Market basis levels are all over the board in big corn areas, despite a futures corn price around $4. “Farmers often have a sense of loyalty to their local elevator,” says Kevin Dhuyvetter. “But they should be willing to do a little bit of shopping around. Basis can jump more than we might think.”
With a good U.S. soybean harvest nearly complete and South America production on a roll, cash soybean prices below $11 per bushel may be the norm next year and beyond, said Chad Hart, Iowa State University Extension crop markets specialist. Hart said Friday that growers should consider locking in higher soybean prices when brief rallies occur because “it looks like the market is digging in.”
“With corn prices where they are compared to last year, we’ll probably see more accumulators used for 2014,” says Ron Groskreutz, grain originator, Heartland Co-op, headquartered in Des Moines, Iowa. “But you don’t want to be oversold. A good rule of thumb still applies; sell one-third before planting, one-third while it’s growing and one-third after harvest.”
With new-crop soybean futures at about $12.70/bu. and higher than any trading months through November 2014, there are limited market incentives for farmers to “hold and store” soybeans for later sale, says Dan O’Brien, Kansas State University Extension grain economist. But with supply and demand issues coming from all directions worldwide, that doesn’t mean there won’t be opportunities to ride markets up next year.
Corn usage for ethanol will likely be 4-6% higher for the current 2013-2014 marketing year compared to last year, according to Bob Wisner, retired Iowa State University Extension grain marketing specialist. But it’s more in the fuel end of corn usage through the ISU Ag Marketing Resource Center.
Projected budgets for 2014 corn and soybean production are out – and they’re pretty scary. But Dave Hommel has faced tight years in the past. And a balanced offense with staggered small sales helps keep profits at levels he can live with.
Eastern Europe, South America and other grain-producing regions have scooped up much of the U.S. corn export market after last year’s drought-fueled higher grains prices. “They have geared up for the corn export business,” says Chris Hurt, Purdue University Extension economist. “Our high prices helped unleash the competition. It will be hard to get back to 1.5 billion bushels in U.S. corn exports.”
With November soybean prices perched in the teens, it appears growers may escape big drops in the market that often accompany combines in the field. Weekend rains did cause a sharp drop Monday in the November 2013 futures contract, down some 50¢/bu. from near $14. The contract closed Tuesday at $13.42, down 6¢ more.
The steady slide of corn prices took a detour for the better this week, as weather markets, projections from USDA and a major crop tour eased the risky road to $4 cash. And even if $4 corn is found, a Texas A&M economist feels user demand will support higher prices down the road.
By managing his corn pricing in a conservative but prudent manner, Don Villwock normally hits his target of being in the top-third of the year’s marketing price. He uses the newest marketing tools like short-dated new-crop options.
Despite gloomy projections for slow economic growth in China and other big buyers of U.S. soybeans and corn, any experienced farmer knows there’s never a guarantee that markets will be up or down. In July, November 2013 soybean futures traded at $12.30 early on, before rallying to $12.90, and backing off to below $12.20 on Tuesday. Swings of 60¢ and 70¢ can mean $35-40/acre for typical soybean crops.
There were many who expected December 2013 corn futures prices to already be below $4.50. That was before continued wet weather slowed planting and crop progression. The contract closed Friday at $5. That’s close to $2 below what the old-crop July contract expired at last week. Tight supplies kept old-crop higher.
Despite logistical problems in Brazil and Argentina, there remains a strong chance for a big South American soybean crop. That – on top of predicted record U.S. planted acres –can easily pressure U.S. soybean prices, says Dan O’Brien, Kansas State University Extension agricultural economist.