Skip to main content
You are the owner of this article.
You have permission to edit this article.
Edit
Harvest season affects the 2022 outlook

Harvest season affects the 2022 outlook

Grain with money

Grain markets are starting to feel the effects of harvest season, and crop conditions are leaving question marks heading into October.

Brian Doherty with Total Farm Marketing said conditions are widely variable this season as the poor to very poor ratings are coming in at 15%, nearly 10 percentage points higher than normal. With that uncertainty, predicting yield from outside the combine is going to be tough for traders.

“Accurate yield prediction will be challenged, and harvest results will be the key to price direction,” Doherty said. “Yield results will vary across the Midwest more this year, due to significant challenges faced by many this growing season, especially in the western half of the Corn Belt.”

With expectations all over the board, Doherty suggests producers should put themselves in a “prepare for the worst, hope for the best scenario,” in case a big crop comes to fruition.

“Producers are wise to manage their downside price risk,” Doherty said. “This can be done by using forward sales, hedging and purchasing puts. We like the put strategy this year, as it provides a floor for prices and still leaves opportunity for upside price appreciation.”

If lower yields come about, however, price crunches may come up for producers who have less capital to work with. Doherty said to prepare for that instance by booking any 2022 needs, such as inputs, now and not waiting to see how end users adjust prices going into a new season.

Steve Freed with ADM Investor Services said fertilizer costs may also impact next year’s harvest prices as extreme weather and plant shutdowns have affected production. Higher-priced fertilizer could result in fewer applications and therefore lower harvests in 2022.

“Prices for urea, a popular nitrogen-based fertilizer, skyrocketed earlier this month to the highest since 2012 in New Orleans,” Freed said. “A perfect storm of events have hit the fertilizer market this year, slamming farmers already buckling under the strain of rising costs.”

CropWatch Weekly Update

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.

Related to this story

Most Popular

Find the equipment you're looking for

Get up-to-the-minute news sent straight to your device.

Topics

Breaking News