Weather forecasts suggest optimal planting conditions could be ahead for many U.S. corn and soybean regions, putting pressure on prices, says Brian Roach, Roach Ag Marketing.
“Last year, we had a catalyst that came with a wet spring and acres not going in the ground, and we put 90 cents in the corn market in a short period of time because the specs had set it up that way,” Roach tells “AgDay” host Clinton Griffiths on the Agribusiness Update.
“I think we could just plan on the specs being in that short position in corn and soybeans," Roach continues. "We could be record short in May just like last year if the crop and the forecast were to play out like they look, which looks to me like the next 60 to 90 days could be dry and warm. That means our crop goes in the ground. I think you could probably plan on prices being under some pressure.”
It’s too early to get excited about USDA’s outlook numbers published this past week, he adds. Instead, it’s valuable to look at indicators that might make 2016 different from other planting seasons.
“Beginning supplies are larger than normal, so we don’t start off with a tight pipeline like we’ve had a couple years ago and back,” Roach says. “I think as you look at a roll forward based on trendline yields, we see corn acres coming up [with] better potential for corn profits with fertilizer prices down versus soybeans. The surprise might have been we’re seeing fewer wheat acres. Those acres might actually move over into soybeans.”
Click the play button below to watch the complete interview with Roach on “AgDay.”