Sub-$4 per bushel corn futures continue to strain markets as a large old-crop carryover and lower feed demand hold down prices. December 2015 corn futures closed Friday at just over $3.78, meaning many farmers are seeing $3.50 or lower cash markets, depending on their local basis.
Soybean demand remains strong as projected soybean crush and export numbers continue to exceed 2014 levels, helping keeping bean markets from falling lower. But political policy in China, the world’s largest user of soybeans, could quickly swing bean markets up or down, said Scott Irwin, University of Illinois (U of I) agricultural economist.
Corn futures prices tumbled by nearly 10¢ per bushel this past week, with old-crop May closing Friday at $3.77, September at near $3.92 and December new-crop at $4.02. That’s even with good exports and USDA’s projected ending corn stocks still below trade expectations, notes a Memphis, Tenn., market analyst.
Already depressed due to large U.S. supplies, a projected strong South American crop and a volatile U.S. dollar, soybean prices could face even more pressure from high prospected planting numbers expected from USDA on Tuesday. Once the planting and stocks reports are released, it could be “opening the gates at a horse race,” says one commodity market analyst.
With USDA projecting an average corn price of $3.50 to $3.60 and soybeans at $9, these times require risk management survivalist mode. Dan O’Brien, Kansas State University Extension grain marketing economist, says the foreign crop production, U.S. weather during planting, the U.S. dollar and other factors may impact prices at any time.
With December corn futures stuck in the range of $4.05 to under $4.20 per bushel for nearly a month, it appears markets may remain in a lull until the March 31 USDA Prospective Plantings report, say marketing analysts. But a leading university grain marketing economist encourages farmers to be ready to pull the trigger when their target price is reached.
Ed Usset, University of Minnesota grain marketing economist, sees little incentive for making corn and soybean sales at price levels seen early this year. “I’m not recommending getting aggressive at these levels,” he says. “I’m going to be patient and hope something better shows up this spring. Give me a spring rally and I’ll perk my ears up.”
Trucks destined to haul Brazil’s soybean crop remained idle last week, as haulers continued to strike against high government diesel prices. The result was a double-digit rally in U.S. soybean futures prices and the potential for more foreign buyers of U.S. beans, notes Bob Burgdorfer, senior editor of Farm Futures.
December corn futures ended the week at about $4.18 per bushel, up about a nickel and enough to add a little strength to the price discovery level for crop insurance purposes. And for farmers worried that prices could tank well under $4, it may be a sign to forward contract a few acres, says Dan O’Brien, Kansas State University ag economist.
Once again, every quote on the CME Group soybean board was below $10; not a good sign for farmers eager to catch some sort of rally to make some early-season sales. March futures hit $10.60 in early January, but closed down about $1 below that at $9.61 on Friday.
New-crop December corn prices topped $4.30 per bushel in mid-week following a few bull signs from the Jan. 12 USDA crop reports. But that doesn’t generate a strong enough cash price to temp many farmers to make early sales, say two university grain-marketing specialists.
Short-dated new crop options (SDNC), available since mid-2012 from the CME Group, Chicago, Ill., provide a short-term alternative for trading new-crop corn and soybeans as well as hard red winter wheat and soft red winter wheat. CME reports that more than 2.5 million SDNC contracts have been used.
Soybean futures ended 2014 on a whimper, down close to 20¢ per bushel across the board. The market didn’t act much better the first the first day of 2015, with the January contract closing at $10.02. November slid below $10, closing at $9.93.
With corn futures prices seeing a nice little rally above $4 per bushel, it may be time to look for early 2015 crop pricing opportunities in a market that will likely see continued volatility next year, says Scott Irwin, University of Illinois ag economist.
The process of enrolling in either the Agriculture Risk Coverage (ARC) program or Price Loss Coverage (PLC) program, which began in October and runs through spring, requires farmers to update their base acres and yields, then make a one-time decision for the program they will use for the next five years.