Home Indiana Agriculture News Fasten Your Seat Belt It May Be A Rough Ride

Fasten Your Seat Belt It May Be A Rough Ride

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Fasten Your Seat Belt

 

Arlan Suderman
Arlan Suderman

Volatility in market prices is not new to farmers but, according to Arlan Suderman, it is the new normal for the next few years. The senior analyst with Waterstreet Solutions says farmers need to put plans in place to limit their downside risk, because market prices for corn and soybeans will be very unpredictable for the next two years, “Volatility is with us to stay because of the amount of outside money that is in the markets. So we need to understand it and build systems that protect us and allow us to profit from it.”

 

The uncertainty in the market comes from the supply side. Suderman feels demand for US commodities will remain strong, “There are some people who say demand will slide off over the next few  years, especially out of Asia and China, but I don’t think that will be the case.” He sees Chinese demand for commodities from the world market staying strong despite a slowdown in the Chinese economy and said the Chinese government fears high food prices sparking civil unrest more than anything else, “Maintaining an ample supply of food at an affordable price is a priority that should keep demand strong.”

 

He told HAT the March planting intension report will set the tone for the futures market for 2015. He said right now the market is expecting an increase of 3 to 4 million soybean planted acres, “I think with the loss of winter wheat acres and the lack of support for cotton in the Farm Bill, this number is achievable.” He added that corn acres may not be down as much as some anticipate. He sees planted corn acres only being down 1.5 million acres from last year.

 

Suderman believes the most downside price risk will be in soybeans which could drop as low as $8, “If we get above trend line yields along with an increase in acres, we could go as low as $7.” Of course, a weather event this summer could change all that.