While many Americans are busy filling out their NCAA Tournament brackets, grain advisors are urging farmers to fine tune their game plans for the 2015 crop. The extreme market volatility last week and the uncertainty of planted acreage intentions, to be reported by USDA at the end of the month, puts many growers at risk. Bob Utterback, of Utterback Marketing, New Richmond, IN, told HAT on Friday, “When you take your planter to the field you should have 25% of your crop hedged. When you have 50% of your crop planted, you should have 50% of your crop hedged. And, when you have 75% of your crop in the ground, you should have a price floor under 100% of your crop.” He added, with the large amount of 2014 stocks still on hand, even a summer weather event will not bring prices significantly higher. He estimates that about 60% of the 2014 grain crop has not yet been sold.
Utterback admits that farmer price expectations are still higher than what the market is likely to offer them, “I think $4.30 December corn is a place producers should sell at, and anything close to $10.00 on soybeans. I do not think this is what most farmers are thinking about, but I think that is about the best the market is going to offer.” After the dollar driven volatility of this past week, Utterback feels the market will begin to settle down, “The 3 – 5 days prior to the USDA reports, the market will be very choppy.” He said traders are not likely to drive prices too high in advance of the reports. He feels the market will go into the March 31 report with a bias toward more corn acres and fewer soybean acres.
“Fundamentally, we’re seeing an increase in private acreage estimates that are reminding the trade that USDA’s March 31 planting intentions report is just around the corner,” said Arlan Suderman with Waterstreet Solutions. Farm Futures’ survey pegged corn acreage at 88.3 million; while Informa reportedly told its client to expect 88.5 million. According to Suderman, the trade is starting to settle on expectations that we will see corn area shrink by a couple million acres this year if the market doesn’t do anything to change the farmer’s mind, “That means that corn needs to rally relative to corn to drop the new-crop soybean corn price ratio closer to 2.2 to 1. It traded near 2.4 early in the week, but finished the week trading closer to 2.3 before settling at 2.34. High input costs for corn mean that the feed grain needs to look more appealing than normal relative to soybeans to reverse the current expectation of shifting acres to the oilseed.” Suderman observed farmers are leaving the door open for shifting acres longer than normal this year, but prices need to do their work to get the corn acres.
Jim Riley, with Riley Trading, told HAT the USDA reports will not settle the acreage question. He believes weather delays will push final planting decisions back even further. In the end, Riley believes that corn and soybean acres will not come close to what the market is expecting. He sees more sorghum and sunflower acres being planted in the west and northern plains.