hello my name is Aaron Edwards co-founder and Market consultant of Santos Springs we offer grain Marketing Solutions to producers in multiple countries Welcome to our W2 grain marketing channel go ahead and hit the Subscribe button I also recommend tapping the Bell so you get future notifications and if you like what you see hit the like and share this video with other farmers who care deeply about their great marketing if you are a corn or soybean farmer your Revenue depends not only on your production but also the answer to three simple questions when how much and
how you sell 1 W when 2 hes how and how much our w2h mentorship provides a clear concise and custom approach to answering each one of these three questions for your specific Farm throughout the year before we start this week's content It's always important to remember that trading in Futures products entails significant risk of loss which must be understood prior to trading and may not be appropriate for all investors this commentary and the information contained within should be considered Market commentary and reflect the opinions of the author for those of you watching this with a
delay if you are a US corner or soybean farmer and want to stop being being held hostage by market uncertainty let us teach you how to place each one of your bushels in a grain marketing strategy specifically designed to optimize your Farm's Revenue click on the link and we'll work together to see if our w2h mentorship is the right Next Step for your grain marketing all right let's get into this week's report uh hooray we got a rally not not some not anything incredible but it is a little something to be happy about so let's
just start with the recommendations got a little bump in the markets we need to talk about what to do uh with that I want to make sure we get that out of the way first all right so the first thing we want to do here is we want to just check through these items item number one recommendation number one sell an additional 20% of quarter one corn bushels sell an additional 20% of quarter 1 bushels in December we sold 10% and then a week or two later we sold another 10% of our quarter 1 corn
bushels now we're going to level that up sell 20% we'll be 40% sold on quarter 1 corn bushels the way that I like to think of kind of a rhythm of sales quarter 1 bushels we've got 3 months to sell it if we're 40% sold halfway through January then we're a little bit ahead or it's nothing nothing too off Pace but if we need to be patient here for a little bit we've kind of bought that time to be patient on some sales next item I'll check the box there is we are going to sell
10% of quarter 2 corn bushels 10% of quarter two corn buels um the third item is we are going to sell 10% of new crop corn bushels 10% of new crop corn bushels now let's shift gears to soybeans check that box we're going to exit the remaining long soybean positions that we have if you remember off our quarter four bushels so that it's a 35% of the quarter four bushels what we did was we sold soybeans it was not a very good sale uh but we reowned we reowned those soybeans 70% of those and then
the markets went down and the markets came up and we got out of uh half of that close to break even maybe a little bit of a loss maybe a little bit of a profit uh now we got a rally and we're going to exit the other 35% of those depends where you get filled but that should be a winning trade right that should be a re ownership that works so we're going to do that we're also going to be aggressive on selling 50% of our quarter 1 soybeans 50% of quarter 1 soybeans basically we're
we're playing ketchup to the rate of sale for corn but we just now got the bean rally we're going to play ketchup we're actually going to do 10% more so we're going to sell 50% of quarter one quarter 1 soybean vs um and got to check that box there all right now let's get into a little bit of the analysis and um we will go from there you should be able to see photos there's a couple of pictures just a little bit of a rundown on what what's driving this Market we'll talk a little bit
about the USDA report in a minute but um there's two things the USDA tightened the uh Global it it just the fundamentals got a little tighter on last Friday's USDA report that gave us one bump and then we came into this week still with dryness so the pictures I'm showing you they're from the state of bana and they're definitely talking to a customer down there he said this is Western fana he said there is definitely yield loss already he wouldn't take a stab at how much yield loss there is because will it rain or will
it not rain so if they get rain here kind of soon it might not be that much of a loss I would guess maybe take 10 15 % off their yield uh if they go another week or 10 days without rain it's pretty serious talks to a customer in Paraguay yesterday and they are he's expecting Nationwide he's in the real good area the Iowa Illinois so to speak of uh of Paraguay and he said average Nationwide he thinks that you're going to trim 20 to 30% off of the Paraguay crop just to put some numbers
on it Paraguay produces about 10 million metric tons good year maybe 11 12 bad year like this one we're probably looking at 8 9 million metric tons um so it's not it's nowhere close to you know Argentina's 50 million metric tons ballpark or Brazil is pegged at 170 million metric tons so it's not it's not even in the same ballpark but it's still reduces it's still maybe 20 you know 2 to 3 million metric tons which if you think of how much the last USDA report cut out of global supply and demand it's only about
that much and we got we got a bit of a bump right um what the USDA report did not do on Friday was reduce the crop in South America so you can see a couple of these pictures of stressed crops this is from the state of Parana uh um and you could see kind of where they are from a developmental standpoint now picture paints a th000 words so I wanted to make sure you see the picture of the crop but I also want to pull up here um the let just give me a second here
for me to find this all right we wanted to pull up in and not show what the what Brazil's crop where it is developmentally again Brazil is 70 million metric tons or I think the usdaa number is 169 some private estimates are over 170 some estimates are below that that is the monster crop in Brazil so where is it developmentally cuz that gives us a bit of an idea and this 54% here is this yellow area that is um filling Inon is it's filling the grain or filling the pots uh 177% is flowering so there
there is potential yield loss these are the two categories where I'd say we could have yield loss right we could have yield loss maybe a little more if if in the areas where you get the the flowering that that cuts potential but if there's not rain uh you know if there's not rain to fill those pods uh there is a significant amount of Brazil's crop that is um that is still vulnerable I I think I mentioned last week or two weeks ago uh beans in the US are made in August well January January similar to
their August we'll shut that uh that down and start um and just a little bit we'll talk about other markets I don't think this is a really significant story out of South America because the northern production regions are looking very very good um so maybe you're going to trim 5 10 million metric tons off of the crop in southern Brazil uh but you might pick up 5 10 million metric tons out of good yields bumper yields in the northern part of the country so from a global supply and demand uh standpoint I think the Brazilian
crop should come down a little bit I think 170 is high but maybe 168 or you know 165 I think it should come down a little bit but um it's still a monster crop right it's still a lot of soybeans as far as when will harvest start well those early soybeans will start being harvested yet this month have some customers that are going to start running maybe next week by the end of January a lot of them will be will be already starting to harvest soy beans again that's those early soybeans that they can uh
turn around and plant double crop corn so February February is probably the busiest year the busiest month of the year in the field for farmers who do double crop corn and soybeans in February they are uh you know Full Speed Ahead with soybean Harvest and full speed up ahead with double crop Corn Harvest but they'll get started on that um maybe next week for sure by the end of January the farmers that to double crop corn it's going to start getting real busy real quick all right enough about uh enough about South America let's look
at markets and let's look at the rationale behind it I always like to throw up the pyramid because this describes the philosophy of how we handle markets Baseline build a portfolio custom to your operation and then within that portfolio you get specific recommendations and then how are these recommendations constructed seasonals the net position of the funds technical analysis that's the middle level of the pyramid that's what we're going to get into in just a minute and then the the the top point is action you need to execute so for me that's the right way to
construct a marketing strategy and you don't need a crystal ball you don't need um to know the future or to to expect Perfection but if you build it in that way you will make progressively good decisions throughout the year and throughout the years and those progressively good decisions compound results again that's that's the philosophy we handle markets if you've been with us a long time you might be tired of seeing that pyramid but for me that's just ingrained in the way that I think about markets so much and I really want people following along to
have that same thought process and it does a tremendous amount to align expectations it does a tremendous amount to reduce the uncertainty and the emotional stress if we say I build a portfolio I'm managing this portfolio I want this portfolio to perform well um all right so let's talk about let's get into the nitty-gritty here of um of the analysis section of the video all right here we go the first thing I want to do and let me grab a grab a color here I think maybe blue will work blue will work nicely on this
all right in why would we be aggressive at at this point if you're thinking that selling 50% of quarter 1 soybeans is aggressive why would we be aggressive at this point um that's because we are at the smallest uh um I I included January I included the 2025 this first coot report the first position of the funds report I included the 25 January 25 in the 24 chart because I wanted we really wanted that reference just to be able to look back on it but we are at the smallest net sold position of the of
soybeans in Chicago since the first of 201 24 and then we also got tail end of May we got to similar levels there that is the reason that we would be saying let's sell this or let's take profits on Longs from from the standpoint of looking at the funds just okay this last time they were here after after they got to this point this was a huge selloff this was a huge selloff maybe we should go ahead and and get rid of some of our maybe we should go ahead and take advantage uh of these
price levels from a from a fun standpoint on soybeans that's a little bit of the rationale and then on corn it's actually a little bit different and we'll get a little different color here uh let's give uh let's give green a shot there we go on corn the good news is again I included January here but we are at the highest that long position for corn that we have had since 2023 this isn't those astronomically High overbought corn positions you need to sell it it's not that but they have progressively since uh first part of
November when they got positive the the clear tendency is the stair step up that is good news that is that is exciting news speculators want to own corn does that mean they're going to get rid of it or does that mean they're going to keep buying it I think the main thing that's important to realize is that this has been primarily a speculative Buy on corn uh yeah fundamentals got a little tighter but we've seen we've not really it's not been a basis Le rally it's not been a spreads Le rally it's been a spec
fund Le rally uh so what to expect now okay spec funds kind of bought it up that's good news what to expect now we're going to work through the several of the of the Corn and soybean contracts because I want you to kind of understand the rationale behind the recommendations kind of one by one so we'll start here the the first recommendation was sell 20% of quarter one corn so I pulled up the March contract that's what we would be selling against with quarter 1 Bush bushels what's the rationale and let's get this in Black
boom there we go black the rationale for selling quarter one bushels is basically we are at the highest price level you know if you look at that we're at the highest price level we're in the upper uh fours on March cor it's been a while since we've been here I think this $5 Mark is something that is very very desirable uh this would be the classic case in my opinion where we would see somewhere in here maybe maybe yesterday Tuesday's trade was the high tick or maybe we can you know get some friendly trade come
up to 490 or something like that but somewhere in here I think selling pressure will limit our gains and I think it will be hard for us to continue rallying short term the huge question in my mind is regardless of how high we go this will probably come down to catch its breath well does it stop at the 20-day that would be good news or does it you know if this 200 day kind of turns does it come down to the 200 day or does it completely lose Steam and you know trade down here to
some support that third alternative I don't really expect for a a few reasons I think we will probably have a a somewhat supported corn market and that's why we're not more aggressive on on other sales if you look from the the lows back in here uh and even really in here this very much looks just kind of like a stair step market up right so it comes down doesn't and then it comes up again and then it goes up again and then it comes up again so I think probably we're going to keep stair stepping
up I I think that's the the more likely thing and this isn't something like wow Aaron a great idea now we usually stair step stair step up in the corn Market um between Harvest and some weather uncertainty uh in the spring that's the usual thing to happen uh so as we need to move corn throughout the year pick oh got a little bump sell a little bit comes back down got to get another bump sell a little bit that's not a that's not a bad move I do like the idea of getting enough sold to
where if we need to be patient sellers for for a little bit we'll be okay the next chart that I want to show is is July 2025 and the thought process here this would be for our you know sell 10% of quarter two bushel if you think about that recommendation the main thing is just just to reward a rally I hope that on your quarter 4 bushels I hope this Market keeps stair stepping up and I hope that this is kind of the worst sale that you make on your quarter 2 I'm sorry if I
said quarter 4 on our July 2025 we're talking about quarter 2 bushels I hope that this is a sale that brings your average down on quarter 2 but after when you get a rally with everything that we've been through we have to remember that the fundamentals they it's not like they got super tight we still we still have quite a bit of corn in the US um with the ratio between corn and soybeans probably I mean the the battle for acres is probably leaning towards more corn Acres we'll keep an eye on that but as
of right now that's that's what it's looking like it just makes sense highest prices since June of last year largest overbought you know speculative uh corn position since 2023 that's a rally whether we like the price very much or whether we like the situation very much that's a rally we just make sure we're we're participating in we're putting that in our pocket and that goes same basic rationale but I'll pull up here's the December um the December actually is maybe even a little bit stronger case because let me just point out a few resistance points
um every time we've gotten ready around this price level we don't know what'll happen this time but every time we got here in the past that was a pretty significant resistance level that coincides with the 200 day moving average coming down that up against this resistance after the bad markets that we've had if 450 is the lowest lowest average price for a corn sale nobody's going to be too excited about it but again I feel like you should uh you should be swinging at it you know just layering into an average with 10% nothing aggressive
hopefully hopefully we get chances at $5 Hedges sometime in the in the spring and and hopefully that's the case but just it's just 10% right you're just getting the steak in the ground starting to get a benchmark for for averages this year at the price that has has found resistance in the past on that new crop uh we don't need to overthink it much more than that it's just just kind of taking it one step at a time all right um shifting gears now to soybeans this is the March 25 soybeans if you'll notice the
difference on the recommendation so soybeans is just two things that we pointing out the first one and I'll talk about that when I show the July contract is sold quarter 4 beans had some reers ship we're higher we're going to get out of that re ownership that's that's the first thing I'll talk about that when we do the July um the next thing is we still need to remember that about half of Brazil's um crop that's going to be harvested like I said beginning next week is unsold I find it very difficult to think that
soybeans are going to have just a runaway rally to the upside if we've got anywhere from 80 to 100 million metric tons not proba not 100 but we're probably at about 80 million metric tons of soybeans that will need to trade hands maybe a little bit in January but say February March April uh we likely are going to have about 80 million metric tons of soybeans out of Brazil adding selling pressure on top of that spec funds haven't even bought soybeans yet they're kind of a little uncomfortable with being sold and we've got a ton
of selling pressure out of South America so I think that this quarter one might be a very tricky time for the soybean market so okay well Aaron is you know uh bullish corn but he's bearish beans but he says that that ratio needs to improve this uh you know this doesn't H make this make sense the truth of the matter is we're just making decisions one week at a time and that's the best we can do for this week I think it makes sense to take quite a bit of risk off the table on your
quor one soybean sales and that's it that's the extent of it once we get into planting and battle you know battle for Acres news and all that all that news that comes March April May that's that's uh that's an eternity away we don't know you know by then Trump will be in the White House soybean Harvest will be over in Brazil we're going to be talking about corn risk we're going to be talking about battle for Acres there is a there are a lot of headlines that will come and go in the next uh in
the next few weeks and months but for today we're going to take a lot of the quarter 1 uh risk off the table by making sales at a at a price point that we've we've struggled to spend very much time above for really since like July of last year um and then we're shifting to the other the last uh chart here talking about recommendations July if we just kind of go back what happened on our on our quarter 4 bushels well um about in here uh about in here sales were made and re ownership took
place uh about in here part of that re ownership was exited and then here we're going to exit the rest of that uh that re ownership on the quarter four soy soybeans um all right so now we will go over we have a few questions and then well I let let me do this first let me go over the um just kind of a rundown on the uh the analysis and the thought process behind it there we go we got the screen so seasonally it is neutral for corn it's neither a buy nor a sell
for soybeans because of the weather risk in how South America it is a sell managed money corn is bought they are long but it is they are not bought long enough to sell and soybeans spec funds are sold but not big not a big enough sold position to justify anything thing and both corn and soybeans are in uptrends I like to sell in uptrends basis has softened as Chicago has rallied that's the first thing the next comment I'm going to make on basis here we go basis tends to move sideways during during the winter months
you might be able to pick up a nickel here or a nickel there maybe a dime but basis is very there aren significant basis opportunities um typically at this time of year technical considerations uh I'm not going to summarize the technical considerations and this video because we went chart by chart because you'll see you know like new crop coin is at resistance levels you the the story is a little bit different across contracts and we just went through those in detail so I'm not going to uh I'm not going to go through those right now
before we wrap up let me just answer a few questions that we have and um and go from there all right so question one number one do I hedge you futures or options uh that's a great question it it's not a one- siiz fits-all question obviously but I I would tell you on this week's recommendations I just the only position that isn't just a simple cash sale is stepping out of Longs on soybeans that for my recommendation right and when we got into those I had suggested Futures so that's that's that um um in these
recommendations I I just my I make the recommendations kind of assuming its Futures that's that's my my default I realize that that's not for everyone some people like options and that's fine this is the way that I see Futures and options right and and and again I I'm not going to impose my risk Vision on you that's that's particular to each one but if I buy Futures basically in a nutshell I need to get the direction right which is challenging enough if you deal with options you need to get the direction right the timing right
because they depreciate um and you need well if you're buying options I should say timing right the direction right and you get need to get the magnitude right for your strike price so there is a lot more that you kind of need to get right in order for options to work that doesn't mean that it's not the right tool and for some people it it absolutely is the right tool in the right approach from the standpoint of recommendations uh in this video the the default my default is is to uh go over just assuming mean
kind of it's a Futures position and then we can manage the basis separately but what I'm aiming at is whenever there's basis opportunities rather than Futures opportunities or whenever we need to move inventory but we you know we don't really want to accept the price level so the Futures is just the best exchange for that cash position in kind of the most direct way so that's my default is is kind of to use Futures now I realize that that's not for everyone I realize that that's someone you know something you need to sort out but
that's my thought process um next question should I sell cash or HTA there there are times in the year where there are fairly significant basis opportunities and basis strategies and when that is the case I will make those recommendations um from a basis or HTA standpoint is it possible that you could maybe maybe improve your um results using htas instead of just moving the grain it's possible we probably I mean I would be surprised if it's much more than a nickel uh it basis is typically sideways right so the way that I see it is
let's say that you have quarter one bushels right and you're saying should I do an HDA or should I do a basis but I'm going to move my grain in the winter your biggest opportunity is probably to not move the Grain in the winter and to move the Grain in sometime in the spring or summer when it's the dearest and then bases can absolutely be a factor that plays in and htas can absolutely be a factor that plays into your marketing but historically speaking this is kind of a sideways boring time for basis or at
best a slow gradual appreciation of basis so if basis is doing this even if it's going up can you do an HTA and get one of these tiny little moves yeah maybe maybe but most of the action will be in the F in the in in Chicago right so oh Chicago went up 20 points or you know went up 20 cents and bases came down a nickel or three 4 cents right the cash sale is the big decision get that right and then and then you're not there aren't typically significant basis opportunities right now in
the winter and for that reason just just keep it simple and just just be done with it is is my thought that doesn't mean it's wrong that doesn't mean it's wrong to necessarily do htas but um there's not enough of a systematic um strategy to where that's going to be year in and year out the best alternative for you uh to where I would change your recommendation at this point in time time uh will the US exports um stay strong with harvest in Brazil starting that is a great question I would say there is a
there is the Assumption right as soon as Trump this is probably 6 months ago as soon as it was pretty evident Trump would be in the white house there was kind of this assumption that what would happen back in 2018 would happen again which is uh the so price of of um soybeans struggled and corn also but you know soybeans got punched in the gut back in 2018 basis in Brazil skyrocketed uh Brazil got all the export business that's what happened back then and the Assumption was that's going to happen again and maybe it is
right I'm not I'm not making any type of geopolitical comment but there is a very important observation to make and the observation is is China and other foreign buyers as when Harvest was over in the US their attitude wasn't like well there's plenty of grain in the world I'll wait for Brazil their attitude was let's stockpile and China accumulated I think it's their largest soybean inventory I think on the books but regardless of whether it gets the gold medal or not China bought a ton of soybeans um from the US also right so the behavior
of China as the biggest buyer but other countries it seems more like let me make sure I have enough instead of oh I'll wait and buy it cheaper later so let me make sure I have enough this stockpiling behavior that that to some extent changes our previous ideas on how much is enough because it's not let me make sure I have enough compared to my historic needs let me make sure I have enough you know let me make sure I'm buying it cheap it's let me make sure I have enough for what that this type
of buildup in in Grain reserves is typical when there is geopolitical uncertainty and so I'm not saying any I'm not making any type of commentary I'm just looking into export data that's it all right so will the US exports dwindle maybe maybe or maybe there is enough uncertainty geopolitically to where they say yeah I want all the grain I can get out of the US and I want all the grain I can get out of Brazil I need to buy enough grain for me to feel safe and we have no if that's the mode we
have no clue how big that number is so a lot of people are real quick to write off that as soon as the South American crop comes in we're going to lose lose demand um and I do think that'll be probably the predominant headline but uh I'll just put it this way that's the overarching narrative that's probably going to be the predominant headline is that we lose business to South America I'm definitely going to be week by week reading fine print to see if if buyer behavior is changing because what their actions they actions speak
louder than words what actions are saying maybe the words are saying I'll buy from Brazil later actions are saying let me stockpile grain so for me I'm uh not I'm not I don't want to overstate that I don't want this to change the way you Market your grain make your decisions see the world um but this is the type of headline that I think you should just be zeroed into that okay what would typically happen is Brazil gets all the export business we go way down that will probably happen to some extent but the behavior
of the quarter 4 exports was more like stockpiling than it was let me just buy a minimum to make it to the Brazil Harvest so let's see if that changes um a lot to go over this week so much nicer to put out one of these videos when we when we have a rally uh thank you for watching and send me any questions you have [Music]
