Clear Focus Hedging News and Views
May 1, 2024

“Stuck in Neutral?”

After finally getting some positive news from the USDA on March 29 th , and a new high in December corn
of 4.81, we have gone nowhere but stuck in a rather narrow trading range. There is still a large
difference in estimates of the South American crops, with the chatter lately that Brazil may be better
than once thought, but Argentina may not be as good due to wet weather and disease issues. Without
any definitive direction, the markets remain “stuck” in neutral, except for wheat which rallied almost 80
cents in 6 days on weather issues in the Black Sea region, and also Western Kansas missing out on recent
rains. Forecasts today, (April 30 th ) were more generous with the rain in the Black Sea region, causing
wheat to set back today, but with the US $ back above 106 our competition is stiff in the export market
once again. May 10 th will be our next set of numbers from USDA to consider, and we will watch closely
the following:

1. South American production numbers- up or down?
2. Any changes to US carryout?
3. Any adjustments to demand, exports and domestic use?
4. World carryout: up or down?

The planting season has gotten off to a good start overall, with the west leading and the east plenty
moist. Many dry areas have received some good moisture, some areas more than enough, but certainly
welcome to many. Forecasts going forward are mixed, but so far not threatening enough to spark a rally.
What will it take to move out of this range?

1. Significant weather delays: something lengthy enough to cause switching or prevent plant
2. May 10 th reports: any bullish surprises?
3. An uptick in demand: we are competitive in corn, but still too high on beans verses Brazil
4. US $ weakens enough to make a difference

With a rather stagnant outlook, it is easy to ignore the markets for a while and focus on getting the
seeds in the ground, but our memory suggests that is the best time for opportunities to come and go
quickly. We feel it is very important to have orders in at prices you can live with, especially focusing on
bushels you can’t or don’t want to store at harvest. Those bushels are our biggest risk, and we all know
how painful it can be to have to deliver, pay a dumping fee, a storage fee on top of a low price and bad
basis. That we can avoid by getting it priced and using futures or options or both to maintain ownership,
and preferably reduce risk at the same time. On our farm, we can live with 4.75 corn, but not 3.95 at
harvest with a wide basis, and also 11.80 beans will keep us in the green, but 10.00 will not work well.
We feel more defensive this year, willing to get HTA contracts written at these prices, and using call
options to hopefully add to our price along with rolling out what we can store to capture carry in the
market if the payment justifies the cost of money at that time.

Old Crop Corn:
We remain sellers on rallies, last week July futures hit $4.60, and we would like anything above $4.50 to
add as long as basis is reasonable. If you think we can get a weather rally, look at some short dated new
crop calls to replace the sold bushels, hopefully to sell new crop against on any decent rally.

Old Crop Soybeans:
We seem trapped in a range, but it looks like $12.20 basis July is stout resistance. We like selling in the
$12-$12.20 range, and using short dated new crop calls for re-ownership, again, reducing risk and giving
us something to sell against on any rally.

New Crop Corn:
We have done some HTA contracts on corn starting at $4.75 and $4.80 and will add more in this range
and only buy calls if we can take out the 4.81 high made on March 29 th . Our short dated puts expired
worthless on April 26 th , so we will be more aggressive adding to sales in the 4.75 area as well. With the
weather a mixed bag, funds still very short and prices competitive on the world market, downside seems
limited for a little while, but any rally into the May 10 th reports will get our attention in regards to more
put options.

New Crop Soybeans:
We did some HTA contracts for November beans at $12, and would add more sales in the 11.80 or
better range. Not the prices we were hoping for, but our attitude is more defensive than the last few
years. These are prices we can live with, not hoped for, but with carry in the market, we need to have
sales on to be able to roll later and add to our price. The market will not guarantee us a profit, and
couldn’t care less about our risk as producers, so it’s up to us to lay off some or all that risk!
Following up on our sale of the $14 bean calls, they closed today at 9 cents, and we will continue to hold
until we see the possibility of a rally back over $12. Time value continues to erode
In conclusion, the adage of “if bullish news can’t rally a market, its time to sell” sticks in our mind. There
is still hope, but hope doesn’t pay the bills. We would like to believe that a big rally is in the works, but
so far, we remain “stuck” in neutral. Don’t let that prevent you from getting a plan together, get some
orders in or at least let us know what you are looking for so we can call you. It’s time for long hours,
little rest, and planting the crop, but that’s when things change and quickly. Have a safe and hopefully
pleasant planting season and remember those who made it possible for us on Memorial Day!
..

Dates to remember:
Every Monday – Export Inspections at 10:00 am CST
Every Thursday – Export Sales at 7:30 am CST
Every Friday – Commitment of Traders Report at 3:00 pm CST
May 10th – WASDE at 11:00 am CST
May 24 th Cattle on Feed at 2:00 CST
May 24 th June options expire.

Mike Daube (574) 586-3784
Allen Gard (573) 769-4193
Peter Schram (317) 910-1473