Grain Division: Positioning for Opportunity Amid Market Shifts

Good news seems to have a way of being followed by bad news. Or the reverse, and a more positive outlook is also true that you could say bad news is usually followed up with good news.  The reality of the ag economy, break even prices, and returns to farm operations was discussed earlier in this publication as the bad news.  Fortunately, we have what appears to be great crop growing, with stable demand for our commodities, which is good news.

Demand has been strong for US commodities in the export market, even in the face of a large crop growing in South America.  Domestic demand in Brazil has also been increasing for corn into ethanol, and Brazil’s mandatory blend of ethanol in gasoline increasing from 27% to 30% which helps to absorb some of that additional SAM supply. 

The EPA’s Renewable Volume Obligations (RVO’s) set earlier in June also gave the market a confidence boost in maintaining corn grind for ethanol, while providing the runway for an increase in demand for US Feedstocks going into biomass-based diesel, supporting the soybean crush market.  The soybean market felt more of the initial market movement optimism, while also seeing soybean crush board margins rebound.  Ethanol margins also improved with the improved pricing for Distillers Corn Oil (DCO). OBBB recently passed also supports demand through extension of the 45Z tax credit with some changes to the Indirect Land Use Change (ILUC) scoring that will open the door for more plants to qualify.  Additional guidance is still necessary from the US Treasury on how, or if, farm level CI scores will be impactful, and if realized is an opportunity ahead for our members. 

The IAS Grain division continues to position your cooperative’s capital, resources, and time to connect our local corn, and soybean supplies to the end destination market demand, while finding ways to service you better and more efficiently.  One way the IAS team has been doing that is by accessing the UP-rail corn market out of Garden City to connect demand in the western United States and Mexico to our membership locally. Just like being efficient with growing crops, equipment maintenance, tax strategies, and cash flow management is critical on the farm, an equal amount of time is being spent at IAS to focus on weathering the bad news while positioning for good news ahead. 

Thank you for the opportunity to earn your business, we appreciate the relationship we have with you and your operations.