Corn basis strategy

first_imgShare Facebook Twitter Google + LinkedIn Pinterest CornThe Tuesday USDA report didn’t hold any surprises last week. However, the Monday afternoon report showed farmers planted 40% of acres in one week. Some Chicago analysts say there is a downside to this quick corn planting. Weather within days of July 1 now becomes extremely critical for pollination across the Midwest. Weather variances in this single week could swing the national bushels per acre by five, or corn futures from $3 to just short of $5. So much money could be made if we knew what the weather would be in just that one week. Preliminary El Nino reports indicate good weather is a higher probability than bad in early July.On Thursday last week wheat rallied 30 cents on rumors Russians are going to stock pile grain and freeze potential in the Dakotas. Speculators have a huge short position on, so when they go to cover those positions the market gets very volatile. If something spooks corn speculators, we could see a similar type of rally. But, no one knows what would be that spark right now. SoyeansThe USDA estimates 350 million carryout bushels in 2015, which is more than double what is considered adequate. The USDA is predicting 500 million bushels next year. If this happens, it would be extremely burdensome to the market, and would likely cause prices to drift to $8. This is why beans do not have a lot of potential for price rallies. Lack of farmer selling is probably the most bullish story out there right now. Corn basis strategyBasis is the spread between the CBOT futures price and the cash price paid locally for corn. Basis represents the demand for grain in any area of the country (or world). It increases or decreases at each location based on grain demand or movement.For example, if farmers are not selling grain, an end user’s only choice to get the grain they need is to increase the basis. Conversely, if farmers are selling a lot, demand by end users decreases, so they can bid lower than the CBOT (slowing the pace of grain movement). This is why it is so important farmers watch the basis AND the CBOT futures prices. It’s also why we seldom if ever see corn basis and futures prices hit highs at the same time.Many farmers have the “deer in the headlights” approach to selling their remaining old crop as futures prices have fallen the last few weeks. They are frozen with fear. Many think if they wait it out the price will rally (which has happened in some recent years). This collective holding strategy has allowed basis prices to rally some. But, end users know farmers are holding on to a lot of bushels that need to be moved before new crop is harvested. It’s just unclear when farmers will sell.This “holding” is scaring some end users that there won’t be enough coverage for their next two months’ needs, so they are putting on coverage right now. This has increased basis the last few weeks. If futures were to rally though, the basis would likely fall because farmers would sell their old crop. Eventually corn will have to be sold, when it does, basis will collapse.This week I advised my clients to set the basis on any remaining old crop bushels. This does NOT mean they set futures or cash prices, just the basis. As I mentioned before, this is one of the three independent “levers” farmers can use as part of their grain marketing/pricing strategy — one many farmers don’t utilize to its optimal profit potential.Jon grew up raising corn and soybeans on a farm near Beatrice, NE.  Upon graduation from The University of Nebraska in Lincoln, he became a grain merchandiser and has been trading corn, soybeans and other grains for the last 18 years, building relationships with end-users in the process.  After successfully marketing his father’s grain and getting his MBA, 10 years ago he started helping farmer clients market their grain based upon his principals of farmer education, reducing risk, understanding storage potential and using basis strategy to maximize individual farm operation profits.  A big believer in farmer education of futures trading, Jon writes a weekly commentary to farmers interested in learning more and growing their farm operations. Trading of futures, options, swaps and other derivatives is risky and is not suitable for all persons.  All of these investment products are leveraged, and you can lose more than your initial deposit.  Each investment product is offered only to and from jurisdictions where solicitation and sale are lawful, and in accordance with applicable laws and regulations in such jurisdiction.  The information provided here should not be relied upon as a substitute for independent research before making your investment decisions.  Superior Feed Ingredients, LLC is merely providing this information for your general information and the information does not take into account any particular individual’s investment objectives, financial situation, or needs.  All investors should obtain advice based on their unique situation before making any investment decision.  The contents of this communication and any attachments are for informational purposes only and under no circumstances should they be construed as an offer to buy or sell, or a solicitation to buy or sell any future, option, swap or other derivative.  The sources for the information and any opinions in this communication are believed to be reliable, but Superior Feed Ingredients, LLC does not warrant or guarantee the accuracy of such information or opinions.  Superior Feed Ingredients, LLC and its principals and employees may take positions different from any positions described in this communication. Past results are not necessarily indicative of future results. He can be contacted at jon@superiorfeed.com.last_img read more

News Briefs

first_imgSmart meter case settledA protracted legal squabble over the installation of smart meters in a Chicago suburb may be at an end.According to an article in the Chicago Tribune, the Naperville City Council has voted to pay Kim Bendis $117,500 to settle her federal lawsuit alleging the city and police officers violated her constitutional rights during an arrest two years. Bendis, an outspoken critics of the city’s plan to install smart meters, was filming a smart meter installation at the time.As GBA reported earlier, Bendis and a group she founded objected to the installation of smart meters on privacy grounds. A federal district court judge earlier this year, however, blocked the group’s efforts to stop the installations. Colorado now offers energy scorecardColorado has become the second state in the country to offer the Home Energy Score program, a rating system that provides home efficiency scores and recommendations to both buyers and sellers.The rating system was developed by the U.S. Department of Energy (DOE), and in Colorado will be run by the state’s Energy Office. Connecticut began offering the program in April and a number of other states also have expressed interest, the Energy Department said.Qualified assessors collect information about a property and generate a score on a scale of 1 to 10. Assessments give buyers the benefit of an energy rating similar to the miles-per-gallon sticker on a vehicle, and guide sellers on how to make their houses more attractive to buyers.Colorado is offering $750 for every 1-point improvement a borrower makes on the score at the time of purchase or refinance, up to $3,000 for a 4-point improvement, DOE said. Price of solar energy hits all-time lowUtility-scale solar developers have been negotiating power sales agreements with utilities at prices averaging 5 cents per kilowatt hour, an all-time low, the Lawrence Berkeley National Laboratory said in a report.The lab attributed lower prices to lower installed costs, improved project performance, and a surge in the number of projects in anticipation of a sharp cut in the investment tax credit at the end of 2016. Utility-Scale Solar 2014 also reports that installed project costs have dropped by more than 50% since 2009, with median up-front costs falling from about $6.30 per watt in 2009 to $3.10/watt for projects completed last year.Newer projects also generate electricity more efficiently. Projects finished in 2013 had an average capacity factor of 29.4% in 2014, what the lab called a “notable improvement” over projects built in 2012 and 2012. Power purchase agreements also have fallen to new lows, the report said, and make solar “an increasingly cost-competitive option for utilites.” Student design competition opensThe U.S. Department of Energy is looking for college design teams to develop plans for low-cost, zero-energy homes suitable for mainstream builders.Registration is now open for DOE’s 2016 Race to Zero Student Design Competition, to take place at the National Renewable Energy Laboratory in Golden, Colo., next April 16 and 17.The 2015 competition attracted 33 teams from 27 U.S. and Canadian universities. According to the DOE website, teams are given a specific design problem and asked to either redesign an existing floor plan or create a new design that satisfies project requirements.There are four categories, with up to 10 teams competing in each: suburban single-family detached, urban single-family detached, attached (two- to six-unit duplex or townhouse style), and small multifamily (three or fewer stories above grade). There’s more information at the Department of Energy website.center_img PHIUS wins foundation grantThe Passive House Institute U.S. (PHIUS) has picked up a $200,000 grant that will fund its efforts to develop high-performance affordable housing.The money, awarded by the John D. and Catherine T. MacArthur Foundation, helped pay for programming related to multifamily Passivhaus housing at the recent North American Passive House Conference in Chicago.In addition, the grant will underwrite a variety of related PHIUS efforts on multifamily construction, including a design guide for wall assemblies, ventilation and other building components; more technical support for WUFI Passive, the modeling software used for building design; and webinars specific to multifamily design and construction.The money will be paid out over an 18-month period and furthers the organization’s goal of broadening the reach of its North American building standard.“Over the past 10 years, PHIUS has made significant progress in developing a solid designmethodology and energy performance standard appropriate for North American climates andconstruction practices,” the organization said in a news release. “Until recently, however, passive house remained something of a boutique niche for forward-thinking single-family homeowners. Not any more.”PHIUS also said it was compiling presentation slides and selected videotapes from the Chicago conference and making them available online. For more, browse its interactive website and follow the links. A business code for solar installersThe Solar Energy Industries Association (SEIA) has adopted a new business code to guide transactions between solar companies and their customers.The SEIA Solar Business Code covers advertising, customer acquisition, sales and marketing, and terms of contracts with consumers. The trade group has published the code at its website.“We’ve had a Code of Ethics for years, but wanted to push further in consumer protection,” CEO Rhone Resch said in a news release. “SEIA and the solar industry are taking the right path in helping to make sure both solar companies and consumers fully understand each and every transaction.”The rapid increase in residential solar installations has brought some growing pains to the industry. Early this year, more than a dozen members of the U.S. House of Representatives asked two federal agencies to investigate claims that consumers might be targets of “potentially deceptive sales tactics.”SEIA later published a residential consumer guide to solar power. The Federal Trade Commission also has published a guide for consumers.last_img read more

Srinagar’s poll figures a victory: separatists

first_imgSeparatists on Tuesday used the lowest-ever poll percentage of 7.14 in the Srinagar Lok Sabha by-polls to claim “a victory of their stand” in Jammu and Kashmir.In a joint statement, separatists leaders — Hurriyat chairmen Syed Ali Geelani and Mirwaiz Umar Farooq and Jammu Kashmir Liberation Front (JKLF) chief Mohamad Yasin Malik — hailed people “for complete and unprecedented poll boycott” on April 9.“People’s verdict is loud and clear. It showed commitment to achieving their fundamental political right. It is a victory and the deferment of polls vindicates that State rulers and pro-Indian parties have virtually accepted defeat,” said the joint statement. They said the Government of India’s own index of treating elections as a gauge of people’s faith in Indian democracy “stands completely exposed”. They urged people to boycott re-polling on April 13, too.“Election boycott is a significant part of our movement and people will boycott these elections,” said a Hurriyat spokesman. He said elections to Parliament, Assembly, Panchayats or municipalities, “will not serve any purpose”.The Hurriyat said it is ridiculous to blame Pakistan. “Neither an encounter occurred nor any militant from Pakistan was there. However, the Forces killed eight unarmed and innocent youth and injured over 150,” he said.Separatists are planning joint Friday prayers in Budgam, which witnessed widespread violence during the polls and saw the death of eight civilians.last_img read more

U.P. plans law against organised crime

first_imgThe Yogi Adityanath government on Wednesday gave its nod to a new law against organised crime in Uttar Pradesh along the lines of the stringent Maharashtra Control of Organised Crime Act (MCOCA). At a meeting presided by the Chief Minister, the State cabinet approved the Uttar Pradesh Control of Organised Crime Act, 2017.The BJP government is expected to introduce the proposed legislation in the Winter Session of the State Assembly, which commences from Thursday. The government said the UPCOCA was brought to check and curb acts of oganised crime and mafia, including land grabs, illegal mining, sale of illegal medicine and illicit liquor, wildlife smuggling, extortion, abduction syndicates as well as white-collared criminals. The draft of the proposed law, which could be tabled in the Assembly soon, was prepared in consultation with the State Law Department and after an “intensive study” of MCOCA, Cabinet Minister Shrikant Sharma said. A similar law was passed by the Uttar Pradesh government in 2007-08 when Mayawati was in power but it had to be withdrawn after then President Pratibha Patil refused to give it assent. Shrikant Sharma, U.P. Cabinet Minister, said it was the BJP government’s “priority” to make the State “free from injustice, crime and fear, and establish the rule of law.”Under the UPCOCA, the State would be empowered to seize the property of those implicated by the law during the period of investigation and properties acquired by people through illegal activities and organised crime would also be seized. State security would also be withdrawn from persons booked under the the law. Special courts would be set up for the trial of cases under UPCOCA for speedy conclusion. “Criminals will not be able to roam free for too long,” said Mr. Sharma.The government is introducing the UPCOCA when it already has a stringent law to check crime syndicates, the Gangsters Act. However, the UPCOCA would have 28 provisions in addition to the Gangsters Act.S.R Darapuri, retired IPS officer, was critical of the UPCOCA. He said the present laws were sufficient to deal with crimes in UP and there was no need for a special Act. Mr. Darapuri also said that the general experience was that “all such laws were misused against the weeker sections of the society,” in particular Dalits and Muslims.”These Special Acts do not help much in controlling crime. The need is for the existing laws to be implemented uniformly. There is a tendency to add more laws to cover up failure of the state in implementing existing laws,” Mr. Darapuri told The Hindu.last_img read more

French Open: Nick Kyrgios overcomes injury concerns to go past Philipp Kohlschreiber

first_imgAustralian Nick Kyrgios shrugged off injury concerns and kept his emotions in check to outclass Germany’s Philipp Kohlschreiber 6-3 7-6 6-3 on Tuesday and book his spot in the second round of the French Open.The 18th seed, who fired a total of 20 aces, including six in the first set alone, which he raced though in 30 minutes.A mini-break in the tie break was enough to hand him the second set as Kohlschreiber struggled with the Australian’s whipped groundstrokes and repeated audacious dropshots.Kyrgios, notorious for his periodic bad temper and sulks on court, sealed his victory on his first match point.last_img read more