Minnesota Farmer


Still opportunities
February 18, 2014, 10:10 am
Filed under: Ag education, Corn, Farm, Soybeans | Tags: , , , , ,

With all of the doom and gloom in the forecast for corn and soybean prices you would expect that prices would be gong down every day.  For the most part, they are.  Yet for those who are patient there have been opportunities to sell their grain at slightly better prices, and now is one of them.images

When we crossed into 2014 I was certain that I would not sell another bushel of corn for over $4.25, and yet today I hit another target, and sold more of my 2013 corn crop.  This is the third sale I have made in February and all of them have been have been over $4.25 and two have been over $4.35!  Now I am not saying that this price will bring me a large profit, but it will ensure that I can pay my bills.  Now if prices do fall below $4.00 I will feel better since I locked in a small profit, rather than a loss.

So why are prices rising?  So many factors are pushing prices down.  South America is harvesting a large crop, livestock numbers are down and we have a lot of crop in the bins.  Prices should be falling.images

Despite the large crop in South America, they have transportation issues with poor roadsimagesand their corn and soybeans will not be at the ports for some time yet.  Buyers who need corn and soy now, must still look to the U.S.  When you look at the basis levels (the difference between the CME price and farm price) in the markets, you can see that end users need the corn and soybeans now, and are not getting enough of them.

The beef herd has taken a real hit with drought and is nearing record low numbers.  Pork herds are battling disease problems and are not as large of a demand for corn and soy as they could be.  But beef production does not use the large amounts of corn and soybeans that pork and poultry do, so their effect is minimal, and the pork and poultry industry can turn numbers around much faster and thus fill demand for protein faster than does beef.images

The farmers are not exactly willing sellers at these prices.  Many have sufficient cash reserves from the last two years of high prices and are holding on to their 2014 crop hoping for higher prices.  Recent memory of corn over $7.00 is still causing many to hold out for more.

The biggest difference in the markets today vs. a few years ago is China.  China has already purchased, and is expected to purchase more corn and soybeans from our current world stockpiles.  A newly industrialized populous is demanding food that was not available to them just a few years ago.  The Chinese people have money, and they want more than rice.  The demand for protein in China has increased with the rising economy and will continue to rise for some time now.images

What the future holds for the corn and soybean markets, I am not exactly sure, but I can tell you that markets are not reacting today like they did just a few years ago.  There have been new factors entered into the market, and until their effect is completely understood, we are all just guessing.

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