When you gather a panel of market analysts with varying opinions in one room, you’re sure to have a lively discussion. At the Farm Journal Media Marketing Rally in early December, the analysts agreed there are virtually unlimited opportunities for commodity markets in the coming year. They’re also equally cautious when weighing the potential pitfalls. Here’s a snapshot of each analysts’ outlook for 2011.
Brian Basting, Advanced Trading. You can build a bullish case for all crops, but you can also build a cautious case that as the price goes higher, the harder you could fall. There’s a lot of volatility here in 2011, but tremendous opportunity out there.
Bill Biedermann, Allendale Inc. I’m looking for a $4.50 to $6.50 per bushel price range; of course $6.50 getting there first because we need the acres. Now, if we don’t get the acres or we have a weather problem, $6.50 won’t even touch it. If we get the acres and have trendline weather, we’ll probably be around $4.50 by next fall.
Richard Brock, Brock Associates. The biggest news in 2011 will be a bear market in soybeans. I’m not sure when it will start, but when a market goes up as much as the soybean market has, it goes down even more. This one’s not going to be any different. Irrelevant of ethanol, irrelevant of China, every bull market needs more bullish news to keep it going up.
Alan Brugler, Brugler Marketing. Basically, we have a tight supply and we’re trying to spread out that supply to make it last the entire year. Simultaneously, we’re trying to buy acres for 2011. Marketing-wise, you’ve got pricing opportunities as long as the specs want to stay in the market. As long as the demand is there, you have a reason for prices to go higher.
Mike Florez, Florez Trading. I’m quite positive. I trade technically, and there is nothing I see that suggests a top in the market. I’m not talking just commodities either. We’re inflating the economy and everybody knows it. There’s going to be a lot of buying coming into the market in the near future, and I don’t think you want to be hedged right now.
Gregg Hunt, MF Global. Right now I’m friendly, basically everything. I will stay that way until I see the acreage battle and what comes out of that. I don’t think there’s enough acreage to meet the total demand for corn and soybeans, especially when wheat has already taken 3 million acres and farmers are going to plant more cotton.
Chip Flory, Pro Farmer. We’ve got to ration corn use, which suggests higher prices. The slowdown, whether it be by the market or the government, will probably be the ethanol market. The rationing will take time if the market does it. If the government does it through a waiver, it likely won’t be until the end of the year.
Mark Gold, Top Third Marketing. The bias is to the upside through the end of March and early April, as we decide which commodities will win the acreage war. We believe cotton is going to win acres back because of historically high prices, so corn and soybeans are going to have to fight it out. Between now and the end of March, there’s going to be a great pricing opportunity that farmers should look at.
Jerry Gulke, The Gulke Group. It’s all about China. They can make or break our markets, and every day they seem to be buying grain. I get a little nervous when one country buys 40% to 50% of all the exportable beans in the world. They can make beans go up or down, so I think we need to get really educated on what happens in China. We cannot have a situation where a major exporting country or a major user has a crop problem. We have to do better in 2011 in corn in the U.S., or I don’t know how high prices can go. We’ve got the cattle guy and the ethanol producer in place. The cattle guy will feed until the grain runs out. It could get real exciting come June, July and August.
Kevin McNew, Cash Grain Bids. After the basis has been extremely weak in some states, it’s showing good opportunity for recovery in the next two to three months. It’s a good time to store on basis and for farmers to make some money on grain storage.
Paul Nelson, EHedger. If I start trying to guess the marketplace, I’ll probably miss the one thing that moves it. I’m confident that we’ll continue to see extreme volatility. Being in the position to adjust your strategy that centers back on the cost of production and knowing where is a good cost to sell is your best option.
Mike North, First Capital Ag. The market is incredibly volatile. Trying to predict prices in this market, or any market, is virtually impossible. It just gets farther from your grasp when it’s this volatile. Expect choppy trade for the next four to five months, but once we get to planting I’d be concerned about the risk in this market.
Andy Shissler, Roach Commodities. China has huge problems, and it’s not going to get better anytime soon. They sold reserves throughout 2009 to try to keep prices down. They went into 2010 with weather problems. Whether it’s on the street or not, their crop is not what they say it is. They’re going to go through a tough year trying to get enough food to put in front of their people. That doesn’t get fixed in a week; it doesn’t get fixed in November with a $6 per bushel price for one day.
Scott Stewart, Stewart Peterson. I’ve been in this business 30-some years and I’ve been bearish 90% of those years, but I really think that’s changing. There is some explosive potential, but every bull market is followed by a crash and a massive bear market. So the real story is uncertainty and volatility and being prepared for it.
Greg Wagner, Independent Trader. I’m cautiously optimistic. Producers have to take a rational approach and not get too exuberant on prices. There’s an old adage: "When you’re yelling, you should be selling. When you’re crying, you should be buying." Maybe a little of that is crucial at this juncture.