First signs of a 2009 acreage battle.
Nov 04, 2008
Chore time for me isn't what it used to be when I was growing up on our eastern Iowa farm, but taking care of two horses in the morning before I head in for work gives me a little time to think about the day ahead. Each morning, stop at this spot to get a feeling for the "tone of the day" - and some attitude about agriculture and the markets.
I was thinking…
... well, we've had a week to digest corrections to the October Crop Production Report. After a week, I think it's worth taking the time to reevaluate exactly what's happened to the markets since that correction was released. So, today's close compared to the close on Oct. 27 (the day before the correction) looks like this:
Dec. '08 corn closed at $3.85 1/4 on Oct. 27; today -- $4.13, up 27 3/4 cents.
Nov. '08 beans closed at $8.93 on Oct. 27; today -- $9.49 1/2, up 56 1/2 cents.
But, just looking at the nearby contract probably doesn't tell the whole story... let's look at the new-crop 2009 contracts:
Dec. '09 corn closed at $4.43 1/4 on Oct. 27; today -- $4.77, up 33 3/4 cents.
Nov. '09 beans closed at $9.20 on Oct. 27; today -- $9.93 1/4, up 73 1/4 cents.
Now... I understand that "other things" have changed in the last week, as well... but those are some fairly "telling" gains of what the corrections meant to the markets! The difference in the gains posted by the two December corn contracts isn't all that significant, but it is enough to make me think the adjustments to 2008-09 crop and carryover estimates was enough to jump start concerns over 2009-crop supplies. The gains in new-crop soybeans, however, are significant enough to signal the correction to the October crop estimates changed the dynamics of the market.
While there's a lot to sort out for 2009 plantings (including pricing opportunities), it appears the soybean market just realized it got a big-acreage increase for 2008 plantings, and couldn't increase carryover from the 2007-08 marketing year. Impact on the 2009-10 marketing year? The bean market may have realized that if it is going to build carryover, it will need to encourage even more acres for the 2009 growing season -- and Dec. '09 corn futures are starting to show some willingness to participate in an acreage battle.
We're still far from a full-blown battle, but the signs of a 2009 acreage battle are starting to be seen.
