It’s not an especially exciting market for corn or soybeans these days, especially for old-crop corn and beans.
“It makes it tough,” says Brian Hoops, a market analyst with Midwest Market Solutions, Inc.
The soybean futures market has been supported by Chinese buying, Hoops says. The problem is that most of that buying is for fall delivery of new-crop beans. For farmers still sitting on old-crop beans, that is a problem.
“The Chinese are way behind in phase I (trade agreement) buying,” Hoops says. “They’re not even close.”
The scenario isn’t quite the same for corn, but the closure of some ethanol plants due to the COVID-19 pandemic has led to its own problems in the corn market. And while ethanol production has started to recover a bit in recent weeks, it still may not return to former levels by fall, he says. Because of that possibility, farmers may need to make sure they simply have a place to go with the fall crop.
With those trends in mind, he says the situation calls for farmers to reward any rallies in either the corn or bean markets, especially for old-crop corn or beans.
Good weather in June is also a factor in that situation. Hoops says the deeper the crop gets into the growing season, the lower the production risk gets and the smaller the risk premium in the market gets. Recent crop status reports have pointed toward excellent crop conditions this month.
For farmers, all of this means the opportunities for marketing are not especially good at the moment. And while the economy has been opening up in the past month, there are still some concerns of a rebound in COVID-19 and a resulting second hit to the economy that could also impact ethanol production and in the grain markets.
Those factors are all important when making revisions to any grain marketing plans this summer.