Price Advice for Farmers and Traders in December 2013

December 2, 2013 09:00 AM
Price Advice for Farmers and Traders in December 2013

Entering December, farmers continue to focus on what to do with their corn and soybeans. Meanwhile, traders also are paying attention to the commodities, with an eye toward tightness in the corn market, experts tell the U.S. Farm Report Market Roundtable.

"Corn becomes very much a tactical play" for farmers, says Mike Hogan, Stewart-Peterson Inc. "You’re working your basis, you’re working your spreads. Watch out for right after Jan. 1, there’s likely to be a big crop dump at that point in time that could hurt basis and spreads both. I think that’s an area you want to watch. Also watch for a little bit on beans. Typically over the last 10 years we’ve seen roughly $1.30 rally off of harvest lows. We’re about 90 cents through that right now. You might want to think about what you’re doing with the beans you have on hand right now."

Meanwhile, traders are looking out for volatility in the markets.

"Our moves in corn are limited, so volatility’s been hit, and volatility’s the fear factor," says Tommy Grisafi, Indiana Grain Company, LLC. "The conversation you would have had with a grower three months ago, six months ago, ‘Hey, is there a chance we can go to $5, we might go to $6,’ there’s not many of those conversations. So volatility’s saying we’re at a lower price level for a while.

"Now beans, they’re a wild card," Grisafi continues. "Those things can get up and go. If I was going to load a boat full of something and send it to China, I’d rather fill it with beans than corn. But we’re floating in corn, and you see that through our daily price ranges. So on average we’re having about a 6-cent range in corn, whereas front-month beans are having a pretty big range, like a 20-cent range. But you look at next year to November 2014 and that’s having a much tighter range.

"As a trader, when you look at your ranges, both front-month and back-month corn are having tight ranges, but the front-month beans are having a larger range, more volatility, and the back-month beans it feels like we’ve been trading at $11.50 for months and months. We’ve had a 20- to 30-cent range. So things are coming in."

Click the play button below to watch the complete U.S. Farm Report Market Roundtable:

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