Truck at grain bins on farm

There are several items worth noting about the grain markets right now, says Karl Setzer, commodity market risk analyst with AgriVisor.

While production is expected to be down in the United States due to weather conditions, some areas may still have excellent corn yields, he says. And secondly, while yield numbers could creep up, the market is rapidly turning toward the demand side, and that side is not especially good.

And Setzer says the third, and perhaps most important, is that it appears the futures market will be far less important to watch in the coming months than the local cash markets.

“The futures are becoming irrelevant,” Setzer says. “It’s all about the cash market right now.”

That cash emphasis is due in large part to the poor crop conditions in large areas of the Corn Belt. It means farmers in areas where crops look relatively good may be starting to consider items such as how much grain they can afford to store and how far they can reasonably ship grain to take advantage of localized markets in other areas.

That puts an emphasis on knowing your cost of production, storage and transportation, he says.

Meanwhile, Setzer says the outlook for soybeans remains a bit grim. New-crop soybean sales are at their lowest levels since 2004, and there are concerns the trade war with China may not be settled until after the 2020 election. That is bad news because U.S. soybean exports to China are down by over 60%, and the Chinese are starting to buy beans from places such as Brazil and Russia.

In short, it’s a buyer’s market for soybeans, and world stocks are more than adequate.

Setzer says he is concerned too many farmers are basing too much of their income projections off of the USDA’s Market Facilitation Payment (MFP). There are no guarantees that the USDA will make the second and third MFP payouts, he says.

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Gene Lucht is public affairs editor for Iowa Farmer Today, Missouri Farmer Today and Illinois Farmer Today.