levels.  My target for now is $5.50 old crop.  If we have weather issues this spring/summer in the US I can make a case for $6 old crop at some point.  That in turn could bring new crop to $5.

We’ll hold our current old crop positions.  I am getting a lot of calls about marketing new crop.  If you take a look at the new crop column, we estimate 92mm acres and a trend line 180.5 bpa. Personally, I think 180.5 is a lot to ask for considering it is dry in the Midwest, La Nina could continue into the spring and bring drier and hotter conditions, and the acres the US adds on will tend to have yields below the national average.

New crop corn should stay above $4 all marketing year.  A carryout of 1.5 billion bushels is right on the line of being adequate or tight.  Odds are the production number is more likely to go lower than higher.  It is hard to argue for $5 or higher in new crop with out serious weather issues this summer.

For farmers looking to start marketing and hedging new crop, I like the following as a spread

* Buy the Dec 2021 Corn $5.00 Call

* Sell the Dec 2021 Corn $6.00 Call

* Sell the Dec 2021 Corn $4.00 Put

We were doing these today for around 2 cents and margin was around $650.  Farmers who want to start pricing corn for 2020 can use this as a re-ownership strategy. I also like it a lot as a courage option spread for future sales.  If you put this option spread on you can then sell new crop on the rallies this spring/summer and still have a lot of upside left.  

Interested in working with Craig Turner for hedging and marketing?  If so then click here to open an account.  If you are a