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Economist and analyst outlook
Michael Swanson, economist and financial analyst for Wells Fargo Bank, Minneapolis, MN, says corn and soybean markets are far too volatile and influenced by far too many forces to forecast prices for 2011.
“I don’t have any price expectations,” he says. “Domestic economic demand growth should be relatively strong and global demand very strong, but this market has made fools out of us too often to try to base predictions on fundamentals.
“This market is about matching opportunities and risks. The supply and demand tables are a necessary exercise, but they won’t shape prices as much as expectations and speculative buying,” says Swanson.
Growers should view crop production on a margin-oriented basis, based on their input costs and expected yields, he says. “It’s too easy to be blinded by the dollars with today’s price volatility in inputs and crop prices. However, the reality of who gets the yield never changes.
“If there are 175 bushels of corn/acre in the field, you’ll never go broke if 25 bushels are yours free and clear to sell.”
He adds that the still-poor economy isn’t shrinking the growing demand for corn and soybeans. “The global demand growth for better food supported by corn and soybeans is alive and well.”