Bearish talk has flooded the grain markets for several years. Record yields and crop production only adding to that discussion in 2016. However, in order for prices to move higher, Doug Werling of Bower Trading says there’s one major change that needs to be made.
“The grain market, the livestock market in general, needs a perception change,” said Werling on U.S. Farm Report. “What did we see in oil from this point last year? What’s changed supply and demand wise? Not that much.”
Werling says it’s people‘s perspective on the oil market that led to oil trading above $50 per barrel. While we haven’t seen that shift in the grain market, Werling thinks a big report week is starting to shift moods.
“I think you had a step forward with the last crop report to change, or help change, some perspective in the grain markets,” said Werling.
Brad Matthews of Roach Ag Marketing wants producers to look at a more detailed approach, advising farmers to think about basis first, and then the futures market.
“The big thing for corn producers is you have to stay patient on the futures price,” said Matthews. “ We think going into spring, potentially summer, you’re going to have better prices; but between now and then, if corn is not going to move much, and users are going to need it while farmers are unwilling sellers, you’re probably going to see the basis start to tighten up a little bit.”
Matthews says that’s why farmers should look at protecting basis over the next 30 to 60 days.
“When they see their local market tighten, lock that basis in, because when we do finally get that rally, with all the corn that needs to be sold, basis is going to fall apart.”