As the USDA Supply and Demand numbers were released on Monday, well-known, market analyst Arlan Suderman was standing before a group of Indiana farmers at a seminar sponsored by Waterstreet Solutions. He told the group that the good export figures shown in the report Indicates that corn and wheat prices have gone low enough to stimulate world demand which should help stabilize price declines — for now. He added, however, that the increase in demand will increase market volatility as we head into spring, “The numbers show we are not going to run out of corn or wheat, but it will make the safety net a little smaller if we have any production problems this year.” He said the market will be paying a good deal of attention to spring weather and early planting progress.
Suderman says right now the long range forecasts indicate a cool and wet planting season, “The ice on the Great Lakes may act like an air conditioner, giving us cooler temperatures and more precipitation.” He noted that the long range weather models do not agree with each other for the weather trends remain very uncertain.
Suderman said he is looking for about a 4 million acre shift from corn to soybeans, but planting season weather could change that, “I think farmers intend to plant more soybeans; but, if the weather is good and the soil is right, there will be a great temptation to put in a few more units of corn instead of soybeans.” He told his audience that, without a reduction in corn acres, corn prices could drop as low as $3.20, but, with a tight carryover, any major production cut due to poor yields would send prices soaring to $7.
Suderman told HAT this kind of uncertainty and market volatility make it very difficult for farmers to make plans, “I have had a lot of guys tell me they hope corn prices will get to $5.20 so they can sell, but hoping is not a marketing plan.” He said the market offers tools to protect yourself from the downside, but leave open the opportunity to sell higher if things go that way.
You can read Arlan Suderman’s market comments every morning in the HAT newsletter and on this web site.