Farms.com Home   Expert Commentary

Marketing – A Year Round Chore

Jul 24, 2014

By John Berry

As we typically expect crop prices to decline this time of year due to acreage being known and crop progress being average, we also typically expect some level of market price increase during weather scares at or near pollination. We may want to be prepared for a market bounce, should one occur. Allendale, Inc. researchers found that in recent high production years with rapid market declines there has been a market bounce in late July and into August. The study highlighted 1994, 2003, 2004, and 2009.

In those four years the rebounds ranged from 5 to 19% above the late July low’s. The rebound lasted between 12 and 47 days, including weekends. If you still have grain to price, are you going to do something if there is a bounce? Waiting some more is always an option, also.

This year’s crop continues to look good. Crop progress reports tell us this is the fourth best corn crop condition for this week of the season in the 28 year history of the ratings. Soybean reports tell us there are only two other years with better condition and progress numbers for this week of the annual growing season.

We’ve seen what prices have done. We’ve seen growing conditions to date. Will favorable weather continue? What will yields be? Looking at several weather related yield models, both private and public, we find expected yields anywhere from 167 to 175 bu./A as a U.S. average. Should this record occur, we can all confidently predict soft prices at the 2014 harvest. I am seeing reports of cash corn harvest bids in the Plain states under $3.00. YIKES!

For those with storage available there are more options for what to do with the upcoming new crop. These options may be better, or they may be worse. Only time will tell. However, in the next few newsletter postings we will review how to read market price signals as we approach harvest. Over the year’s we have accumulated knowledge and experience that does suggest appropriate marketing strategies for grain we do not have committed at harvest – using price signals as indicators.

Also, we are getting closer to USDA, FSA having their guidelines in place for implementing programs in the new Farm Bill. You may want to participate in any and all educational opportunities that come along on these new crop programs, the new concepts and the new vocabulary words that may have a significant impact on our farm revenues for the period of time this farm bill is in effect (2014-2018). Lots of new things to comprehend, and it may take some repetition for it to make sense. I know it does for me.

Source:psu.edu