Summer Pricing for Corn & Soybeans

ifr170526–137
Summer Pricing for Corn & Soybeans
Todd Hubbs, Agricultural Economist - University of Illinois

Farmers should take heed of last week’s one day drop in the soybean market. Todd Gleason has more on why from the University of Illinois.

Last Wednesday night the price of soybeans…
2:43 radio
2:51 radio self-contained

Last Wednesday night the price of soybeans tumbled as news of a scandal in the Brazilian government developed. The price decline on one piece of political news says Todd Hubbs provides an indication of the precarious price situation. He has been, and continues to advise that farmers sell new crop soybeans and the University of Illinois agricultural economist has a timeline, too.

Hubbs :31 …I think you might be prudent to do that.

Quote Summary - There is only one direction I see soybean prices going currently, barring some type of extreme weather event, and that is downward. Yes, we’ve seen some difficult weather early in the crop year, but does that portent difficult weather this summer? Who knows? Will we have weather rallies? In all probability we will. Still, on pricing 2017 soybeans, if you can get a good price before that June 30 USDA Acreage Report I think you might be prudent to do that.

Corn, on the other hand, is a different story. It starts with the lower number of acres farmers told USDA they were going to plant this season. It was down some four million from last year when USDA took the survey in March. And that thread - maybe now a threat - of lower acreage has been complicated by the weather says Hubbs.

Hubbs :39 …there is support in my opinion.

We’ve seen this real issue with planting and replanting in not normally a good thing for yield. Will we see a huge yield like we did last year with corn? It is hard to say? I think moving into the summer there could be a much larger rally in corn prices than in soybean prices. While are supplies are large, these are being reduced with good consumption and USDA is projecting lower ending stocks. So, when I look at corn prices long-run, I see them flat to up. There is support in my opinion.

Support which should provide a marketing opportunity for both old and new crop corn. Todd Hubbs summarizes it this way.

Hubbs :20 …not where you would want it to be.

Quote Summary - If you get a good rally in the summer I think you’ll have an opportunity to price the crop. Soybeans, on-the-other-hand, after the June Acreage Report - we’ll have to see how it shapes out - that could be a really bearish signal to the market. It might put prices, even it they were to rally later, at a level not where farmers would want them to be.

The risks associated, then, with waiting for a summer price rally is larger for soybeans for several reasons. Soybean acreage is more likely to surpass planting intentions. Soybean yields may be less vulnerable to summer weather problems. And finally soybean prices appear more vulnerable to downward movement given the state of domestic and global supplies.