Head to Head: Corn-Soybean Acreage Battle

January 25, 2017 02:44 AM
Soybeans Miss

Q: There has been much discussion about corn acres switching to soybeans or other options for 2017. Can you share your opinion on acreage? In addition, for the past two years the best pricing opportunities have occurred by midsummer. Will this pattern make you more aggressive in marketing the 2017 crop during the first half of the year?


Preve​nt Plant And Prices Will Sway Acreage

I think we will see 3 million acres of corn switch to soybeans in 2017, but the acreage mix will be a moving target well into spring. As of early January, North Dakota sat under a heavy blanket of snow that had fallen on already-wet fields. Unless North Dakota sees a hot and dry spring, prevented planting acres will be up sharply from this past year’s extremely low state total of 20,000 acres. The state last saw moderately wet conditions in 2011, when it had 5.6 million acres of prevented planting. 

Another factor that will affect planting intentions is price. If December corn can get above $4, the chance of losing 3 million acres will be reduced sharply. A price rally above $4.20 will likely result in zero corn acres being lost. 

Markets tend to top out because of late spring planting concerns or early summer weather scares. Commodity brokers can help producers manage risk with CME tools instead of relying solely on cash-grain contracts. 

If prices do indeed soar higher again early this year, we at Bolt Marketing will be actively assisting our clients to manage the risk of falling prices into harvest.

Contact DuWayne at duwayne@boltmarketingllc.com


Whe​at Might Toss Aside Market Expectations

There has been much discussion regarding the migration of corn acres to soybeans. For this to be true, we must assume the decision will take place in a bubble and profitability will be the only deciding factor. Many project a 3.5-million-acre decline in corn acres and a 4.5-million-acre growth in soybean acres.

Yet recent history suggests corn acreage is slower to leave than sometimes predicted.

This past year, the market commonly accepted that approximately 600,000 acres of wheat would be lost. It lost nearly 5 million acres instead. As of early January, winter wheat acres are pegged to fall by 1 million to 2 million acres. Wheat can be used for pasture and cover crops, so seeding it doesn’t necessitate it will be allowed to stand after April. With the soybean-to-wheat price ratio at its highest level in 12 years, wheat might be more willing than corn to give up ground to soybeans.

When marketing corn, be mindful of large inventories, cash-flow needs and likely softer basis. Don’t be afraid to address corn opportunities before summer. Waiting for a summer-price rescue might leave you needing just that.

Contact Mike at mike@crmg.us

Disclaimer: There is substantial risk of loss in trading futures or options, and each investor and trader must consider whether this is a suitable investment. There is no guarantee the advice we give will result in profitable trades.

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Spell Check

Hastings, NE
1/25/2017 08:51 PM

  Farmer don't tell anyone what your going to plant till the last minute ,then lie about it like we do in this area. www.afairmarketprice.com


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