The corn and soybean markets are heading in different directions.
Right now traders are looking at fields of corn that have tasseled and a forecast that includes rain. As a result, the risk premium is quickly disappearing and corn prices have dropped by about 30 cents in recent days.
“For the most part, the corn crop looks pretty good,” says Brian Hoops, a market analyst with Midwest Market Solutions out of Springfield, Missouri.
Some areas are dry, Hoops says, but most of the crop looks good and that points toward a potentially large crop and a very large carryover.
At its core, Hoops says, the corn market right now is a weather market. The weather for pollination has been relatively good and the market reflects that.
The situation is different for the soybean market, Hoops says. The risky time for the soybean crop is later in the growing season so the risk premium has not yet started to disappear. And recent sales of beans to China have also helped to boost prices.
“We had a strong week of private sales,” Hoops says.
All of that means it may be a bit more fun to look at marketing opportunities right now. With prices nearing the $9 mark, farmers have an opportunity to lock in some profits. On the corn side, they are in many cases trying to reduce losses.
Hoops says using tools such as put options will allow farmers to set a price floor under at least a part of their 2020 crop. They could also use those tools to set up a marketing window.
Such management tools will be useful to farmers this summer as they deal with sometimes challenging marketing conditions. Meanwhile, the crops appear to be dealing with weather conditions just fine, and that will continue to be a factor in the markets as the season progresses.