The grain markets have been relatively quiet since producing a record setting crop for both corn and soybeans this past fall. Nationally, we set a new record yield for corn and soybeans. As a result of the big supplies, we have seen mainly lower prices which has increased demand. In fact, the USDA is currently forecasting record demand which is a positive for the grains. The end result still leaves us with big supplies left over.
With the lower prices and lofty expenses for producing corn, there is a strong potential for acres to shift away from corn and move to soybeans, cotton, etc. In addition, soybean prices have been favored over corn prices this winter and early spring making the decision for many farmers a challenge as to which commodity to plant. Longer term, less corn acres will likely provide a more optimistic outlook for corn as we believe we could see anywhere from 3 to 6 million less acres of corn planted this spring. This would be friendly to corn prices especially if you throw in a weather scare in the market place this summer. On the other hand, soybean prices are concerning if we plant more soybean acres this spring on top of the big supplies we have on hand already. South America is also forecasted to have a good crop in 2017. The weather will be vital to price direction moving forward.
One important thing to watch relating to the grain markets is grain price seasonality’s. Grain prices have a tendency to move higher or lower at certain times of the year. We tend to see prices rally to a high into spring because of “buying acres” and weather uncertainty. Based on a 20 year corn seasonal, this statistically comes around April 6th. We consider the week before and after that date as a time to take advantage of the market. After the crop is planted, we tend to see a set back before making a summer high in prices statistically around June 18, usually due to hot/dry weather concerns. Again, we consider the week before or after as well. These are traditionally your most opportunistic times to reward the market with sales. Knowing how grain price seasonals work can help you build a plan.
At Blue Reef Agri-Marketing Inc., we work with growers to help build a marketing plan. We assist them with implementing and executing that plan. It’s another set of eyes and ears to help make good business decisions through the volatile markets. For more information and market updates check out our website at www.bluereefinc.com or give us a call at 309.550.7213.