This was report week, when everyone in the grain marketing world waited to see what the USDA would say about 2021 planting expectations. But before that report came out, there were other things impacting the market.
“It’s a volatile market,” says Don Roose, president of U.S. Commodities in West Des Moines.
For most of the last seven months, the market volatility has pointed upwards, as corn and soybean and wheat prices have all risen dramatically. Strong domestic and export demand combined with a poor 2020 crop were the primary factors in that jump. Now the crops are coming out of the fields in the southern hemisphere, and farmers are preparing to plant in the northern hemisphere.
The good news is that demand remains strong, Roose says. China and other countries continue to buy U.S. grain, and domestic demand has been strong as well.
But as corn and soybeans in South America hit the market they could put some pressure on prices. That harvest appears to be going well, he adds.
One problem for U.S. farmers is that U.S. soybean prices are about 30 cents higher than beans in Brazil.
“That’s a little bit of an anchor (on the U.S. soybean market),” Roose says.
Another item to consider is how the report itself may impact planting decisions. The report sometimes sends a signal to farmers about what is happening and what that may mean for prices. Some farmers certainly look at the expected planted acres and adjust their own plans between now and when the planter goes into the field.
For Roose, the thing to remember is that farmers are operating from a place of strength. Prices are good and marketing plans should take advantage of that fact. Depending on the risk each producer is willing to take on, this could be a time to lock in prices or to use market tools to buy some protection.