Gro Intelligence has enhanced its coverage of US agricultural markets with the addition of local cash grain price data from DTN. This valuable new data source adds daily spot and forward delivery prices for corn, soybeans, and wheat at 4,200 elevator locations across all 50 US states going back more than a decade. Users are able to analyze cash prices alongside futures prices and the more than 55 million other data series in Gro.
DTN’s extensive network and history of cash grain prices offer an important tool for Gro users. The price data can be used to create forward curves at a given location and make price comparisons across the country. Users can derive additional value by using DTN data in conjunction with the substantial number of other sources in Gro. Cash grain prices are much more granular in terms of geography and reflect local fundamentals that might not be represented by broad futures contracts.
The chart on the left shows a forward curve of corn basis, the difference between cash prices and futures contracts used to hedge the price, for delivery of corn from now through next year. The cheaper basis in future months shows the expectations of a large new crop that will be harvested in late september. Negative basis in general indicates ample supply. The chart on the right shows a history of soybean basis in select locations across several states. The difference in basis from one location to another can be due to local availability, logistics, or end user demand.
The following are a few possible ways to explore DTN and Gro data to form a better understanding of the market. Raw DTN data is only available to paying customers of Gro’s API.
Calculate Local Crush Margins
Crush margins are an important calculation for many market participants, from farmers and elevators that supply the grain to traders and processors and finally end users. DTN cash prices can be used to calculate local crush margins better than with just futures prices, which don’t contain important basis price information. Having a more accurate picture of processor demand can inform balance sheet forecasts, product availability, competition for supply, and ultimately ending stocks. Combined with data from Gro covering ethanol production and stocks, soybean and corn crush, yield forecasts, and countless other fundamental data points, market participants can form a complete picture of the commodity markets.
Make Purchasing Decisions
Gro’s US Corn and Soybean Yield Models forecast district-level yields on a daily basis. An elevator operator, processor, feedlot, or exporter can examine local yields in the areas surrounding their facility and determine if there is a potential shortage or abundance of supply. Users can then check DTN’s cash prices for both spot and forward periods in the region to inform purchasing decisions. If yields look great it might be better to wait for the new crop to come in and buy spot. But signs of stress may suggest a better course of action is to secure more supply in the short term or lock in forward price now before supplies get tight and basis rises. The history of prices and yields in Gro lets users perform rigorous statistical analysis to model reactions in the forward-price curve or basis levels under different yield scenarios.