Release of USDA U.S./World Supply and Demand Estimates - Monday, 12 March 2012

Update for March 12th, 2012

 

The USDA U.S/World Supply and Demand estimate was released last Friday, there was little change to the corn, soybeans and wheat but they did lower the South America soybean crop.  Currently supplies of corn are very low but if planting starts on time than that fact will have little effect on the grain markets.  It is also believed that the corn market is already trading on the idea of the drought continuing, if that is true a “weather scare” may not drive prices as it usually does.  The USDA Planting Intentions Report is on March 30th, and it is widely believed that the corn market could range anywhere from $3.50-$8.00 depending on acres planted and weather this year.  So when making your marketing plan for new crop corn consider where your break even costs are and what percentage of your income are you willing to gamble-30%, 50%...100%?  Most breakeven levels that we have been seeing range from around $4.50-$5.00 per bushel, in those cases we recommend that you think about being 40% sold prior to the March 30th report, but be careful to NOT sell over your guaranteed crop insurance bushels.  Remember to look down the road for selling opportunities in 2013; right now Dec. 2013 corn is at $5.56 so the opportunity is there to sell $5.00 corn.  It may be a good starting point to make some sales and limit your risk.

Corn is higher today on rumors that China is possibly looking to buy again.  This would be great news for old crop corn, now we need something to push new crop prices higher too!  What do you think it will take to drive new crop corn/beans higher?  Send me an email and let me know your thoughts!

La Niña has been in the news lately because forecasters have noticed that it has weakened substantially and may soon be gone, and they believe the effects may also disappear as early as the end of April.  This would hopefully bring a moderation of temperatures and rainfall for the 2012 growing season.

 

 

The tension between Israel and Iran continues to build.  If military action is taken by either country our grain market prices may suffer the consequences along with oil prices that would likely skyrocket.  20% of the world’s oil supply comes through the 34 miles wide Strait of Hormuz and Iran has threatened to close these vital shipping lanes.  Obviously it is uncertain whether or not any of this will take place but knowledge of the possibility allows everyone time to prepare.

 

 

 

CROP INSURANCE

Remember the deadline to sign up for 2012 Crop Insurance is this week, Thursday,March 15.

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