Melvin Brees
Farm Management Specialist
University of Missouri Extension




Decisive Marketing

Weekly Grain Analysis Report
Richard Rudel
University of Missouri Extension Economist

 Weekly Cattle Report

 Weekly Hog Report
Glenn Grimes
Ron Plain
University of Missouri Extension Economist

Previous Issues of
Decisive Marketing

Other Ag Newsletters from University of Missouri Extension in Central Missouri

Dale's Country Trails

Ag Connection

Ag Page for Central Missouri UO/E Ag Page for Central Missouri
UO/E in Central Missouri University of Missouri Extension in Central Missouri

MailboxComments or Suggestions?
Please send your comments and send suggestions to Melvin Brees, Farm Management Specialist, University of Missouri Extension, #1 Courthouse Square,  Fayette, MO 65248, call 660-248-2272, or send messages by e-mail to:
January 19, 2001

"The Ugly, The Bad and The Good"

That's backward to the title of the old western movie, but it seems to describe the corn and soybean market situation following the January USDA reports.

The "ugly" is market price action in the last week. As of Thursday (01-18-01), March corn futures price had declined eleven cents in just over a week and March soybeans were twenty-four cents lower. Central MO cash corn bids ranged $1.85 to $1.91 (Thursday). Soybean basis, while varying considerably, remains very weak. Soybean cash bids at several Central MO locations ranged $4.30 to $4.33--that's ugly!

The "bad" is some of the disappointing supply and demand news in the reports. The bad news was different for corn and soybeans. For corn the bad news was demand. USDA lowered projections for both domestic use and exports resulting from larger than expected current supplies. These changes increase the projected carryover supplies at market year-end. The bad news for soybeans was supply. 2000 production was only reduced 7 million bushels, most expected a larger reduction. This small reduction along with expectations for a large South American crop and an increased 2001 U.S. soybean acreage suggests burdensome supplies.

The "good" is also supply and demand news in the reports. For corn the best news appears to be on the supply side. The 2000 crop is no longer a record as a result of a cut in the production estimate. In addition, a potential acreage shift from corn to soybeans suggests the potential for lower production in 2001. Demand news wasn't all bad either. Corn use, while lowered, is still expected to be a record. Soybean demand is also good news with expected record use building on last year's record use. In addition, the improving supply and demand situation for wheat could provide grain market support.

This past week, the "bad" overshadowed the "good" and resulted in the "ugly." Reduced corn use in spite of less production and large soybean supply regardless of record use sent prices lower. The good news may be more bullish for corn. Reduced 2001 planting along with stronger than expected use or weather could quickly change the supply and demand balance. The price outlook for soybeans is less optimistic. However, continued strong soybean use suggests that this market could also react quickly to surprises.

This mixture of both good and bad news creates market uncertainty and considerable risk. Market strategies for both new crop and remaining old crop supplies need to recognize these risks. The good news still provides hope for some price rallies. While rallies are possible, current outlook for large supplies remains negative and price goals should be realistic. It won't be easy, but a priority should be to avoid "having to sell" at market lows. This may require relying on the market loan (if the LDP hasn't already been claimed) or strategies that use a combination of cash sales and options or futures transactions. Witnessing "ugly" price is one thing, actually having to make sales at an "ugly" price is worse! --Melvin


University of Missouri ExtensionDecisive Marketing - January 19, 2001 -- Revised: April 20, 2004