DTN Corn News

FARM MARKET NEWS - CORN REPORT FOR Thu, August 22 Bank of Canada Noon exchange rate was 1.3293 up 0.0011 Chicago corn closed slightly higher. SEP19 HI 3.66 1/2 DEC19 HI 3.74 1/2 LOW 3.59 LOW 3.68 CLOSE3.63 1/4 Up 3/4 CLOSE 3.71 Up 3/4 OLD CROP BASIS NEW CROP BASIS Location Spot 1mt 2mt 3mt U.S. $/bu $/mt Cntrct U.S. $/bu $/mt ELEVATORS +DEC19+DEC19+DEC19 CK Low 1.95 5.58 219.77 1.25 4.96 195.27 CK High 2.00 5.63 221.74 1.30 5.01 197.23 CK Avg 1.96 0.57 5.59 220.10 1.28 0.06 4.99 196.58 Essex Cty 2.00 5.63 221.74 1.30 5.01 197.23 Mdsx Low 1.95 5.58 219.77 1.30 5.01 197.23 Mdsx High 1.95 5.58 219.77 1.30 5.01 197.23 Mdsx Avg 1.95 0.57 5.58 219.77 1.30 0.07 5.01 197.23 Hensall 1.95 5.58 219.77 1.33 5.04 198.22 Bruce 1.95 5.58 219.77 1.30 5.01 197.23 Putnam 1.95 5.58 219.77 1.30 5.01 197.23 Burford 1.95 5.58 219.77 1.30 5.01 197.23 Port Perry 1.95 5.58 219.77 1.30 5.01 197.23 Norfolk 2.00 5.63 221.74 1.30 5.01 197.23 Palmerston 1.80 5.43 213.87 1.30 5.01 197.23 Varna 1.90 5.53 217.80 1.30 5.01 197.23 Trenton 1.95 5.58 219.77 1.30 5.01 197.23 Winchester N/A 1.35 5.06 199.20 North Gower 1.55 5.18 204.03 1.40 5.11 201.17 Huron FOB 2.10 5.73 225.68 1.30 5.01 197.23 Kent FOB 2.15 5.78 227.65 1.35 5.06 199.20 Lamb FOB 2.10 5.73 225.68 1.35 5.06 199.20 Mdsx FOB 2.15N/A N/A N/A 5.78 227.65 1.30 5.01 197.23 FOB SW Que 2.65 6.28 247.33 1.33 5.04 198.42 Track 2.35 5.98 235.52N/A PROCESSORS Chat-Eth N/A N/A N/A N/A N/A Jhnstwn-Eth N/A N/A N/A N/A N/A Aylmer-Eth N/A N/A 2.25N/A N/A Sarn-Eth N/A N/A N/A N/A 1.40 5.11 201.17 London-Ing N/A N/A 1.95N/A N/A Pt.Colb-Ing N/A N/A N/A N/A N/A* Cardnl-Ing N/A N/A 1.55 1.50 1.50 5.21 205.11 W O Feed 2.56 6.19 243.63 US Rep 2.54 6.17 243.00 Toledo El. 0.51 4.14 162.89 0.20 3.91 153.89 TRANSFER Pt. Colb N/A 1.65 5.36 211.01 Prescott 2.05 5.68 223.71 1.50 5.21205 1/9 MID SD CRN 1.27 1/2 4.98 1/2 HI SD CRN 1.30 5.01 *Wet Bid

DTN Closing Grain Comments 08/22 13:52 Winter Wheat Prices Get Modest Boost December Chicago and KC wheats both closed up 3 3/4 cents Thursday, showing a little benefit from a higher start for exports in 2019-20. November soybeans ended down 4 1/4 cents and December corn was up 3/4 cent while scattered showers worked across the southern Midwest.

DTN Midday Grain Comments 08/22 11:03 Grains Mixed at Midday Wheat leads mixed trade at midday. By David Fiala DTN Contributing Analyst General Comments The U.S. stock market indices are weaker with the Dow 20 lower. The dollar index is 9 points lower. Interest rate products are firmer. Energies are weaker with crude down $0.40. Livestock trade is mixed with cattle leading. Precious metals are weaker with gold 6.30 lower. CORN Corn is narrowly mixed with trade trying to build on the solid close yesterday with two-sided trade so far. Weather should continue to remain a short-term non-issue as the crop tour wraps up today, with few surprises found so far. Ethanol margins remain poor with blenders in the best position currently, with more plants likely to be idled with rumors of the refinery waivers to be reversed. Basis remains mixed overall with harvest getting closer. Weekly export sales remain soft at 119,300 metric tons old crop, and 301,600 of new crop. On the September nearby chart support is likely the $3.59 low with the lower Bollinger Band at $3.47 below that with resistance the 10-day at $3.70. SOYBEANS Soybean trade is narrowly mixed with trade again trying to find some buying support at the lower end of the range and to finally put two positive finishes in a row together with early strength evaporating again. Meal is 0.50 to 1.50 higher, and oil is 5 to 15 points lower. Crush margins remain positive overall, with oil staying towards the upper end of the range. Basis remains flat overall. The Brazilian real is trying to firm off the lows again, with local prices an effective premium to much of the US. The weather looks to be a short-term non-issue for soybeans as well coming forward. The trade situation remains little changed as well. Weekly export sales showed some improvement at 25,900 metric tons of old crop, 792,600 metric tons of new crop, 118,600 metric tons of old meal, 13,400 of new meal, and 2,200 of oil. September chart support is the lower Bollinger Band at $8.42, with the next round up the 10-day $8.65 which we tested again today. WHEAT Wheat trade is 2 cents lower to 3 cents higher at midday with light buying with all contracts trying to shake off oversold conditions. The Kansas City/Chicago spread is at 75 after a high of 90 cents last week and a low of 71 cents this week with Kansas City gaining slightly overnight. The corn/HRW spread is wider, back to 27 cents. Kansas City wheat is now back to competitive on the world market trading as well as into feed rations. Spring wheat harvest should expand with winter wheat just about wrapped up, with Europe progressing as well. The dollar remains near the upper end of the range, limiting upside potential. Weekly export sales showed improvement at 594,600 metric tons. The September Kansas City chart support is the new low at 3.80 3/4 with the first resistance the 10-day at $3.91 which we are just below. David Fiala is a DTN contributing analyst and the President of FuturesOne and a registered adviser. He can be reached at dfiala@futuresone.com Follow him on Twitter @davidfiala (CZ) Copyright 2019 DTN/The Progressive Farmer. All rights reserved.

DTN Weather Trend Indicators 08/22 09:09 Weather Indicator status values are: Corn=Neutral Soybeans=Neutral Wheat=Neutral LEGEND: The indicator choices are: Corn, Soybeans, Wheat The status choices are: Up, Down, Neutral For example: Corn=Neutral (ES)

DTN Early Word Grains 08/22 05:57 Grains Slightly Higher as Rain Falls December corn is up 1/2 cent, November soybeans are up 1 cent and December KC wheat is up 1 3/4 cents. By Todd Hultman DTN Lead Analyst 6:00 a.m. CME Globex: December corn is up 1/2 cent, November soybeans are up 1 cent and December KC wheat is up 1 3/4 cents. CME Globex Recap: U.S. stock futures and European stock markets are lower early Thursday with China still talking about retaliating to new U.S. tariffs, set to take place on September 1. Wednesday's minutes from the latest Fed meeting showed two members dissented, favoring no rate cut on July 31. Outside of grains, most commodities are trading higher early Thursday. OUTSIDE MARKETS: Previous closes Wednesday showed the Dow Jones Industrial Average up 240.29 at 26,202.73 and the S&P 500 up 23.92 at 2,924.43 while the 10-Year Treasury yield ended at 1.58%. Early Thursday, the September DJIA futures are down 42 points. Asian markets are higher with Japan's Nikkei 225 up 13.16 (0.06%) and China's Shanghai Composite up 8.03 points (0.29%). European markets are modestly lower with London's FTSE 100 down 48.60 points (-0.67%), Germany's DAX down 38.50 points (-0.33%) and France's CAC 40 down 28.99 points (-0.53%). The September euro is down $.001 at $1.11. The September U.S. dollar index is up 0.04 at 98.22. The September 30-year T-bond is down 2/32nds, while December gold is down $8.00 at $1,507.70 and October crude oil is up $0.38 at $56.06. Soybeans are slightly lower and meal is modestly higher on China's Dalian Exchange. November palm oil is up 2.1% at a new five-month high.

Market Matters Blog 08/19 11:40 USACE Running Out of Funds to Continue Critical Dredging Operations DTN Weekly Average DDG Price Lower DTN National Average Soybean Basis Resembles Sunken Ship DTN Weekly Average DDG Price Weaker If You Dredge It, They Will Come DTN Weekly Average DDG Price Lower Flooding Turns Mississippi River Into a Sandbox DTN Weekly Average DDG Price Flat Minimum Average Contract: A Smart Marketing Move 2019 Spring Wheat Tour Preview: After Rough Spring, What Will Scouts See? ****************************************************************************** USACE Running Out of Funds to Continue Critical Dredging Operations In my July 29 column, "Flooding Turns Mississippi River Into a Sandbox," I discussed the shoaling left behind on nearly the entire Mississippi River System by the 2019 flooding. I noted that the Army Corp of Engineers Rock Island District said that, normally, dredging costs them $2 million, but this year, they are paying $10 million, or five times more than normal. (https://www.dtnpf.com/agriculture/web/ag/blogs/market-matters-blog/blog-post/20 19/07/29/flooding-turns-mississippi-river) On Aug. 12, the Army Corp of Engineers put out an SOS to the River Industry Executive Task Force (RIETF) that the Rock Island Engineer District would have to start removing dredges from the rivers on Aug. 17 due to a lack of funding. According to an article in the Waterways Journal Aug. 19 newsletter, the district said it had not yet received emergency dredging funds allocated by Congress. They were referring to the June 6 Additional Supplemental Appropriations for Disaster Relief Act of 2019, in which Congress provided an additional $100 million for "emergency operations, repairs, and other activities in response to such disasters" above and beyond the Corps' usual appropriations. (https://www.congress.gov/bill/116th-congress/house-bill/2157/text) Darin Adrian, RIETF co-chair, sent a letter to eight U.S. senators on Aug. 13 warning about the funding for emergency dredging in the Rock Island District running out and urging Congress to direct the Corps to allocate the funds appropriated in the disaster relief act to avert additional disruptions to the nation's inland waterway transportation system. "The nation's waterway transportation system has been gravely harmed with river closures and severe tow restrictions throughout the system since late 2018 due to unprecedented flooding," Adrian stated in the letter, the full text of which was published by American Commercial Barge Line in its daily online newsletter "American Currents." "After 85 days of closure on the Upper Mississippi River and lengthy closures on most major rivers, barge traffic is finally moving," Adrian stated. "Despite the re-opening, barge traffic is still moving with restricted tows and random river closures. "In fact, funding for emergency dredging in the Rock Island District will be exhausted in the coming days and the Corps anticipates that the Dredge Goetz will cease operations by Saturday, Aug. 17, due to lack of funding. We are requesting your help to ensure that the funds appropriated with the passage of H.R. 2157 -- Additional Supplemental Appropriations for Disaster Relief Act, 2019 ($100 million) -- be made available immediately. The industry members of RIETF urges Congress to direct the Corps to allocate the funds to avert additional disruptions to the nation's inland waterway transportation system." Adrian told senators that, without immediate action, over 20 reaches of the Mississippi River in the Rock Island District alone were in danger of closure by Aug. 17. He said RIETF also expected similar dredging issues to affect the St. Paul District, the St. Louis District, the Lower Mississippi, and other waterways in the near future if emergency funding wasn't distributed to the appropriate districts. "If this vital segment of the Upper Mississippi River is not maintained to its fully authorized width and depth, the nation's heartland will face severe economic consequences," Adrian said. SHOALING MORE PROBLEMATIC THAN NORMAL IN 2019 Dredging is not an unusual event on the river. The USACE St. Paul District notes on their website that sedimentation (shoaling) in navigational channels can be caused by the normal cycle of silt movement, erosion from high water or heavy rains and changes in river currents. To maintain the 9-foot navigation channel every shipping season, material that settles in the channel area is removed by mechanical or hydraulic dredging. However, the relentless flooding of 2019 left behind a big mess throughout the Mississippi River System and its navigable tributaries. Areas on the Upper Mississippi River have been shut down recently because of barge groundings or have seen slowdowns in traffic because of shoaling, even with the Corps dredging constantly over the entire summer so far. Dredging has also been started in the Lower Mississippi River after the floodwaters finally receded there. American Commercial Barge Line noted there are many problem spots on the Lower Mississippi, with the major one at Victoria Bend (LM 595). This area is restricted to daylight only for tows with 30 or more barges and there is currently not a dredge scheduled in this area to assist with this problem. Delays and slow transit in this area are expected to last until the end of the August. Another location causing problems for transit is LM 807 just below Blytheville, Arkansas, where the Mississippi River is very swift and boats are having issues making it through the area heading northbound without an assist boat. On the Arkansas River, a major tributary of the Mississippi River, there is significant shoaling located at miles 222 and 350 with both areas being dredged, while dredges continue to work on problem areas above Van Buren (AK 298), according to ACBL. "There were barges stuck on ground holding the lock gate open at Lock 16 (AK 366)," ACBL said. "In order to get the barges off ground and out of the way of the lock gate, the Corps had to drain the pool above the lock and in doing this they will lose the pool. It is then expected to take several weeks to close the locks and several more weeks for them to restore the pool. Given this information there is currently no estimation on when we will be able to reach Catoosa." I contacted the USACE Rock Island District late on Friday, Aug. 16, and asked if they had any update on the funding needed to keep dredging. They responded: "Our Operations Division Chief Tom Heinold confirmed earlier today that the Dredge Goetz has funding to operate through the weekend due to limited funding received from USACE St. Louis District. Beyond that, we do not have any further updates on supplemental funding." ACBL also noted late Friday afternoon in their newsletter, "The U.S. government has provided funding for dredging operations on the Upper Mississippi through the week of Aug. 18." Given that dredging will likely need to continue for many months along the entire river system, it is imperative that the funds allocated by H.R. 2157 are dispersed to all the districts in need so they can continue to keep the river safe for barges moving north and south. Mary Kennedy can be reached at mary.kennedy@dtn.com Follow her on Twitter @MaryCKenn ****************************************************************************** DTN Weekly Average DDG Price Lower OMAHA (DTN) -- The domestic distillers dried grains (DDG) weekly average spot price from the 40 locations DTN contacted was down $4, at $130 per ton, for the week ended Aug. 15. Prices moved lower after the limit-down close in corn Monday and the additional losses on Tuesday and Wednesday, as well as losses in the soymeal market pressuring feed prices. The Energy Information Administration reported midweek that ethanol inventory in the U.S. was higher for the week ended Aug. 9, rising for the sixth time in seven weeks, while domestic plant production continued higher. Based on the average of prices collected by DTN, the value of DDG relative to corn for the week ended Aug. 15 was at 100.90% versus the two-year average of 107.00%. The value of DDG relative to soybean meal was at 44.51%. The cost per unit of protein for DDG was $4.81, compared to the cost per unit of protein for soybean meal at $6.14. In its weekly export DDGS update, the U.S. Grains Council stated, "Merchandisers note there is still some elevation for September shipments out of the Gulf, but expectations are that elevations will tighten like they have so far in August. Prices for DDGS CIF NOLA barge are near $169 per metric ton (MT) for September while FOB Gulf values are slightly lower at $187/MT for the same month. Prices for 40-foot containers to southeast Asia are slightly lower this week at $230/MT." ALL PRICES SUBJECT TO CONFIRMATION CURRENT PREVIOUS CHANGE COMPANY STATE 8/15/2019 8/8/2019 Bartlett and Company, Kansas City, MO (816-753-6300) Missouri Dry $150 $155 -$5 Wet $75 $78 -$3 Show Me Ethanol LLC, Carrollton, MO (660-542-6493) Missouri Subject Dry $135 $135 $0 Wet $70 $70 $0 CHS, Minneapolis, MN (800-769-1066) Illinois Dry $135 $140 -$5 Indiana Dry $130 $135 -$5 Iowa Dry $115 $120 -$5 Michigan Dry $140 $145 -$5 Minnesota Dry $115 $120 -$5 North Dakota Dry $120 $125 -$5 New York Dry $135 $140 -$5 South Dakota Dry $115 $120 -$5 MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253) Kansas Dry $130 $135 -$5 POET Nutrition, Sioux Falls, SD (888-327-8799) Indiana Dry $135 $145 -$10 Iowa Dry $130 $125 $5 Michigan Dry $120 $125 -$5 Minnesota Dry $125 $125 $0 Missouri Dry $140 $150 -$10 Ohio Dry $135 $150 -$15 South Dakota Dry $135 $140 -$5 United BioEnergy, Wichita, KS (316-616-3521) Kansas Dry $135 $135 $0 Wet $40 $40 $0 Illinois Dry $135 $140 -$5 Nebraska Dry $135 $135 $0 Wet $40 $40 $0 U.S. Commodities, Minneapolis, MN (888-293-1640) Illinois Dry $130 $135 -$5 Indiana Dry $135 $137 -$2 Iowa Dry $125 $130 -$5 Michigan Dry $130 $135 -$5 Minnesota Dry $120 $125 -$5 Nebraska Dry $122 $130 -$8 New York Dry $150 $150 $0 North Dakota Dry $130 $130 $0 Ohio Dry $150 $150 $0 South Dakota Dry $125 $125 $0 Wisconsin Dry $130 $130 $0 Valero Energy Corp, San Antonio Texas (210-345-3362) (210-345-3362) Indiana Dry $130 $130 $0 Iowa Dry $125 $125 $0 Minnesota Dry $120 $125 -$5 Nebraska Dry $135 $135 $0 Ohio Dry $135 $145 -$10 South Dakota Dry $128 $128 $0 California Dry $178 $185 -$7 Western Milling, Goshen, California (559-302-1074) California Dry $188 $195 -$7 *Prices listed per ton. Weekly Average $130 $134 -$4 The weekly average prices above reflect only those companies DTN collects spot prices from. States include: Missouri, Iowa, Nebraska, Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan, Wisconsin and Indiana. Prices for Pennsylvania, New York and California are not included in the averages. ** VALUE OF DDG VS. CORN & SOYBEAN MEAL Settlement Price: Quote Date Bushel Short Ton Corn 8/15/2019 $3.6075 $128.84 Soybean Meal 8/15/2019 $291.80 DDG Weekly Average Spot Price $130.00 DDG Value Relative to: 8/15 8/8 Corn 100.90% 91.29% Soybean Meal 44.51% 45.45% Cost Per Unit of Protein: DDG $4.81 $4.96 Soybean Meal $6.14 $6.21 Notes: Corn and soybean prices take from DTN Market Quotes. DDG price represents the average spot price from Midwest companies collected on Thursday afternoons. Soybean meal cost per unit of protein is cost per ton divided by 47.5. DDG cost per unit of protein is cost per ton divided by 27. Mary Kennedy can be reached at mary.kennedy@dtn.com Follow her on Twitter @MaryCKenn ****************************************************************************** DTN National Average Soybean Basis Resembles Sunken Ship Every weekday, DTN collects about 2,940 soybean bids from around the country and from those bids the national average basis is produced. If you look at DTN national average basis chart that coincides with this article, you will see that for the entire 2018-19 crop year, it has laid on the very bottom of the chart like a sunken ship in the deepest part of the ocean. For the current 2018-19 crop year, which is soon to expire on Aug. 30, soybean basis has been pathetic. Much of that can be attributed to the trade war that has been going on between China and the U.S. for more than one year now. When the trade war started in mid-June 2018, shuttle basis for soybeans delivered to the Pacific Northwest (PNW) immediately disappeared. With the majority of soybean exports going to China off the PNW, the trade war shut those exports off and in turn left farmers in North Dakota, South Dakota and western Minnesota with no export market for their soybeans except to the Gulf. However, that Gulf soybean market became overwhelmed and basis weakened to that market as well. On top of that, logistics turned into a complete nightmare as flooding overwhelmed the Mississippi River system starting at the Gulf in January 2019 and overtaking the entire system through June. The flooding caused major closures of locks and dams and shut down the St. Louis Harbor numerous times, stopping all barge traffic. When the river finally reopened, the backup of barges caused traffic jams up and down the river. SALES SLOWLY PICKED UP ONLY TO BE STOPPED AGAIN There was a glimmer of hope in December 2018 with China buying U.S. soybeans, their first major purchases in six months. In early 2019, China state-owned firms purchased U.S. soybeans a day after talks between the U.S. and China showed progress towards a trade deal, with a commitment from China to buy more U.S. soybeans as a measure of "good will." In late June 2019, the USDA reported export sales of 544,000 metric tons of soybeans for delivery to China during the 2018-19 marketing year. On Aug. 1, the USDA announced U.S. soybeans sold to China, the first since late June and the first since the Chinese government offered to exempt five private crushers in the country from the 25% import tariffs on U.S. beans arriving by the end of 2019. However, that same announcement included an even larger cancellation of soybeans previously purchased by China. Then, all hell broke loose shortly after noon CDT on Aug. 1 when President Trump announced on Twitter that he would impose a new 10% tariff on $300 billion of Chinese goods, set for Sept. 1, with China's failed promises to buy U.S. goods as one of the reasons. That news sent the soybean basis on the PNW to drop as much as 30 cents, once again causing the basis in the areas that ship to the PNW to weaken basis for their farmers. To add salt to that open wound, various news organizations reported that China's Ministry of Commerce said in a posting online that Chinese companies suspended purchases of U.S. agricultural products, saying suspension would continue until the U.S. created the necessary conditions for cooperation between the two nations. BASIS BIDS BETTER IN PARTS OF THE MIDWEST Angie Setzer, vice president of Grain Citizens LLC, Charlotte, Michigan, told me on Aug. 9 that, "in our area we've actually seen basis strengthen as a lot of what was intended to get planted to beans was either not able to get into the ground or went in way later than normal. The later-than-normal planting has obviously increased concerns over what an early frost would mean." Setzer added that the supply uncertainty, coupled with a new 40-million-bushel-per-year crushing plant going online, has created strength in basis not seen the last couple of years. "There are still a decent number of beans on the farm, but those are currently being held in relatively tight hands as well. Many farmers are waiting to see what they are going to produce or what the market is going to do before making sales. Many commercials are making sure we will have a decent crop before liquidating their remaining supplies as well." As for basis in the areas that rely on a strong soybean export program on the PNW, basis has weakened further after China said they would stop U.S. soybean purchases. A manager of a shuttle basis facility in central North Dakota told me that when the China talks failed and the new tariff was announced, the PNW tanked and moved to the equivalent of a St Louis bid. He said that while there was a rail rate for St. Louis put in place when the tariff war began, that rate to St. Louis only runs through August. He noted that many shuttle loaders there have weakened local basis and when I checked websites of the shuttle loaders in eastern North Dakota, the nearby basis bids were $1.30 to $1.35 under the November futures, with new-crop basis posted at $1.40 under November futures. "Maybe we lose the eastern bean crop and they pull beans over the river," he added. Should that happen, and if the railroad extends the rates out of his area to St. Louis, that could give some hope to the farmers in the U.S. Northern Plains. However, soybeans shipped out of St. Louis to the Gulf rely on a strong export market and for this crop year, that hasn't been the case. In the Aug. 8 weekly export sales and shipment report, USDA noted that 2018-19 soybean export commitments are down 17% from one year ago for that same timeframe. The Wall Street Journal noted in an Aug. 2 article that recent U.S. Census Bureau data showed that U.S. exports to China fell 19% for the first half of the year, as "tit-for-tat tariffs and other barriers imposed by Washington and Beijing took their toll." After holding the top spot among U.S. trading partners from 2015 to 2018, China now sits at No. 3 and is smaller than Mexico for the first time since 2005, noted the article. In the meantime, it appears the DTN national average soybean basis will end the current crop year at its lowest level in five years. The way things are looking now, it will likely start the new crop year on the bottom, right where it left off, with little hope of it being salvaged anytime soon. Mary Kennedy can be reached at mary.kennedy@dtn.com Follow her on Twitter @MaryCKenn ****************************************************************************** DTN Weekly Average DDG Price Weaker OMAHA (DTN) -- The domestic distillers dried grains (DDG) average spot price from the 40 locations DTN contacted was down $1, at $134 per ton, for the week ended Aug. 8. We are hearing reports some ethanol plants are selling more DDG on a spot or prompt delivery basis with expectations that ethanol production may slow in the near future, which would affect DDG supplies. The Energy Information Administration reported in its Aug. 8 "Today in Energy" brief that ethanol operating margins have recently fallen further as a result of sharp increases in corn prices. Iowa corn spot prices averaged about $4.20 per bushel in June, 15% higher than the previous month and the highest price since June 2016. "Corn prices have been driven up because significant flooding in the Midwest has delayed expected harvests and potentially lowered corn yields. Higher feedstock costs and relatively unchanged ethanol demand have driven ethanol margins and profitability to multiyear lows, and current ethanol production levels may soon be affected," noted the EIA. Based on the average of prices collected by DTN, the value of DDG relative to corn for the week ended Aug. 8 was at 91.29%. The value of DDG relative to soybean meal was at 45.45%. The cost per unit of protein for DDG was $4.96, compared to the cost per unit of protein for soybean meal at $6.21. In its weekly export DDGS update, the U.S. Grains Council stated, "Prices are lower this week but exporters report that active inquiries from Southeast Asia, combined with expectations of slowing production, have created near-term outlooks for higher prices. Prices for DDGS CIF NOLA barge are $2.50 per metric ton (MT) higher this week while FOB Gulf values are slightly lower at $196/MT. Prices for 40-foot containers are $11/MT lower this week at $231/MT for August shipment, but increasing international interest has exporters defending offers." ALL PRICES SUBJECT TO CONFIRMATION CURRENT PREVIOUS CHANGE COMPANY STATE 8/8/2019 8/1/2019 Bartlett and Company, Kansas City, MO (816-753-6300) Missouri Dry $155 $155 $0 Wet $78 $78 $0 Show Me Ethanol LLC, Carrollton, MO (660-542-6493) Missouri Subject Dry $135 $140 -$5 Wet $70 $72 -$2 CHS, Minneapolis, MN (800-769-1066) Illinois Dry $140 $140 $0 Indiana Dry $135 $135 $0 Iowa Dry $120 $125 -$5 Michigan Dry $145 $145 $0 Minnesota Dry $120 $120 $0 North Dakota Dry $125 $125 $0 New York Dry $140 $145 -$5 South Dakota Dry $120 $120 $0 MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253) Kansas Dry $135 $135 $0 POET Nutrition, Sioux Falls, SD (888-327-8799) Indiana Dry $145 $150 -$5 Iowa Dry $125 $125 $0 Michigan Dry $125 $125 $0 Minnesota Dry $125 $130 -$5 Missouri Dry $150 $150 $0 Ohio Dry $150 $160 -$10 South Dakota Dry $140 $140 $0 United BioEnergy, Wichita, KS (316-616-3521) Kansas Dry $135 $135 $0 Wet $40 $40 $0 Illinois Dry $140 $140 $0 Nebraska Dry $135 $135 $0 Wet $40 $40 $0 U.S. Commodities, Minneapolis, MN (888-293-1640) Illinois Dry $135 $135 $0 Indiana Dry $137 $137 $0 Iowa Dry $130 $130 $0 Michigan Dry $135 $135 $0 Minnesota Dry $125 $125 $0 Nebraska Dry $130 $130 $0 New York Dry $150 $150 $0 North Dakota Dry $130 $130 $0 Ohio Dry $150 $150 $0 South Dakota Dry $125 $125 $0 Wisconsin Dry $130 $130 $0 Valero Energy Corp, San Antonio Texas (210-345-3362) (210-345-3362) Indiana Dry $130 $130 $0 Iowa Dry $125 $125 $0 Minnesota Dry $125 $125 $0 Nebraska Dry $135 $135 $0 Ohio Dry $145 $145 $0 South Dakota Dry $128 $128 $0 California Dry $185 $185 $0 Western Milling, Goshen, California (559-302-1074) California Dry $195 $198 -$3 *Prices listed per ton. Weekly Average $134 $135 -$1 The weekly average prices above reflect only those companies DTN collects spot prices from. States include: Missouri, Iowa, Nebraska, Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan, Wisconsin and Indiana. Prices for Pennsylvania, New York and California are not included in the averages. VALUE OF DDG VS. CORN & SOYBEAN MEAL Settlement Price: Quote Date Bushel Short Ton Corn 8/8/2019 $4.1100 $146.79 Soybean Meal 8/8/2019 $294.80 DDG Weekly Average Spot Price $134.00 DDG Value Relative to: 8/8 8/1 Corn 91.29% 96.24% Soybean Meal 45.45% 46.04% Cost Per Unit of Protein: DDG $4.96 $5.00 Soybean Meal $6.21 $6.17 Notes: Corn and soybean prices take from DTN Market Quotes. DDG price represents the average spot price from Midwest companies collected on Thursday afternoons. Soybean meal cost per unit of protein is cost per ton divided by 47.5. DDG cost per unit of protein is cost per ton divided by 27. Mary Kennedy can be reached at mary.kennedy@dtn.com Follow her on Twitter @MaryCKenn ****************************************************************************** If You Dredge It, They Will Come Last week, I wrote about the dredging throughout the Mississippi River because of the shoaling caused by the constant flooding, creating navigation hazards for barges. This week is about non-flood related dredging that could have a positive impact on farmers who haul soybeans and other grains to river terminals that eventually send them down the Mississippi to the Gulf of Mexico for export. As U.S. soybean farmers continue to encounter challenges with both growing a crop and marketing a crop, it is essential to maintain and enhance the transportation system established to transport those soybeans -- and all agricultural products. The 256-mile stretch of the Mississippi River from Baton Rouge, Louisiana, to the Gulf of Mexico accounts for 60% of U.S. soybean exports, along with 59% of corn exports, and is by far the leading export region for both commodities. There is a growing effort among Mississippi River stakeholders, including agriculture, to promote the dredging of the lower river shipping channel from 45 feet to 50 feet in depth. On July 10, 2019, Soy Transportation Coalition (STC) in a press release said the United Soybean Board (USB) announced a $2 million allocation to help offset the planning, design and research costs of deepening the Lower Mississippi River. The 73 USB farmer-directors are responsible for investing soybean checkoff funds to enhance the value and preference for U.S. soy. In the press release, Mike Bellar, a soybean farmer from Howard, Kansas, and chairman of the STC, said "During this challenging period, soybean farmers are being aggressive in trying to increase our competitiveness. The $2 million in funding from our national checkoff organization, the USB, will help improve our number one export region of U.S. soybeans. It will remain critical for the STC, the American Soybean Association, and the individual state soybean associations to continue to promote this project at the federal and state level." The overall project is estimated to cost $245 million and would occur in three phases. Two of the phases will be cost-shared between the federal government (75%) and non-federal sources (25%). The State of Louisiana has been designated as the obligated non-federal entity: -- Dredging from Venice, Louisiana, (approximately Mile 10 Above Head of Passes [AHP]) to the Gulf of Mexico. Removing this bottleneck would provide a 50-ft. deep channel to approximately Mile 154 [AHP] of the river. A substantial number of soybean and grain export terminals are located within this portion of the river. The estimated cost of this phase is $100 million. Given a 75% federal and a 25% non-federal cost share, the federal obligation would be $75 million, and the non-federal obligation would be $25 million. -- Dredging from Mile 154 AHP to Baton Rouge, Louisiana, (Mile 232 AHP). The remaining soybean and grain export terminals would be included in the 50-ft. shipping channel upon completion of this phase. The estimated cost of this phase is $65 million. Given a 75% federal and a 25% non-federal cost share, the federal obligation would be $48.75 million, and the non-federal obligation would be $16.25 million. -- The relocation of pipelines buried under the northern portion of the shipping channel. The estimated $80 million cost of doing so would be split evenly between the state of Louisiana and the pipeline owners. USB is allocating the $2 million to help offset planning, design and research costs, combined with approximately $21 million in federal funding and $7.5 million in funding from the state of Louisiana to initiate the first year's work of the project (i.e. commencing the deepening of the river from Venice, Louisiana, to the Gulf of Mexico). While the state of Louisiana has provided its initial $7.5 million allocation of matching funds, the federal government has yet to approve its approximately $21 million in initial funding. Recent research conducted by the STC concludes that shipping costs for soybeans from Mississippi Gulf export terminals would decline 13 cents per bushel ($5 per metric ton) if the lower Mississippi River is dredged to 50 ft. A deeper river will allow both larger ships to be utilized and current ships being utilized to be loaded with more revenue-producing freight. "The research also identifies the impact on interior basis, which is the difference between the local price a farmer receives, and the market value established by the Chicago Board of Trade for soybeans in 31 states if the lower Mississippi River shipping channel is dredged," noted Mike Steenhoek, executive director of the STC. Here is a link to the press release, along with the full STC report that gives detailed examples of freight savings and basis impact the project would have: "Soybean Farmers Strategically Invest in Key Link in Supply Chain" and "STC Research Identifies Farmer Benefit of Dredging the Lower Mississippi River -- Full Report": https://www.soytransportation.org/news.html "If I had to select a single infrastructure enhancement that would provide the most benefit to the greatest number of U.S. soybean farmers, deepening the lower Mississippi River would be my choice," said Steenhoek. "Soybean farmers are demonstrating a willingness to collaborate with federal and state government on an innovative public private partnership that will enhance the competitiveness of both agriculture and a host of other industries. The STC, the American Soybean Association, state soybean associations and other stakeholder groups look forward to working together to ensure this critical project becomes a reality." Steenhoek noted that all too often infrastructure investment is allowed to become a "theoretical issue" and that the STC research clearly explains how this single infrastructure enhancement will have a tangible benefit to individual farmers in individual states throughout the country. "If our nation desires to make our farmers more competitive in a turbulent marketplace, this investment would be an excellent place to start. May we have the will to do so," concluded Steenhoek. Here is a link to the detailed comparison in the size of a ship that would need a 50-foot draft to enter a port: https://en.wikipedia.org/wiki/Panamax Here is a link to give you a thorough understanding of everything to do with the process of dredging from beginning to end: https://en.wikipedia.org/wiki/Dredging Mary Kennedy can be reached at mary.kennedy@dtn.com Follow her on Twitter @MaryCKenn ****************************************************************************** DTN Weekly Average DDG Price Lower OMAHA (DTN) -- The domestic distillers dried grains (DDG) average spot price from the 40 locations DTN contacted was down $5, at $135 per ton, for the week ended Aug. 1. DDG spot prices have come under pressure from the losses in the corn market the past 10 days and the weakness in soybean meal and other feedstuffs, in addition to a slowdown in summer demand. Based on the average of prices collected by DTN, the value of DDG relative to corn for the week ended Aug. 1 was at 96.24%. The value of DDG relative to soybean meal was at 46.04%. The cost per unit of protein for DDG was $5.00, compared to the cost per unit of protein for soybean meal at $6.17. The midweek Energy Information Administration report noted that ethanol supply in the U.S. increased for a fifth straight week in the week ended July 26, up 779,000 barrels (bbl) to a 24.468-million-bbl record high, building despite another decline in domestic plant production that fell to the lowest level since late April. In its weekly export DDGS update, the U.S. Grains Council stated, "Prices for DDGS CIF NOLA barge and FOB U.S. Gulf are lower this week as improving Mississippi River conditions have allowed once-trapped barges to move downriver to the Gulf. Merchandisers report that Gulf capacity is tight and that is keeping asking prices competitive. Exporters note that international demand is somewhat quieter this week and that the CBOT selloff in corn and soybean meal futures has influenced DDGS as well. FOB NOLA price indications were last quoted at $200 per metric ton (mt) while 40-foot containers CNF Southeast Asia were steady this week at $236/mt." ALL PRICES SUBJECT TO CONFIRMATION CURRENT PREVIOUS CHANGE COMPANY STATE 7/25/2019 7/25/2019 Bartlett and Company, Kansas City, MO (816-753-6300) Missouri Dry $155 $155 $0 Wet $78 $78 $0 Show Me Ethanol LLC, Carrollton, MO (660-542-6493) Missouri Subject Dry $140 $150 -$10 Wet $72 $78 -$6 CHS, Minneapolis, MN (800-769-1066) Illinois Dry $140 $145 -$5 Indiana Dry $135 $140 -$5 Iowa Dry $125 $130 -$5 Michigan Dry $145 $150 -$5 Minnesota Dry $120 $125 -$5 North Dakota Dry $125 $130 -$5 New York Dry $145 $150 -$5 South Dakota Dry $120 $125 -$5 MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253) Kansas Dry $135 $140 -$5 POET Nutrition, Sioux Falls, SD (888-327-8799) Indiana Dry $150 $155 -$5 Iowa Dry $125 $130 -$5 Michigan Dry $125 $130 -$5 Minnesota Dry $130 $135 -$5 Missouri Dry $150 $155 -$5 Ohio Dry $160 $165 -$5 South Dakota Dry $140 $145 -$5 United BioEnergy, Wichita, KS (316-616-3521) Kansas Dry $135 $145 -$10 Wet $40 $40 $0 Illinois Dry $140 $145 -$5 Nebraska Dry $135 $145 -$10 Wet $45 $45 $0 U.S. Commodities, Minneapolis, MN (888-293-1640) Illinois Dry $135 $140 -$5 Indiana Dry $137 $142 -$5 Iowa Dry $130 $130 $0 Michigan Dry $135 $140 -$5 Minnesota Dry $125 $130 -$5 Nebraska Dry $130 $135 -$5 New York Dry $150 $150 $0 North Dakota Dry $130 $135 -$5 Ohio Dry $150 $150 $0 South Dakota Dry $125 $130 -$5 Wisconsin Dry $130 $135 -$5 Valero Energy Corp, San Antonio Texas (210-345-3362) (210-345-3362) Indiana Dry $130 $140 -$10 Iowa Dry $125 $135 -$10 Minnesota Dry $125 $135 -$10 Nebraska Dry $135 $135 $0 Ohio Dry $145 $150 -$5 South Dakota Dry $128 $130 -$2 California Dry $185 $195 -$10 Western Milling, Goshen, California (559-302-1074) California Dry $198 $203 -$5 *Prices listed per ton. Weekly Average $135 $140 -$5 The weekly average prices above reflect only those companies DTN collects spot prices from. States include: Missouri, Iowa, Nebraska, Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan, Wisconsin and Indiana. Prices for Pennsylvania, New York and California are not included in the averages. ** VALUE OF DDG VS. CORN & SOYBEAN MEAL Settlement Price: Quote Date Bushel Short Ton Corn 8/1/2019 $3.9275 $140.27 Soybean Meal 8/1/2019 $293.20 DDG Weekly Average Spot Price $135.00 DDG Value Relative to: 8/1 7/25 Corn 96.24% 93.67% Soybean Meal 46.04% 46.07% Cost Per Unit of Protein: DDG $5.00 $5.19 Soybean Meal $6.17 $6.40 Notes: Corn and soybean prices take from DTN Market Quotes. DDG price represents the average spot price from Midwest companies collected on Thursday afternoons. Soybean meal cost per unit of protein is cost per ton divided by 47.5. DDG cost per unit of protein is cost per ton divided by 27. Mary Kennedy can be reached at mary.kennedy@dtn.com Follow her on Twitter @MaryCKenn ****************************************************************************** Flooding Turns Mississippi River Into a Sandbox Since the beginning of 2019, parts of the Mississippi River were in flood stage, and as spring approached, the entire river system was flooding. It took over three months for many of those areas to finally fall below flood stage, and at this writing, there are some locations in the Lower Mississippi still trying to get to that point. Flooding causes sand and silt to be carried throughout the river due to stronger currents and faster movement of the water. This is also known as "shoaling," and the sandbars it can create cause dangerous conditions for barges moving up and down the river through the channels. Unless the sedimentation that settles in the channel area is removed, barges can run aground, as we have seen happen during times when the river is low, and sandbars can be a common sight. The process of sediment removal is called "dredging" and is performed by a floating plant known as a dredger or dredge. A dredging schedule can be found on each USACE District website. The schedule by equipment includes information about where (by river mile) and what date(s) the dredging will occur. It also includes what depth and estimated quantities will be, where dredged material will be taken, and what piece of dredging equipment will be used. It is the job of the U.S. Army Corps of Engineers to maintain a 9-foot channel in the navigation pool to allow safe passes for barges moving through the lock-and-dam system in their district. The St. Paul District is responsible for maintaining 243.6 miles of navigation channel to a depth of at least 9 feet on the Mississippi River from Minneapolis at river mile 857.6 to Guttenberg, Iowa, at river mile 614.0, and 40.6 miles on three tributaries: the Minnesota, St. Croix and Black rivers. The district is also responsible for supporting inland navigation by operating 13 locks and dams and by maintaining a 9-foot navigation channel. The Corps operates those locks and dams on the Mississippi River for navigation, not flood control. The locks and dams create "slack-water pools for navigation during periods of low and moderate level water. For each pool, there is a primary control point, where a predetermined water elevation must be kept for navigation to continue," the Corps noted on their website. The Corps started dredging in that district in late April, according to their schedule. As of July 23, dredging operations were going on at four locations on the Mississippi River in the St. Paul District. George Stringham, public affairs for USACE St. Paul, told me in early June that the constant flooding in 2019 will likely keep the Corps dredging in the St. Paul District through the rest of the navigation season. You may wonder what happens to all of the material that is pulled out of the river by the dredge. The Corps noted on their website that it is placed in designated areas along the river. "Some of these areas are beneficial use placement areas," the Corps noted. "Beneficial use of dredged material is the productive use of the material by the public or private sectors," the Corps stated on their website. "Examples of common beneficial uses of dredged material in the St. Paul District are upland habitat development, wetland creation, aquatic habitat enhancement, creation of areas for bird nesting, beach nourishment, winter road maintenance, levee repair and improvement, aggregate for concrete, lining fly ash pits, bank protection and general purpose fill." South of the St. Paul District is the Rock Island District whose waterway navigation system is the second longest of any Corps district, and the number of locks and dams it manages also ranks second within the Corps. The Rock Island District covers more than 78,000 square miles in Iowa, Illinois, Minnesota, Wisconsin and Missouri. The district has responsibility for 314 miles of the Mississippi River and 268 miles of the Illinois Waterway and their tributaries. The Corps in this district has been dredging their navigation channels from the most recent flood since June, according to their schedule on their website. In a July 22 interview with WQAD in Moline, Illinois, Thomas Heinold, chief of operations for the Army Corp of Engineers Rock Island District, said, "We are on the river every year somewhere dredging, but this is a historic year. We are facing some imminent closures actually, we may have to go into restrictions and request that barges lighten their loads and draft less than 9 feet should we have shoaling in the river that we can't get to in time." Usually, this dredging process costs the Corps $2 million, but this year, they are paying $10 million, or five times more than normal, noted WQAD. "We still might not be able to keep up with it all; it's going to be a heck of a year," added Heinold. ** Tune in next week for part two of my two-part series of columns on dredging on the U.S. river system when I will talk about non-flood related dredging. Mary Kennedy can be reached at mary.kennedy@dtn.com Follow her on Twitter @MaryCKenn ****************************************************************************** DTN Weekly Average DDG Price Flat OMAHA (DTN) -- The domestic distillers dried grains (DDG) average spot price from the 40 locations DTN contacted was unchanged at $140 per ton for the week ended July 25. DDG spot prices were mixed this week and feel lackluster overall, especially with the recent heat wave slowing nearby demand. Based on the average of prices collected by DTN, the value of DDG relative to corn for the week ended July 25 was at 93.67%. The value of DDG relative to soybean meal was at 46.07%. The cost per unit of protein for DDG was $5.19, compared to the cost per unit of protein for soybean meal at $6.40. The midweek Energy Information Administration report noted that ethanol supply in the United States increased for the fourth consecutive week through July 19, up 300,000 barrels (bbl) to a 3-1/2 month high at 23.7 million bbl, while domestic plant output fell to a 2-1/2 month low. In its weekly export DDGS update, the U.S. Grains Council stated, "Prices for DDGS CIF NOLA barge and FOB U.S. Gulf are lower this week as traders keep the ethanol co-product competitive with lower corn and soymeal values. Merchandisers are reporting a significant increase in international buying interest as corn futures have stabilized in recent days. Exporters note Taiwan, Korea, the Philippines, Indonesia, Vietnam, and Bangladesh have been active markets for both inquiries and sales. Prices for 40-foot containers to Southeast Asia are averaging $244/MT, steady with last week's values." ALL PRICES SUBJECT TO CONFIRMATION CURRENT PREVIOUS CHANGE COMPANY STATE 7/25/2019 7/18/2019 Bartlett and Company, Kansas City, MO (816-753-6300) Missouri Dry $155 $160 -$5 Wet $78 $80 -$2 Show Me Ethanol LLC, Carrollton, MO (660-542-6493) Missouri Subject Dry $150 $145 $5 Wet $78 $75 $3 CHS, Minneapolis, MN (800-769-1066) Illinois Dry $145 $145 $0 Indiana Dry $140 $140 $0 Iowa Dry $130 $130 $0 Michigan Dry $150 $150 $0 Minnesota Dry $125 $132 -$7 North Dakota Dry $130 $132 -$2 New York Dry $150 $152 -$2 South Dakota Dry $125 $132 -$7 MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253) Kansas Dry $140 $140 $0 POET Nutrition, Sioux Falls, SD (888-327-8799) Indiana Dry $155 $160 -$5 Iowa Dry $130 $130 $0 Michigan Dry $130 $130 $0 Minnesota Dry $135 $130 $5 Missouri Dry $155 $160 -$5 Ohio Dry $165 $160 $5 South Dakota Dry $145 $145 $0 United BioEnergy, Wichita, KS (316-616-3521) Kansas Dry $145 $145 $0 Wet $40 $40 $0 Illinois Dry $145 $145 $0 Nebraska Dry $145 $145 $0 Wet $45 $45 $0 U.S. Commodities, Minneapolis, MN (888-293-1640) Illinois Dry $140 $140 $0 Indiana Dry $142 $140 $2 Iowa Dry $130 $130 $0 Michigan Dry $140 $135 $5 Minnesota Dry $130 $130 $0 Nebraska Dry $135 $135 $0 New York Dry $150 $150 $0 North Dakota Dry $135 $135 $0 Ohio Dry $150 $150 $0 South Dakota Dry $130 $130 $0 Wisconsin Dry $135 $135 $0 Valero Energy Corp, San Antonio Texas (210-345-3362) (210-345-3362) Indiana Dry $140 $140 $0 Iowa Dry $135 $135 $0 Minnesota Dry $135 $135 $0 Nebraska Dry $135 $135 $0 Ohio Dry $150 $150 $0 South Dakota Dry $130 $130 $0 California Dry $195 $195 $0 Western Milling, Goshen, California (559-302-1074) California Dry $203 $205 -$2 *Prices listed per ton. Weekly Average $140 $140 $0 The weekly average prices above reflect only those companies DTN collects spot prices from. States include: Missouri, Iowa, Nebraska, Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan, Wisconsin and Indiana. Prices for Pennsylvania, New York and California are not included in the averages. VALUE OF DDG VS. CORN & SOYBEAN MEAL Settlement Price: Quote Date Bushel Short Ton Corn 7/25/2019 $4.1850 $149.46 Soybean Meal 7/25/2019 $303.90 DDG Weekly Average Spot Price $140.00 DDG Value Relative to: 7/25 7/18 Corn 93.67% 92.34% Soybean Meal 46.07% 45.60% Cost Per Unit of Protein: DDG $5.19 $5.19 Soybean Meal $6.40 $6.46 Notes: Corn and soybean prices take from DTN Market Quotes. DDG price represents the average spot price from Midwest companies collected on Thursday afternoons. Soybean meal cost per unit of protein is cost per ton divided by 47.5. DDG cost per unit of protein is cost per ton divided by 27. Mary Kennedy can be reached at mary.kennedy@dtn.com Follow her on Twitter @MaryCKenn ****************************************************************************** Minimum Average Contract: A Smart Marketing Move With December corn now 42 cents per bushel below the high of $4.73 made on June 17, but still some 67 cents above the contract low set back in mid-May, what kind of marketing strategy can a farmer employ? Although both of USDA's 2018-19 and 2019-20 ending stocks estimates are currently bearish, the prospect for a sharp cut in 2019-20 ending corn stocks is possible in the Aug. 12 WASDE report. If you are looking for a way to market some of your corn and still leave room for upside price appreciation, you might want to consider a Minimum Average Price contract. (The contract might be called by another name, depending on the cash grain company offering it.) The contract allows a farmer to establish a minimum selling price, but also participate in a potential market rise during a pre-determined averaging window. The contract works as follows: Every day during the pre-determined averaging period, an equal number of bushels is priced, with all of the bushels entered in the contract priced by the end of the contract period. Never would any bushels be priced below the pre-determined minimum or floor price. If, on any day, the market closes below the minimum price, that day's bushels would be priced at the minimum. On any days when the futures finish over the minimum, those bushels would be priced at the futures settlement price on that day. At the end of the averaging period, all of your corn would be priced at the simple average of all days. For a nominal fee, to be determined by the chosen pricing period, the farmer will have a limited and pre-defined risk, while being able to take advantage of any upside. Never will the farmer have to deal with any options or pay any futures margin. The cash grain company that offers the contract will assume that risk and responsibility. We have, perhaps, the most important month ahead of us with respect to corn, including not only the Aug. 12 USDA report, but also the revelation of the second survey results and prevented planting data. The chance for a resurgence in price is certainly there, but no one can be certain of how things will turn out. The farmer can choose a shorter window for the averaging period or a longer one that extends into harvest. The shorter the time frame, the cheaper the cost of the contract. As an example, a contract that extends only to the end of August might cost 5 cents per bushel, but one that expires at the end of October might be 9 to 10 cents per bushel. The timeframe can be chosen by the farmer. If you believe the corn market has upside and would like to make sure you get some new-crop corn sold while retaining plenty of upside (and do so at a very minimal fee), then this is the contract may be for you. A typical contract can be entered for a cost that might range between 5 and 10 cents per bushel. The Minimum Average Price contract is one that protects the downside and offers the opportunity to participate in a priced rally for minimum cost, with no additional risk to the corn farmer. Here's an example: Say a farmer agrees to sell 30,000 bushels of corn on a Minimum Average Price contract that extends through August. With 28 trading days remaining, that means 1,071 bushels per day will be priced. The minimum value is set at $4.20 on December corn. Let's assume the cost is 5 cents per bushel. Each day the market settles above $4.20 futures, that 1,071 bushels is priced at the closing December price. Any day December closes under $4.20, that day is priced at $4.20. The simple average of the 28 separate pricings would then equal the final futures price for the 30,000 bushels. Please note that this contract does not take into consideration basis. That is a separate risk to be managed, but basis can be set at any time or even ahead of time. Such a contract offers a chance to capitalize on a potentially bullish August report, but also protects the downside in the event of a bearish surprise. Check with your local cash grain merchant to see if a similar contract might be offered in your area. Comments above are for educational purposes and are not meant to be specific trade recommendations. The buying and selling of grains and grain futures involve substantial risk and are not suitable for everyone. Dana Mantini can be reached at dana.mantini@dtn.com Follow Dana Mantini on Twitter @mantini_r ****************************************************************************** 2019 Spring Wheat Tour Preview: After Rough Spring, What Will Scouts See? The 2019 Wheat Quality Council Hard Red Spring and Durum Wheat Tour will begin and end in Fargo, North Dakota, with scouts gathering Monday, July 22, in the evening and then heading out to check fields July 23 through the morning of July 25. Similar to last year, day one will cover the southern half of North Dakota, southwestern Minnesota and northeast/north-central South Dakota. Day two will cover northwest and north-central North Dakota, with day three covering north-central/northeast North Dakota and northwest/west-central Minnesota. Dave Green, executive vice president of the Wheat Quality Council, told me that the tour route would remain mostly the same and that he has 62 scouts this year versus 56 in 2018. "I am expecting an above average crop," said Green. According to the North Dakota Wheat Commission's (NDWC) crop progress comments for the week ended July 14, development of the crop remained behind normal in all states with the exception of Minnesota. In Minnesota, 96% of the crop was headed, slightly ahead of the average of 91% for mid-July. North Dakota was 79% headed, South Dakota 75% and Montana 60%. A recent stretch of high temperatures -- upper 80s to lower 90s -- helped accelerate crop maturity some, which should be reflected in the July 22 report and will likely be seen by tour scouts. I had a chance to speak with farmers and elevator managers in North Dakota, South Dakota and northwestern Minnesota the past week about their expectations for the new crop. "I think when the tour gets rolling, they will find a little bit of everything. That is what I get from conversations with producers in North Dakota and Minnesota the past couple of weeks," said Tim Dufault who farms in Crookston, Minnesota, and is a board member on the Minnesota Wheat Research and Promotion Council. "In the northern tier of North Dakota counties and the northeast, it was dry this spring and early summer; dry enough to impact the wheat crop. The western half of North Dakota has generally had timely rains and that wheat looks good. Minnesota wheat areas started to get dry by the end of June and my region received a good soaking rain the first week of July. Our yields should be comparable to last year." An elevator manager in east-central North Dakota told me that the crop there is average and is not a bumper crop. He expects the tour to see some drowned out spots, and it is still too early to tell if scab will be an issue. Farmers in his area were faced with soft and wet fields, and it was a challenge to get spraying done, but most succeeded. He added that the wheat should be filling nicely with the rains lately. Keith Brandt, general manager of Plains, Grain and Agronomy in Enderlin, North Dakota, said, "Surprisingly, after how late this spring wheat crop was planted, April 23 through June 11, it looks very good. Granted, that very late planted wheat doesn't have as good of a stand, but the cooler weather in May and early June is what the wheat crop needed. It seems the majority of the wheat got sprayed with fungicide, so that should limit quality concerns." Brandt added that he estimates southeast North Dakota yields will be 60 to 65 bushel per acre. "I think our proteins will average 14.0," added Brandt. "It will be close to Aug. 10 before we see some harvesting, with the harvest extending to mid-September. Everybody will be looking for storage because very little was forward contracted." Brandt added that it will take a stronger corn price to pull wheat prices higher. "I think we are going to have a very good spring wheat crop this year. We had a storm blow through July 19, so there is some lodging now, but it should bounce back for the most part," said Ryan Wagner, Wagner Farms, located near Roslyn, South Dakota. "Starting to see a little scab show up, which isn't surprising considering the amount of humidity we have had, but it's still too early to tell just how bad it will be. Between the corn, soybeans and spring wheat, the wheat has looked the best of the three all season. Stands are nice and even, we have had adequate moisture, and it hasn't been too hot yet. We are on the far southern edge of the tour footprint, but I'm guessing they will find above average yields." Tim Luken, manager of Oahe Grain in Onida, South Dakota, said, "Spring wheat looks out of this world, actually. I do know those that did not spray fungicides are going to have issues with scab. We are about a week away from cutting winter wheat, but scouts may run in to some custom combiners." Allan Klain, Turtle Lake, North Dakota, said, "In our area, timely rains have kept the crop going. The crop does look good, not super spectacular but above average. Leaf diseases are at a minimum and fusarium infestation seems to be minimal. About 30% was sprayed in the area. We received 2.8 inches of rain starting 10 days ago and that basically saved the wheat." Klain said that further south and east, more rain has fallen and there is a lot of spraying for fusarium (scab) in that area occurring. "We made the call not to spray, and it seems to be the right one. I saw my first durum field in the area this year, and the farmer shelved it due to likely discounts if harvested. A farmer on Twitter from southwest North Dakota said around Mott, North Dakota, it is a "fusarium hotspot." I spoke to a durum buyer July 19, and he said he thinks we are going to see above average yields, "for sure in far southwest North Dakota." USDA has production at 58 million bushels, but he thinks it will be more around 63 million bushels. He added that the "jury is still out" on quality, especially areas reporting scab and he also said some that farmers have told him there could be lower HVAC (hard and vitreous kernels of amber color) because of bigger yields and not enough nitrogen. NDWC noted in their crop progress comments as of July 14 that the North Dakota durum crop showed a slight improvement in overall condition with a rating of 77% rated good to excellent, up from 74% the previous week. Crop development was behind with 75% headed versus 88% last year at this time. "Recent rains and stretches of high daytime humidity have raised the disease threats in many areas, especially as the majority of the crop has advanced to the heading stage. As with spring wheat, producers are monitoring the crop and applying fungicides to help manage disease levels," said NDWC. When I was on the hard red winter wheat tour in 2018, Green told scouts that the tour is the industry's "first look" at the crop. "We know between now and harvest that yields can change, but the tour is a good starting point. It gives us the first snapshot of the new crop wheat," said Green. At the end of the 2018 Wheat Quality Council Spring Wheat Tour, the final total of the 325 spring wheat fields surveyed averaged 41.1 bushels per acre (bpa). The 17 durum fields surveyed averaged 39.3 bpa. The USDA reported in the September 2018 Small Grains Summary that the 2018 spring wheat yield was at 48.3 bpa and durum was at 39 bpa. Charles Wallace will be covering the tour for DTN this year and you can follow him on Twitter @agcommcharlie and don't forget to follow DTN/Progressive Farmer on Twitter @dtnpf for stories and updates on tour results as well. Here is link to information published by Ohio State University Extension on fusarium head blight, also referred to as scab: https://ohioline.osu.edu/factsheet/plpath-cer-06 Here is a link to information published by North Dakota Stata University on vomitoxin, also referred to as DON: https://www.ag.ndsu.edu/publications/crops/plant-disease-management-deoxynivalen ol-don-in-small-grains-1 Mary Kennedy can be reached at mary.kennedy@dtn.com Follow her on Twitter @MaryCKenn ******************************************************************************

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