June is historically a month when new-crop corn and new-crop soybean prices plateau and then begin to gradually slide lower as we move toward fall harvest. Here’s a look at 10 years of price trends:
But is this a typical year?
At this point, you should assume it is, says Chip Flory, host of “AgriTalk” and Farm Journal Economist.
“The reason that I say that is the trade is already reacting to the weather forecast,” he says. “We’re at the point in the summer weather pattern where if we have rains in the forecast for the central and even eastern Corn Belt, it’s negative for the markets. And if that’s a negative for the markets, then you kind of have to assume we’re going to see the typical seasonal pattern play out.”
Listen to Chip Flory discuss grain marketing strategies with Andrew McCrea on the Farming the Countryside podcast:
Even if prices follow their seasonal trends, what is different this year are price levels.
“Prices are elevated; we still have high prices for corn and soybeans,” Flory says. “Even with the increase in production costs that we’ve seen for the 2022 crops, there’s some really good profit opportunities out there.”
Cash In on High Basis
Basis prices have been increasing throughout the U.S. This month, basis prices posted the largest weekly gain ever. (Check your local basis bids with Cash Grain Bids.)
“After planting, you tend to see basis have a little bit of uptick,” says Stephen Nicholson, global analyst for grains and oilseeds at Rabobank. “Farmers aren’t selling because they’re busy with other things. So, the markets are trying to say: ‘I need corn and soybeans.’”
Nicholson expects basis to continue to be very strong across almost all crops.
“The market is not getting fed what it needs; it wants more, and it needs more,” he says. “I think old-crop prices are going to be strong all summer long, coaxing those last few bushels out of the bins before harvest.”
Listen to Nicholson discuss his grain market outlook on “AgriTalk”:
Sell into Price Strength
Currently, the market is focused on supply and weather, Flory says. This should guide your pricing decisions for the next month.
“My attitude all along on this rally has been to sell into price strength,” Flory says. “I’m not talking about just one day up, but when you get a back-to-back rally, you better reward it.”
On the flip side, Flory discourages selling into price weakness.
“So, if you get the one, two or three days down, don’t panic,” he says. “Wait for that one, two and three days back up and continue to sell into strength rather than selling into weakness. I think that still works at least for the month of June.”
In July, if the weather looks favorable for U.S. crop production, you might have to become more defensive.
“If we’re not seeing any additional production problems and we are seeing a weather pattern that might help us add on 2 bu. back to the national average trendline yield on corn, then we can start thinking about selling into some weakness,” he says, “but I don’t think we’re there yet.”
Mark Your Calendar: Market-Moving Events
The next few months feature several key dates that have historically impacted markets, Nicholson says.
- June 30 through July 4: The June 30 Acreage and Grain Stocks reports, combined with the long holiday week for Independence Day typically set the market tone for at least several weeks. “The market takes assessment,” Nicholson says. “Did we get the acres? What is the weather? How does the crop look? So, you also need to assess where the market is going to make a decision around that.”
- August 12 Crop Report: This report is also a regular market mover, sending prices higher or lower into harvest.
Start Penciling 2023 Sales
Once you have a firm marketing plan for your 2022 bushels, start working on 2023, Nicholson says.
“This is easier said than done, but you need to start looking at 2023 for both your grain marketing and input costs,” he says. “Yes, it may be harder to get that supply locked in for 2023, but it’s an opportunity to sit down and think about what does 2023 look like? Is there an opportunity to lock in some margins that you may not have the opportunity to do later?”
Check the latest market prices in AgWeb’s Commodity Markets Center.
Read More
Chip Flory: Risk and What Ifs for the Grain Picture
Jerry Gulke: Is the Government Influencing Price Discovery?
Is Out-of-Control Inflation on the Horizon? Watch These Two Indicators
