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Cash Market Moves             10/26 11:26

   Farmers' Two Favorite Words: Sellers' Market

   Though the cash price of corn continues to rise, many farmers are remaining 
on the sidelines for now.

Mary Kennedy
DTN Basis Analyst

   It's been a crazy year for cash corn and even cash soybeans, a buyer told 
me. It's crazy that prices during harvest remained strong with little harvest 
pressure on corn or soybean cash prices. On Aug. 3, the DTN National Soybean 
Index was $8.45, and the DTN National Corn Index was $2.95. Fast forward to 
Friday, Oct. 23, and those prices were $10.31 for soybeans and $3.98 for corn.

   The continued rise in the corn price has made it hard for buyers to procure 
corn they need to grind for ethanol or feed and/or for export commitments. 
Another reason some farmers may be able to hold off selling these high prices 
is that, according to Fortune magazine, so far in 2020, 40% of farmers' net 
cash income has come from government subsidies, the highest percentage in two 

   "The share of income they receive from the U.S. government, as opposed to 
what they receive from selling their crops, has steadily increased in the past 
three years," said Fortune.

   So, as farmers hang on to their corn, the commercials are scrambling to 
cover, and in doing so, have either paid above posted prices or offered free 
delayed pricing or other perks in order to get their hands on the corn they 
need right now.

   I asked a buyer what it would even take for farmers to sell cash corn right 
now, and he said that many farmers have told him they are waiting for the 
"high." If I had a dollar for every time I heard that when I was trading, I'd 
be retired with more money than I could ever spend.

   However, this run-up of prices seems to have no end in sight. DTN Lead 
Analyst Todd Hultman said in a recent column that, "Explaining the higher corn 
price is not easy. It is possible that the market thinks corn supplies are 
tighter than USDA is estimating, or it is possible speculators have gotten too 
enthusiastic. As I've often said, markets are human, and humans are emotional; 
humans can also be wrong." Here is a link to that entire column:

   I took a one-day poll on Twitter on Oct. 23 asking farmers how much, on a 
percentage basis, of this year's 2020 corn crop have they sold. I had responses 
from 819 farmers, and here are the results:

   -- 40.7% of respondents said 25% priced.

   -- 26.3% of respondents said 50% priced.

   -- 21.3% of respondents said 75% priced.

   -- 11.7% of respondents said 100% priced.

   -- In addition, there were also responses saying they have zero percent 


   As we head into the colder months of winter, feed intake in cattle increases 
because they are trying to stay warm, requiring increased amounts of energy in 
their diet. According to Oregon State University Extension, "The most common 
energy feeds available to cattle are based on high-starch grains (corn, 
sorghum, barley, wheat), fibrous byproducts (soybean hulls, wheat middlings and 
beet pulp), or fat sources (oilseeds, animal and vegetable oils)."

   Most of those feed prices listed above have been moving higher the past few 
months. On Oct. 1, DDG prices in Illinois and Iowa were trading in a range of 
$145 per ton to $165 per ton, Nebraska was trading $140 to $155 and Minnesota 
was at $135 to $150. On Oct. 23, Illinois was trading in the range of $170 to 
$190, Iowa and Minnesota were at $160 to $170 and Nebraska was at $165 to $175. 
Tight supplies and higher corn and soymeal prices have added to the strength of 
domestic DDG. The price of DDG is valued at about 113% of the cash corn price 
and above the three-year average of 109%.

   As for soybean meal, prices have surged higher since the beginning of the 
month. On Oct. 1, central Illinois meal was trading in the range of $345 to 
$354 per ton, Iowa was at $332 to $347, southern Minnesota was at $330 to $336, 
eastern Kansas was at $348 to $368 and Georgia was at $348 to $368. On Oct. 23, 
central Illinois was trading in range of $384 to $392 per ton, Iowa was at $377 
to $393, southern Minnesota was at $383 to $387, Georgia was at $433 to $443 
and eastern Kansas was at $393 to $403. The U.S. Grains Council noted in their 
weekly DDG price update that DDG are valued at 41% of Kansas City soymeal, down 
from the prior week and below the three-year average.

   All other protein and vegetable feed prices have moved higher, but not to 
the extent we have seen DDG and soybean meal rise. Still, with the cash corn 
and cash soybean prices continuing to move higher, end users of both corn and 
soybeans either for export or ethanol or feed will have to dig deep in their 
pockets to pay these high prices for now.

   Mary Kennedy can be reached at  

   Follow her on Twitter @MaryCKenn

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