Grain truck at elevator

The coronavirus isn’t hammering the grain markets the same way it is hitting the stock market, but it isn’t helping an already challenging situation.

“We’ve got large supplies in the United States and the world,” says Don Roose, president of U.S. Commodities in West Des Moines. “And we’ve got large supplies from South America coming soon.”

The coronavirus hasn’t been a huge factor in the markets, Roose adds, but it has added just one more piece of uncertainty. The impact of the coronavirus would appear to be primarily in overall world economic uncertainty and perhaps in the idea that it could impact demand from China in the coming months.

The recently held USDA ag outlook forum included estimates of an average U.S. corn price for 2020 of $3.60 and an average soybean price of $8.80. Those are lower than last year. Roose estimates the crop insurance price for corn at $3.88 and soybeans at $9.17. Those figures are lower than last year’s crop insurance levels of $4 and $9.54.

About 3% of the corn crop in Argentina is harvested and about 40% of the soybean crop in Brazil is harvested. Unless there is a sudden weather emergency, those crops should be relatively large and should be hitting the market soon, Roose says.

With all those things in mind, Roose says most farmers should be looking to reduce risk and market into any rallies. Switching risk to options may be a good strategy for some farmers.

The outlook forum also predicted farmers in the United States would plant 94 million acres of corn in 2020, as well as 85 million acres of soybeans and 45 million acres of wheat. While all of those are possible, the actual numbers will clearly depend on weather conditions, and some analysts think the acreage figures are optimistic.

Either way, this looks like a spring to reward rallies, according to Roose.

Gene Lucht is public affairs editor for Iowa Farmer Today, Missouri Farmer Today and Illinois Farmer Today.