Grain Gleanings

2024 Storage Policies

By Matt Morog, Grain Department Manager

With the lack of forward contracting, the increase in carries between futures months, and size of the potential crop; delayed pricing charges are increasing substantially. This is going on across the country. Larger DP storage charges hedge the risk for the grain buyer when they need to sell large quantities of product during fall harvest. In our case it’s going to allow us to make soybean train sales ahead of the combine and prior to purchasing the grain. At the elevator we need some protection from the potential basis appreciation that will likely happen after fall harvest when we purchase DP grain that has already been shipped off. Without the offsetting DP charges making up for the basis appreciation there would be no incentive to sell the grain ahead of time and create space that we desperately need for our customers during harvest.

A potential big play this fall will be the use of basis contracts. Basis contracts allow the seller to set basis only on their delivered grain. Basis contracts are subject to the market’s carries and inverses. In a carry market, basis will widen but be offset by the increase in futures price versus the prior month. In an inverse market, the basis will improve but be offset by the decrease in the futures price versus the month prior. The seller maintains all futures risk up/down. A benefit of a basis contract is the ability to be paid an advance on the bushels.

Example: I set basis on 10,000 bushels of beans at a basis of -.75X for harvest delivery. The bushels were delivered on October 10. I am bullish futures but need the space at the elevator for harvest. On October 25th (when the contract must be rolled/priced) I decide to roll my basis contract from November futures to March futures. The carry in the market that day is $0.33. My new basis price is -1.08H and now have until February 21^st to price or roll the contract to a later futures month. If I were to keep bushels on DP until February 21^st, it could cost me ~$0.36 in storage charges and I would be subject to any basis and futures risk.

It’s going to be another challenging harvest this year for elevator and grain producer alike. We are going to do everything on our part to make sure we at Central Farmers and FREMAR LLC are an asset to your operation. When concerns or questions arise, please let us know as that’s how we get better at serving our customers. 

9/13/2024

Storage Alternatives

By Jake Moret, Grain Originator

The silage choppers are rolling over a wide area currently, yields seem to be doing well, and the corn seems to be testing a couple points dryer than what it looks like from the road. We’ve had a nice rally in the soybean market over the last 8 sessions running up roughly 62c and with corn following suit making up 24c. Overall we think things are looking good for our trade area and think we could see space fill up again this fall at all locations. I do expect with a carry market in both corn and beans that we will have some delay price storage charges again. There are many ways to avoid storage costs via different contracts and to ensure you have space to dump come harvest time.

As for this rally I think this is something to take advantage of, especially on bushels that must get priced this fall. The biggest question lately is ‘Did we post a harvest low?’ We have had some “light” bullish news as of recently. There’s been some export demand, South America is dryer than normal during their dry season, there’s some dryness showing up in the eastern corn belt and we still need some sunny days to finish our later planted corn and beans. If you have any old crop that you need to find a home for before harvesting, please reach out to a merchandiser as soon as possible. I’ll end this with a reminder that we are still full of both spring and winter wheat and don’t see any change in that until December or later. We will reach out when we have created some space, starting with those that have already been in contact with us.

9/6/2024

Safety Tips

By Rebecca Johnson, Elevator Location Manager, Salem

School bells are ringing, and we are inching closer to the start of harvest!

Where did the summer go?  School starts at the end of next week for some of the surrounding school districts and by the 26^th of August all schools in SD including those of higher education will be in full swing.  As school starts farmers and agriculture-related businesses start to prepare for the upcoming harvest that is just around the corner.  Given our unseasonably cool temps and early excessive rains harvesting may be pushed back a couple of weeks from the “normal” starting dates of harvest.   Still a little too soon to know. 

Prices have been the hot topic of conversation lately and unfortunately not for the good.  Let’s focus our thoughts on something we can control to a point.  Safety and what we need to do to keep ourselves and others safe.  Below I have listed a few safety tips to hopefully keep you safe.

1. Try and get an adequate amount of sleep. Experts recommend 7 hours of sleep a night for an adult. 9-12 hours for those ages 6-17.
2. Be aware of your surroundings and always take a walk around your equipment and/or vehicles before operating it.
3. Be aware of blind spots and hard to see areas especially corners that have trees or crops growing making visibility difficult.
4. Be a defensive driver.
5. Buckle up.
6. Make sure your lights and turn signals are in good working condition.
7. Make sure appropriate signs are visible and placed on equipment as needed (slow moving vehicle, wide load, etc.).
8. Shut off all moving parts before working on them.
9. De-energize equipment before working on it.
10. Practice good bin safety.
11. Slowdown in construction zones and be prepared to stop.
12. Eat well balanced meals.
13. Take regular breaks for both your mental and physical well-being.
14. Focus on one task at a time.

Always err on the side of caution for if you don’t get everything you want to be done in a day it will wait for you until tomorrow. The more you push to get done in a day the greater the risk of an accident or injury is likely to occur.

At the end of the day, we at Fremar LLC/CFC want all to arrive home safe and sound!  Wishing those in school a great year and to our patrons a bountiful and safe Harvest.  Thank you all for your business as we look forward to providing services to you again this harvest season.

8/9/2024

Central Farmers has a mobile app that provides real time account information at your hands. By partnering with barchart, we are able to empower you, our producers, to make informed and quicker business decisions with CFC. With our app you can:

• Access scale tickets virtually in real time, allowing you to know how many bushels you have delivered and how much still needs to be delivered. You are able to see the grade factors on each scale ticket such as Moisture and Test Weight.
• Access your contracts that you have with any CFC location. You will be able to see the status of any contract to find out whether it is filled or is still open.
• Access real-time bushel balances of your grain across all CFC locations.
• Access delayed cash bids for all of our CFC locations

You can find our App on Google Play for Android devices or the App Store for iPhones by searching for Central Farmers. Scan the QR code below for quicker download process. Download it today!