It’s winter in the Midwest, but the temperatures have been hot in the grain pit as prices for corn and soybeans have shot upward.
For farmers, there are several things worth noting right now, according to Don Roose, president of U.S. Commodities in West Des Moines.
The first thing is February is when crop insurance analysts will monitor prices and set insurance levels for 2021, so high prices this month could put a floor under the market for farmers throughout the year.
Also worth noting is the trade is keeping its eye on the Feb. 9 USDA crop report to see what the export numbers show. Last week’s market climb was spurred primarily by large sales to China.
“China bought a huge amount of corn last week,” Roose says.
And, of course, the South American crop is a factor right now. That harvest has been delayed but it is happening. Oddly enough, most analysts had expected a dry year there because of the La Niña weather pattern, but that has not been the case.
Finally, everyone is keeping an eye on moisture and potential drought conditions in the United States going into the 2021 planting season.
And there is one other item that may have had some impact on the commodity markets, Roose says. The gyrations and fluctuations of the stock market last week didn’t directly affect the grain markets, but there likely was some psychological impact, he says.
Through all of this, the corn market pushed past a 1996 high, hitting $5.53¾ last week. Soybean prices are also high. If there is a problem, it may be that some farmers sold quite a bit of their grain last summer, before prices shot up.
But for those who didn’t, or those who are looking to market 2021 or 2022 grain, today’s high prices present an opportunity to lock in sales at very profitable levels.