Sales Index Key
Excellent sales opportunity 10
Excellent buying opportunity 1
As 2009 comes to a close, we need to prepare for another year of fun and games with the commodity markets. Reflect on 2009 to see if there are any lessons that can be applied in 2010. Remember, every year is different, which forces us to study and
adjust our way of doing business.
One of the biggest influences to consider when creating a marketing plan for 2010 is outside markets. The government's spending spree, low interest rates and the assault on the U.S. dollar are expected to continue in 2010. When the equity, gold and oil markets start to trend lower, watch out for risk in the commodity markets.
The slow harvest is giving rise to the potential for further reduction in the crop size. This could help keep corn prices firm into December, but I still believe corn will experience a period of weakness in January and February as producers move cash inventory into the system. There is also the possibility that poor-condition corn could come out of the bin.
Once we get past March and the lower crop size and stronger ethanol demand are confirmed, the odds are carryover could be 1.2 to 1.3 billion bushels. While this is not low by historic standards, it means we will need a 13.2-billion bushel crop next year. To do so, we need a couple more million acres and solid yields.
So the big question is, "How high does corn have to go to assure enough acres?” With this year's limited fall field work and potential storage problems, will producers go with an easier crop, such as soybeans? Since beans are now above $10 in the deferred contracts, I anticipate rumbles from producers about switching.
- December 2009