By Matt Reese
Prices have been strong but there is a lot of downside potential, according to Matt Roberts, Ohio State University agricultural economist.
“We have a supply driven market, not demand driven,” Roberts told attendees at the 2011 Ohio Grain Farmers Symposium. “Crop carries are small, and we are not going to see the scramble for bushels next summer. I would be moving my old crop when opportunities arise. If you see $6.30 or $6.40 May Corn futures, take it.”
Ethanol use, feed use and exports have all declined in response to higher prices and global supplies. The lesson, especially for corn, is to take marketing opportunities when they present themselves, Roberts said.
“Next year if we have trend line yields of 161.3 bushels on the 94 million acres that a lot of people are talking about, we’ll get 13.9 billion bushels, which is a lot of corn,” he said. “It is a reasonable scenario that prices could be down around $3.80 cash price at harvest next fall and $4.50 average annual marketing price for 2012.”
Soybean prices may be a bit stronger.
“Soybean exports are falling because there are a lot of alternatives out there and we are pretty high priced, but an extremely tight inventory is the new normal,” Roberts said. “I think there is a lot less downside in soybeans because I think they are going to lose about a million acres this year and Brazil revised downward their current harvest of beans. I think we could see an average marketing price around $12.25 in 2012.”
Roberts does not see much support for high wheat prices moving forward, as stocks are ample despite the low acreage planted this fall.