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.
Are you bullish or bearish on new-crop corn prices? No matter which way you lean, the current futures price level near $5.60 – a price seen at least once every month since February – offers a reasonable profit margin.
USDA’s Crop Progress report Monday documented what weather-weary farmers have experienced with planters idled by wet, wet fields. Soybean planting is 17% behind a five-year average. But how long can delayed planting continue to hold soybean prices at their current levels?
Seasonal price patterns suggest that corn prices will likely peak in early July. But with recent price patterns caused by drought, bullish oil and other factors, will that be too early or too late to book much of the 2013 crop?
November soybean futures have seen little movement since late April; soybean prices have ranged from $11.90 to $12.40/bu. They closed Monday (May 13) at $12.09. And with USDA’s projected average season prices as low as $9.50, beans in the teens and even $12 prices may soon be history.
Old-crop corn likely hasn’t seen it’s bottom, even after a $1/bu. cave-in following the bearish grain stocks report March 28, warns Ed Usset, University of Minnesota grain marketing specialist. Usset’s book, "Grain Marketing is Simple (it's just not easy)," examines the difficulties in knowing when to make grain sales. It couldn’t be more relevant than now.
With early prices for 2013 crops at levels likely above projected breakevens, it may be time to get a few bushels booked, says Ed Usset, University of Minnesota grain marketing economist. Usset recently established his annual preharvest corn and soybean marketing plans. While he believes futures contracts normally provide more marketing alternatives to growers, he doesn’t discard cash contracts in his early marketing plans.
USDA has lowered the projected high-end season-average farm price for corn down to $6.75-7.45/bu. It’s a 20¢/bu. drop from last month – a trend farmers hope doesn’t continue as planting time nears. The projection came in Friday’s World Agricultural Supply and Demand Estimates (WASDE) report, which also showed tight ending stocks unchanged at 632 million bushels.
While locking down revenue crop insurance may be top of mind, farmers also should look hard at marketing 25-30% of their soybeans before planting, says Chris Hurt, Purdue University Extension economist and grain marketing specialist. The $12.87/bu. insurance floor for soybeans was determined by the February Chicago Board of Trade November 2013 soybean futures contract price.