The supply of corn is outracing the demand.
University of Missouri Extension agricultural economist David Reinbott told the 2014 Summer AgMarketing Outlook Conference that prices are likely to remain low, with projected record global corn crops. Ending stocks of corn are projected to be 190 million metric tons worldwide.
“I think that is really going to keep the lid on corn prices unless we see some production problems either in South America or China,” Reinbott says. “We’ve got fairly good demand, but there is a lot of corn on the supply side.”
If corn prices rally on the futures market, farmers should start locking in prices, Reinbott says.
“If we see a bump back above $4, I would definitely price some corn, especially that grain you can’t store,” he says. “We’re probably going to trend this market lower, with December down at $3.50 or possibly $3.60.”
Soybean acres are up about 3.3 million, according to USDA’s June report. Reinbott says weather in July has been great for soybeans, but notes that August is the key month for soybean production, so it’s too soon to tell how this year’s crop will be. The other concern is weather in South America.
“You could build a very bearish scenario for all crops if South America has another big soybean crop on top of the big soybean crop it had this year,” Reinbott says. “It could really push these soybean prices quite a bit lower.”
As with corn, demand for soybeans is going up, but not as fast as supply or production. With the potential for a big crop, farmers should be making some sales now, especially with any kind of rally in the $11 range, Reinbott says.
“The next level of support on the market is around $9, and there has been some talk about prices dipping below $8,” Reinbott says. “If I was a farmer, I’d be taking advantage and making some sales now. It probably wouldn’t be a bad idea.”
Audio recordings and handouts from the conference are available for download at http://agebb.missouri.edu/mkt/teleconf/.
Source: University of Missouri Extension