Farm Management Specialist
University of Missouri Extension
|April 16, 1999What Do The Experts Think?
Grain outlook information from various private marketing newsletters is similar to the information from the University of Missouri telephone outlook conferences, summarized in last weeks "Decisive Marketing." The markets can always provide surprises, but market analysts (the "experts") base their analysis on current fundamental and technical information. Briefly, here is some of what they are saying about the grains.
Corn: They are assuming yields of 128-130 bpa and ending stocks for crop year 1999-2000 in the 1.7 to 1.8 billion bushel range. From this they expect the 99 crop prices to average $1.95 to $2.15. Poor yields (less than 120 bpa) could tighten corn supplies and push prices to $2.50 or $2.70. Excellent yields (135+) could produce very low prices. There is a lot of old crop corn under loans that will mature in late summer which is likely to pressure late summer and early fall prices especially if the new crop looks decent.
What are their market strategies? Since harvest prices could fall below $1.80 (triggering the LDP), new crop cash prices above $2.20 may be good opportunities to lock in protection and use the LDP at harvest to enhance that price.
Soybeans: A 38 - 40 bushel yield could easily produce a 2.7 to 2.8 billion bushel crop and result in huge ending stocks of 600-700 million bushels. Several analysts expect prices in the $4.60 to $4.80 range, maybe lower with more acreage or excellent weather conditions. The good news is that low prices should discourage South American planting and, if world economies improve, demand may improve. Still, most agree that, "it would take a drought to push prices above loan price!" This situation doesnt offer much in the way of profitable marketing opportunities.
Wheat: Even though world production may be somewhat lower and carry over may shrink some, supplies will still be large. Most expect yields in the lower 40s and a 2.2 to 2.5 billion bushel crop, resulting in 775 million bushels carryover and a price range of $2.90 to $3.20. They believe that, without weather problems, pre-harvest pricing opportunities will be limited.
The experts could be wrong. Most understand that supply depends upon what is actually produced and that demand can change. These are hard to predict and no one can accurately predict unexpected events or the weather. Most agree that poor weather could strengthen prices and excellent growing conditions could produce very low prices. Right or wrong, these analyses summarize the information currently available for decision making.
The best marketing strategy still seems to be looking for
seasonal spring price strength in May or weather scares in late June or early July to make
pre-harvest new crop sales. The market loan or LDP can be used as a "free put
option" to provide support at loan prices and to enhance pre-harvest sales. -- Melvin
Decisive Marketing - April 16, 1999