The 2010 crop wasn’t even out of the field this fall and people were already talking about the looming battle for acres in 2011. Corn prices were near all-time highs and stocks were low. Soybeans are enjoying record exports, thank mostly to China. And now cotton has entered the fray with booming prices there. So, the big question in Richard Brock’s mind is where will acres fall this year.
At the 2010 Marketing Rally hosted by Farm Journal Media last week, the owner of Richard Brock Associates said that answer may come sooner than most people are saying right now and the battle may take a lull between the first of the year and planting time, when final decisions must be made. "Most farmers are going to make those planting decisions before the end of December because seed is going to be bought."
So while farmers are planning their 2011 crop, they need to also be concerned about selling it. Input costs are rising and ensuring an adequate supply is a key concern. Getting assurance of that supply right now is costing some money and he says farmers need to do everything they can to ensure they take advantage of high commodity prices.
"It’s a crucial timeframe right now. We’re telling people if they’re going to be buying their inputs, they better be getting a good portion of their corn sold. Input prices have come up quite a bit and you don’t want to leg into the profit equation this year.
"The real issue on fertilizer this year is the logistics problem. No one wants to carry any inventory and producers are having some trouble getting prices locked in right now. Part of that, I hate to say, is the fertilizer wants to get their price up a little bit more before they get inventories in."
On the soybean side, some decisions may be delayed, at least the final decisions, until more is known about the South American crop. But also, Brock is concerned about the amount of soybean purchases by the Chinese and he’s fearful their infrastructure can’t keep up with that rate of purchasing. "They are stockpiling beans and the question is when will they quit stockpiling. When that stops, this bull market stops."
"They’re not building new processing right now and they’re buying a lot more beans. It doesn’t take a calculator to figure out they can’t crush everything they’ve been buying, so it’s somewhat of false demand. There’s a big difference between shipping and usage."