Nebraska’s David Grimes believes there will eventually be sale opportunities on corn or soybean rallies, even though prices are lower than they’ve been in several years. A $4.50 cash corn price will get him interested. So will $11 cash soybeans.
In a move not often seen, old-crop soybean futures have caught fire and boosted new-crop prices. The result is a strong pricing opportunity for farmers looking for some early sales, says Mark Gold, a Chicago marketing analyst.
“Risk management – you will not survive without it.” That warning came from Randy Blach, CEO of CattleFax, at the recent National Cattlemen’s Beef Association convention in Nashville, Tenn. Even though the message was aimed at beef producers, Blach says it is also advice for farmers, who face corn and soybean markets as volatile as those for cattle.
Considering where corn was not that long ago, Jason Moss frowns at prices on the futures market and at his local elevator. And he’s thankful he got about 40% of his expected crop booked early at near $5.50 per bushel when demand was still high, supply was low and markets were hot.
If you’re pondering what price you’ll receive for corn this fall, you probably hope history of December 2014 corn futures repeats itself. But just in case, consider pricing a small amount of your anticipated production now, advises a Texas A&M Extension economist.
The current support seen in soybean futures prices is an indication that farmers will plant more soybean acres and fewer corn acres for 2014, says Bob Maurer, market analyst and co-founder of Manduca Trading LLC in Chicago.
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.