Yields, acres and exports are all topics of discussion in the grain markets.
“We still have a lot of balls in the air,” says Don Roose, president of U.S. Commodities in West Des Moines.
The market had to wade through a holiday weekend and then check out the Sept. 11 crop report from USDA. Meanwhile, officials are still trying to deal with the difficulty of getting good numbers from farmers during COVID, so the acreage numbers have been shifting. Add in the August derecho which will change the harvested acreage numbers this year. And then add a drought that is impacting yields as well as a surge in buying by China, which is pushing demand higher.
“We’re still trying to figure it all out,” Roose says.
The good news is the Chinese buying and the derecho and drought should all be pushing prices for grain higher. Of course, the bad news is that much of that is already dialed into the market.
For farmers, those positive bits of news have pushed corn prices up by about 45 cents. Bean prices are about a dollar higher.
Roose says there is some opportunity at the moment. Farmers should look closely at basis and carry issues, as well as at localized storage issues. The basis could be tighter than normal this year and that opens the door for localized marketing possibilities.
And the combination of basis and carry could mean that some producers want to look at marketing some 2020 and 2021 bushels.
“You need to do some risk management,” he says.
The buying by China is welcome. While most pronounced in the soybean market, it is still a factor in the corn and wheat markets as well.
“They’re on a big buying program,” Roose says.
Finally, insurance is an issue in many farm situations this year. For farmers in drought or derecho areas, this may be especially true.