There’s reason to suspect corn acres will be down in 2015, and that means producers shouldn’t rush themselves into marketing next year’s crop too early, two analysts say.
In a high-price world of 2008 and 2011/12, we were buying acres, putting them into production, and in the last couple of years, certainly this last year and going forward, we’ll be selling acres out," explains Brian Roach, Roach Ag Marketing. "If I’m a lender, I’m asking my producers to look at the numbers on the corn and look at numbers on soybeans and really trying to balance that risk out. But I’m not in any hurry to do any marketing on the 2015 corn crop yet."
Risk management will be the operative phrase as the marketplace sorts out its acreage intentions ahead of the New Year.
"The trend is down, so you could sell the trend, but I sure wouldn’t be married to any hedges or short positions in 2015," adds Bryan Doherty, Stewart-Peterson. "Things can and do change. We’re pretty cheap, and when you’re talking about a market that’s trading at or below the cost of production, how much do you really want to sell into that?"
Admittedly, Doherty says, there is a time to take risk. For example, producers who forward-sold corn this spring will find themselves in pretty good shape.
A weather event early next year could send prices higher, so it’s important to take time now to get a plan in place. Consider the case of soybeans, Roach says.
"If you look at the bean market today, I’d say there’s absolutely no weather premium in today’s prices for South American crop," he explains. "We can talk about a big crop, 92-million (or) 93-million acre Brazil crop. But until we actually harvest it, the market’s going to trade, and there could be some risk premium. I would expect risk premium to be in the market, say January-February, and producers ought to wait for those opportunities."
Click the play button below to watch the complete U.S. Farm Report Marketing Roundtable discussion, including a look at how commercial end users of corn and meal are being patient with purchases: