How it Works
Similar to a forward contract, you would commit to sell a certain quantity of bushels to be delivered at a later date. Instead of setting a price today you would choose the Merchant Plus pricing period you want to use. Your bushels are added to a pool that will be marketed by market analysis professionals at FCStone. FCStone has first-hand access to data in the global market place and has had a long-standing relationship with Farmer’s Coop Elevator. They will use their skills and experience to return the best FUTURES for your grain, which will be determined at the end of the pricing period. You will receive a cash price based on the final futures price and the elevator’s basis. Basis will be set at, or any time prior to delivery.
Reference Futures Contract
|Mar 2016 Corn
||July 2016 (CN16)
||9/1/15 – 11/1/15
||11/16/15 – 3/15/16
Aug 2016 Corn
|Sep 2016 (CU16)
||9/1/15 – 11/1/15
11/16/15 – 8/15/16
|Nov 2016 Corn
||Dec 2016 (CZ16)
||9/1/15 – 11/1/15
||11/16/15 – 11/15/16
Merchant Plus allows you to take advantage of alternative marketing strategies without the hassle involved with finding the right strategy, deciding when to implement it, and worrying about how it turns out. Committing a portion of your production is a good way to diversify your marketing portfolio and spread your price risk.
Merchant Plus cannot guarantee you a certain price or that it will outperform your usual marketing strategies. By pooling grain with other producers, FCStone will be able to utilize many different marketing tools to more broadly diversify your grain marketing portfolio to TRY and give you an above average futures price. We recommend doing no more than 10-20% of your production.
Farmer’s Coop Elevator charges an administrative fee of $0.02/bushel on all bushel committed to Merchant Plus. This fee will be deducted off of the final cash price when payment is made.
To enroll in Merchant Plus or if you have any questions contact the following.
Grain Office: 308-487-3325
Tucker Hamilton: 308-360-0830
Download the PDF here. Merchant Plus Marketing
Winter wheat peaking out of the ground near Farmer’s Coop Elevator.
The current talk in the market is corn and soybeans. As of Monday September 21, corn harvest was 10% complete in the US compared to 5% last week and 7% last year. Corn condition was 68% good/excellent, unchanged from last week and down from 74% last year. Daily reports put corn yields at average or better in many areas with some setting record highs.
New crop sales in the panhandle are extremely low with producers indicating break evens near or above $4.00/bu. USDA stocks and acreage report will be released Wednesday September 30. Old crop carryout from 2014 is estimated at 1.732 billion bushels higher than 2013 carryout of 1.232 billion bu. We will also see an updated number of prevent plant acreage from the USDA. FSA numbers on September 1 indicated prevent plant acres of corn at 2.35 million acres. Nebraska has 127,266 prevent plant acres of corn with 7,157 acres (5% of Nebraska) in Box Butte county and 10,309 acres (8% of Nebraska) in Sheridan county.
Recent realtor surveys in Iowa show farmland values declining 11.3% from September 2014 to September 2015. Values need to decline another 20% to be in line with below $4.00 corn futures. Concerns over economics involved with the ethanol industry are building. Low corn prices benefit ethanol margins but long term predictions of depressed energy values may cause that to change. If margins become negative, corn demanded for ethanol would drop considerably.
Wheat is being pulled around by soybean and corn prices. Prices have halted their downward trend and are being spurred by dryness in wheat producing areas in Australia and Russia reducing wheat production estimates. When looking at U.S. long term weather trends, historical trends show that 5 out of 8 times we had a strong El Nino weather pattern, the following winter, spring, and summer resulted in a shift into a La Nina pattern causing drought conditions.
Hemingford Scales and Main Office
A constant stream of bad news is required to promote a bull market. There is a severe lack of news of any kind and the result has been a bearish corn market for the last couple weeks. Weather was favorable, crops looked good, and there was nothing to get trade excited about corn. The story has changed, if ever so slightly, in the last couple days. Early unconfirmed reports coming out of Illinois suggest average yields are lower than the USDA estimate for the state and could be 15-20% below last year. Concern over lower yield, news that heavy rains have flooded a few small areas, and pre-report positioning by speculators has spurred a slight rally in corn prices over the last two days.
Economics 101 dictates that prices are determined by supply and demand. When supply is greater than demand the price drops because there is a surplus. What people don’t realize is that world demand for corn is high and continues to increase just about every year. Our current dilemma stems from the fact that supply is growing faster than demand. Producers are really good at producing corn, especially in South America. South America is predicting a record corn crop this year and since they have made considerable improvements to their infrastructure, they are now a large competitor in the world market.
In the Panhandle of Nebraska overnight temperatures are dipping into the low 50s and daytime highs range from 75-80 degrees, 10-15 degrees lower than they have been for the last few weeks. On August 23 there was a spotty frost that wiped out a couple pivots of beans in the area and hurt a little corn. A large portion of this area’s corn was planted around June 1 and some of it has not even started denting yet. The million dollar question is when the first major frost is going to happen. Some producers are not taking the chance and chopping their late corn for silage and others are seriously considering doing the same.
Wheat is singing the same song, just a little bit louder. Wheat has been bearish since July 1st, dropping $1.50 in two months. Winter wheat harvest was not great with weather causing reductions in quality but it was more than made up for with spring wheat that was and is seeing great weather for growing and harvest. El Nino is extremely favorable this year and reports all around the world say that wheat conditions are favorable and crops look good. Wheat continues to take a back seat to corn and soybeans as there is still some uncertainty about yield and acres that will need to be debated. Russian wheat is still $0.40-$0.60 cheaper than US wheat.
New crop sales are lagging as the costs of production are too high relative to commodity prices. Land rental rates are number one on the list of things to give way in order to lower costs of production. Universities in several states are holding seminars on how to set a “fair” price. University of Illinois economists estimate that land rents need to drop $50 to $100 dollars in order to move the ag balance sheets so they are profitable. However, it is unprecedented to do that all in the same year in the hopes that commodity prices come back up.