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.
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.