It was tough to find a bear in the bunch at the second annual Farm Journal Media Marketing Rally in St. Charles, Ill., this past month. Sixteen of the nation’s top market advisers came together on
one stage to discuss and debate the 2011 market situation for major agriculture commodities.
"There is a lot of upside in the market right now, especially when you look at China buying beans," said Scott Stewart, president of Stewart-Peterson. "We are in a very bullish situation and could run out of carryover supplies. I wouldn’t be surprised if we add a couple of dollars to corn and beans."
The soybean market is going to keep running until January, when the world gets a better sense of South American production, predicted Doug Werling of Bower Trading.
"The weather is a huge factor in South America. Brazil had dryness and late planting and is not going to see a doublecrop season. It could be a tight situation, so I think the bean market will be surprising," he said.
Worldwide concern about the weather means volatility and opportunity to see the market go higher.
Dryness in the U.S. Western Plains, concerns in Australia and issues in South America are putting demands on farmers before we even put corn in the ground, added Mike North of First Capitol Ag.
"For me, from a fundamental standpoint, we still have a problem to be resolved in that we have an 800-million-bushel carryover in corn," said Jerry Gulke, president of the Gulke Group. "I think the market has to figure out how to get that over 1 billion so it can carry into next fall."
The January USDA Grain Stocks report is key, Gulke added.
"You have to be fairly bullish today, especially as you are seeing the funds get out of positions in recent weeks," added Bill Biedermann of Allendale, Inc.
End Users Worried. North said he is concerned about end users who are in tough positions and worried about margins. "We are in a difficult position where fundamentals suggest we could go higher because we are below a billion-bushel carryout on corn," he said. "A lot of people are worried about having an ample supply to carry us through the next calendar year. At the same time, we already have a massive fund position on the table. We likely won’t be running short of $5 corn or $13 soybeans next fall."
If most of the advisers are correct and corn pushes to $7, then "we are going to have every livestock producer in the U.S. out of business," said Richard Brock of Brock Associates. "It will kill demand."
Alan Brugler of Brugler Marketing & Management expects to see a slowdown in hog expansion, but not as much in poultry, as it is trying to rebuild from the bankruptcies of the past few years. "We will have lower meat production overall, about 4% lower, but that also means the livestock sector will have better pricing power than a year ago," Brugler said. "The consumer is going to miss that 4% and bid to bring it back."
- January 2011