Looking back on this winter, how the cold and snowy weather didn’t want to go away, reminds me of how these markets felt through most of the fall and winter. It seemed like nothing was ever going to change and we were stuck with these low and stagnant markets forever. However, with some Argentina weather problems, and strong demand, we have seen a nice rally in both corn and beans to values we haven’t seen since last summer.
On March 8th the USDA WASDE report came out with a surprising increase of 175 million bushels to the 2017-18 corn export picture now totaling 2.225 billion along with a 50 million bushel jump in ethanol grind. These two drivers led to a 225 million bushel reduction to US carryout now totaling 2.127 bbu. This was nearly 100 million bushels below the average trade guess. Soybeans were not as friendly as ending stocks were increased 25 mbu from last month to 555 mbu as exports were lowered 35 mbu and crush was increased 10 mbu. The report gave corn a nice bump to highs not seen since last summer and left beans with a weaker tone.
Many producers ask how much higher can corn and beans go? That is a question we all wish we had the answers to, but with so, much of that discussion hinging on weather, it is hard to come to any concrete conclusions. What we do know is the recent rise in prices has given us an opportunity to sell old and new crop corn and beans at values a few months back that didn’t seem possible. With our crop not even in the ground yet, there is the potential for some more fireworks this summer if there is any threat to the U.S. crop. However, before we get too bullish, we must remember we still have a 2+ billion bushel corn carryout which gives us some cushion if the U.S. has some weather threats.
With the recent push to $4+ December Corn Futures and $10+ November Bean Futures we have seen producers get aggressive making old and new crop sales. Depending on a producers APH and breakeven, we feel these are good levels to get some marketing done. Over the last couple of years our rallies haven’t lasted long and the producers that sold into those rallies were rewarded. We believe in being proactive in your marketing plan and not reactive. The best marketers develop a marketing plan and stick to that plan. Many times, the best marketing opportunities occur when farmers are busy planting their crops and not watching the markets. If you have any price levels you would like to get some old and new crop priced at, please let us know and we can put offers in at no charge and watch them for you.
We offer various contracts and programs to help fit your storage and marketing needs. With the new tax law in effect benefiting doing business through the Coop, we have seen an increase in direct ship sales to non-coop processors. There has been a lot of talk in changing the 199A as it has been vigorously debated; however, as of this writing, it is still the law for now unless Congress makes changes. If you have any questions regarding any of the programs or tools we offer we’d be happy to go over them with you individually at the office or at your farm.
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