Market Outlook: Take advantage of higher prices; watch policy on grain reserves

November 2, 2010 09:14 AM

Most Advisers Still Pricing

Prior to the October price spike, only a few advisers had priced half or more of the corn and bean crops. The values of hedged-to-arrive contracts, hedges and options positions, as well as cash sales, are reflected in the Market Value columns below. For the breakout of cash, futures and options, see the Marketing tab at

The prospects are for further price improvement, says Dan Manternach of Doane’s Agricultural Report. “When USDA lowers the [corn] yield in October, there is a strong tendency for them to cut the national yield an additional bushel or two in November. We expect to add to 2010 crop sales and begin pricing 2011 crop,” he says.

For soybeans, USDA reduced crush, making exports the story for that crop. The October report placed exports at 1.52 billion bushels, breaking the previous record of 1.498 billion bushels for the 2009 crop. “We have advised pricing the first 10% of 2011 production when November futures top $10.50,” Manternach says.

—Linda H. Smith

Key Market Factors

  • Use rationing as required
  • More acres of everything needed in 2011
  • Exports rely on cheap dollar
  • Focus on profits

Policy Danger?

With global food prices gone wild again, agriculture is sure to take some flak. Daryll Ray, University of Tennessee ag economist, is already calling for government grain reserves. “We have seen decades like 1996 to 2006, with few widespread production problems, and decades like the 1930s, when they seem to happen on a regular basis,” he says. Reserves, Ray adds, are the way to protect consumers.

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