There are still risk factors facing the 2019 corn and soybean crops, and the market is taking those risk factors into consideration, but the choices are not especially easy.
Right now the trade knows the crop is late and there is a risk from any early frost. It also knows the cool weather the last week of August could be bad news for crops in need of heat.
“There has been a little bit of a run-up on weather concerns,” says Don Roose, president of U.S. Commodities in West Des Moines.
Roose says this year’s market saw a rally from about mid-May to mid-June. Since then it has been a lot of one step up and two steps back.
What’s more, farmers are getting mixed messages. On one hand, there is a strong basis in many areas, pushing farmers to use the cash market. On the other hand, there is a large carry in the market, encouraging many farmers to hold onto their crop until next year.
There is no good answer to that mixed message other than to say that what is best for each farmer is going to vary according to the circumstances.
Still, there are a few things Roose says farmers do know right now.
They know the crop is late and there is a frost risk, as well as a risk from any other fall weather issues. In addition, they know that most of them will need to spend money drying this crop in the bin and that cost must be taken into consideration.
They also know other countries are taking up the slack. Global supplies remain large and the very early word from South America is that farmers there are increasing their corn and soybean acreage by 2 to 3 percent.
Employing market tools to reduce risk remains a smart strategy, Roose says. And keeping a close eye on local carry and basis numbers will remain important for many producers.