The calendar says it all when it comes to the grain market right now.
“It looks like the window for marketing the corn crop is starting to close right now,” says Don Roose, president of U.S. Commodities in West Des Moines, Iowa.
That scenario isn’t unusual, Roose adds. As the crop moves into and past pollination, the risk premium in the odds of a good corn crop grow. With the improved odds for the crop, the risk premium in the market disappears. And while it is dry in some areas, there do not appear to be any major crop issues.
No widespread drought appears likely. And that means less risk premium.
The latest USDA numbers put the estimated corn price for the next year at $3.35 and the estimated soybean price at $8.50, Roose says. Those numbers are not especially good, but they are improvements on previous estimates. They are also reasonable levels and set the baseline for what is expected in the market.
This has been a production market all year, Roose says. Demand has been sluggish and certainly has not been strong enough to trigger any large rally.
“The demand has not really improved and that is a little disappointing,” Roose says.
Competition from South America and Ukraine, as well as an economy that has suffered through the COVID-19 crisis, have been factors in that demand equation.
With all of that in mind, it may be a good time to market into any possible rallies and to take a hard look at the marketing plan for the rest of the season.
That should include making sure there is a potential home for grain coming out of the field this fall. And for many farmers, it should include a look at downside risk reduction.
Meanwhile, the market will be watching the weather forecasts and the crop ratings reports in the coming few weeks.