Analysts Expect Spring Rally for Stored Grain

October 13, 2015 05:00 AM
Analysts Expect Spring Rally for Stored Grain

If you’re wondering whether you should sell or store your corn and soybeans these days, the analysts on U.S. Farm Report have an answer for you: Keep filling the bins and wait for a spring rally.

“I don’t see us going back to (harvest lows) based on the data that we’re seeing,” said Brian Roach of Roach Ag, speaking on U.S. Farm Report after Friday’s USDA reports.  “We’re soon going to trade on South America, and I think growers are going to want to put the crops away like they’re planning (and) keep the ownership on (that grain) until the spring, because another year of ideal weather—or really good weather—in the U.S. is unlikely, and we still have to grow a crop in South America.”

The situation leads Roach to believe that crop prices could be on the rise—just not right now.

Compared to 2014, when corn and soybean prices moved up sharply in October, “fundamentals are different,” he said. “The pipeline is fuller today than it was a year ago. … But I would still see a 50- to 75-cent move in corn into the spring, because end users don’t have a lot bought, and the producers don’t have as much sold as they did a year ago.”

Watch Roach's comments on U.S. Farm Report here:

He expects to see gains in soybean prices too, although perhaps not as high as farmers might want.

“You have to temper the topside of your price expectations, and this past year, we traded above $10 futures just a couple times,” Roach said. “I think U.S. producers can look for that kind of price level sometime between now and springtime when they absolutely have to move those crops, but you have to be ready to sell it and manage your basis. I would see a dollar move in beans is very typical in world crop production years and a 50- to 75-cent move in corn in common, and I think you have to wait for it.”  

Kevin Duling of KD Investors also sees the potential for a rally in the months ahead.  “I believe the risk is more on the end user side of it than the grower,” he said, also speaking on U.S. Farm Report. “If that’s the case, you need to be patient. I think (growers) are going to see better opportunities. … We’ve got the huge net short with the hedge funds. If they run out of that, it’s going to pull the corn wagon up too. … Frankly, I have no interest in the bearish side of it right now. I just don’t. I don't think there’s a whole lot of downside.”

Watch the U.S. Farm Report discussion here:

Roach also sees farmers moving into the driver's seat when it comes to crop prices. "This is a time of year for producers not to be doing much, and so you want to put the crop away and shut the bin doors ... Don't be afraid to wait for basis to make a pretty good appreciation, because it will pay for storage," he advised. "I think you move into the front part of the year and begin to work off your crops January 1 and not much before."

Do you think we’ve put in harvest lows in corn? Soybeans? Take our Oct. 8 poll on corn prices and let us know your thoughts in the comments. 

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Spell Check

Chicago, IL
10/13/2015 08:45 AM

  You want the reason...they are plugged into the USDA's manipulation of the market and have insider information. Roach is a scammer...his "sell signals" always start a day after the high in the market

Western, NE
10/13/2015 09:20 AM

  And if there is no rally?

Greensburg, IN
10/13/2015 08:23 AM

  I wish my cyrstal ball worked as well as these two gentlemen's did. However I would feel better in their beliefs if they assigned a "reason" for the rally? Just because is not a reason. Now if they said I see weather as a threat, or the long term technicals are moving higher, then I understand. Give us the "Why's"...cause inquiring minds like to know.


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