2017: Bearish Beans, Bullish Corn

December 9, 2016 02:35 PM

USDA’s latest WASDE report released Friday provided no shock to the market. With corn and soybean production unchanged, Bob Utterback of Utterback Marketing says now producers’ focus should shift to 2017.

“2017 is bearish beans, bullish corn as a spread trader,” said Utterback. “I think for January, February, you get your call protection so you can sell the summer rally.”

Utterback says producers need to think hard about selling $10.30 or higher soybeans. In addition to sales, he suggests to take a hard look at cash flow.

“Be conservative in cash flow for next year,” said Utterback. Prepare for adversity, but if that we get a weather scare, take advantage of it.”

“The tools are out there,” said Chip Nellinger of Blue Reef Agri-Marketing. “I think it all starts with a plan. So, do some work, and figure out really what your true costs are.”

Nellinger says it’s not just seed and fertilizer costs, but cash rents, labor, interest and machinery. Once producers know their true cost, they can then better plan for the volatility.

“Beans are the only thing with profits right now,” said Nellinger. “Let's lock that in. Whether that's puts, whether that's sales with calls attached, there's ways to kind of have your cake and eat it too and lock in that profit.” 

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