There was certainly a prevailing theme across the board by the advisers in the Archer Financial Services, Inc., Ag Hedge Program in January. The focus appeared to be on rewarding the historically strong basis across the country by recommending that producers price inventory in the cash market.
Nearly every market adviser in our track records made cash sales, which represented half of the total recommendations for the month. Adviser hedge positions now stand at 66% priced for the 2011 crop corn and 64% sold for 2011 crop soybeans. Meanwhile, new-crop corn hedge levels jumped 9% to 35% and new-crop soybean hedges advanced 3% to stand at 28% for the marketing year.
For example, AgResource made a 20% corn and soybean sale, while Top Farmer was the lone adviser that replaced its previous sales with long positions. In light of the onslaught of cash sales recommended for stored inventory in January, it now seems that producers and advisers will watch new-crop corn values for opportunities to advance sales.
The old-crop U.S. corn market still has some demand rationing to accomplish, notes Dan Basse, market analyst and president of AgResource. "U.S. cash corn stocks are historically tight and the market cannot afford to let China make another reserve purchase," he says. "Our work suggests that July corn will likely reach near $7 at some point. Farmers should make scale-up sales."
- March 2012