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Early-March Prices: Lion or Lamb?

March 2, 2013
By: Sara Schafer, Farm Journal Media Business and Crops Editor
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Corn and wheat prices turned around to start the new month. Jerry Gulke analyzes what make prices soar or crash this season.

The old weather saying goes, "If March comes in like a lion, it will go out like a lamb." And vice versa. So, do current corn prices have more bite or baa?

As of Friday, corn prices made a significant turn up. After weeks of losses, March 2013 corn closed at $7.24 and May 2013 at $7.08.

See the March 2013 chart:

March 2013 corn

"The good news is we quit going down," says Jerry Gulke, president of the Gulke Group. "Eventually there is some type of a bottom."

Will this trend continue? Gulke says as of now, we still don’t know, for sure, what’s going on out there in terms of demand.

But, some new information is on the horizon. On Friday, March 8, USDA will release its monthly Crop Production and World Agricultural Supply and Demand Estimates reports.

In terms of next week’s report, Gulke says farmers should pay close attention to the new production information in Europe, South American and other places.

Also, keep an eye on demand. "What you don’t want to see is feed usage and exports drop. We don’t want demand to still be going down, after we’ve lowered prices."

Also this month, on March 28, USDA will release its Prospective Plantings report and quarterly Grain Stocks report. Gulke says these reports will be equally as important as the information USDA release on Jan. 11.

Until these reports are issued, Gulke says the market has kind of taken a breather. "We are trending sideways, so there is just as much upside risk right now, as there is downside. This is a good way to start out March, with an unchanged to neutral attitude."

Crop Insurance Levels Set

With the calendar turning to March, farmers now know USDA’s Rick Management Agency’s crop insurance prices for 2013.
Here’s an overview:

  • Corn: $5.65 per bu.; 0.19 volatility factor
  • Soybeans: $12.87 per bu.; 0.17 volatility factor
  • Spring wheat: $8.44 per bu.; 0.15 volatility factor
  • Cotton: 83 cents per lb.; 0.16/0.17 volatility factor
  • Sorghum: $5.53 per bu.; 0.19/0.20 volatility factor

In 2012, base prices were $5.68 per bu. for corn, $12.55 per bu. for soybeans and $7.84 per bu. for spring wheat.

Gulke says at these insurance levels, farmers will face a lot of risk. His advice is to explore the multitude of crop insurance options available and be open to revising your business plan this year. "If there was ever a need for flexibility in choosing crop insurance and marketing our crops, this is one of those critical years."

 

Hear Gulke's full audio analysis:

 


 

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