Although new-crop corn prices have trended lower recently, it’s likely they’ll move higher as the market adds a risk premium later this year.
“I think we’ve been removing premium and going without any premium now for a little bit of time,” explains Brian Grete, editor, Pro Farmer in an interview on “AgDay.”
It’s true corn acres are forecasted to be fewer this year than in 2014, so the decline in corn prices likely results from the influence of the soybean market. “It’s working as an anchor here,” he says.
2015 Prospective Plantings Preview with Brian Grete, editor, Pro Farmer
The odds of a rise in corn prices are favorable because of several factors.
“We grew a 171 national average corn yield last year,” Grete points out. “Odds are—and the weather was darn near ideal—odds are that we’re going to grow something sub-that this year. So you’re going to see your acres down, your yield down, means your production’s going to come down, and yet they’re taking all of the premium out. We haven’t even talked about weather and what could happen there. So I think there are some odds increasing here as far as prices fall that we will see higher prices later.”
The Prospective Plantings report due March 31 from USDA should confirm producers intend to plant more soybeans and less corn this year, though how much in either direction is unclear.
“It’ll be a shocker if bean acres aren’t up and corn acres aren’t down,” Grete notes.