What a difference a spring rally makes.
During meetings this winter with growers, Farm Journal Economist Bob Utterback heard all their worries about the year ahead.
“‘Corn’s below the cost of production (and I’m in multi-year agreements,’” they told him. “’I can’t afford a contract. I can’t do anything. I’m going to lock in a loss, and hopefully I’ll get rescued.’”
That lifesaver came in April when soybeans soared to $10 on weather concerns, pulling corn briefly over $4 and delivering an essential boost to growers’ 2016 profitability.
Will the roll continue? It’s hard to say, but even the bearish Utterback understands the allure of such thinking.
“The rally in April is a very atypical rally, so everyone is thinking, ‘If we do this in April, what are we going to do in June and July?’” Utterback said on AgDay.
Before farmers get too excited about the possibility, though, they should look at their marketing plan and see how they can take advantage of the current market.
“You should be thinking about all your forward contracts,” said Utterback, stressing the importance of using the carry, or the spread between current and more distant futures contracts, to boost your per-bushel revenue. “All of a sudden you can pay for that higher cash rent that you couldn’t 60 days ago.”
Hear Utterback’s full comments on AgDay here: