Around the Markets

Organic Corn trading activity is picking up but prices remain subdued with bids near $7.25 and offers at $7.75 for the balance of Q4. Farmers are building storage with the harvest near its tail end, with approximately a week to go until completion.  The carry for Q1 has nearly evaporated as consumers are sitting on their hands. The dollar index has surged nearly 3.5% since the Presidential election which should continue to drive imports to the U.S. It remains to be seen what Trump will do within his first 100-days on trade, but in an announcement, this week, he reiterated that the U.S. will opt out of the TPP.  This could reduce grain imports from China, giving a bid to the organic complex. NON-GMO yellow #2 CIF remained steady at $0.10 premium over conventional the balance of Q4. Approximately 97% of conventional harvest is complete, per NASS.

Corn board futures prices are heading north, just as it appears that hedge fund bears are building positions. Per the most recent commitment of trader’s report released for the date November 15, 2016, managed money significantly reduced long positions in futures and options while adding to short positions in futures and options.  Managed money, that is short futures and options, outnumber managed money that is long by approximately, 85K contracts up from 28K contracts, 1-week ago.

Mid-west organic soy bean trading activity is accelerating for Q4.  Prices remain near the $17.25 levels, as buyers and sellers continue to wait for someone to flinch.  Farmers appear to have contracted what they need for beans, generating the cash they need for corn storage. The carry for the second quarter is flat. NON-GMO soybean CIF for November and December delivery are trading $0.10 –  $0.35 above cash but the recent rise in conventional prices could put upward pressure on premiums.

The growth in the organic space is for proteins, which is driving feed demand. The Agricultural Marketing Service recently reported that total organic milk sales were 218 million pounds in September, a 5.5% increase year over year, while organic whole milk was up 17% year over year in September (USDA). Prices for brown organic eggs are also elevated at an average price of 311.0 compared to a 5-year average of 297.3, per the USDA.

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