The big corn crop from 2013 hangs heavy over the market, but international instability, a sluggish planting season, and fewer corn acres are making things interesting for the future of corn prices.
In a recent OCJ/Ohio Ag Net survey we asked: “What percent of your new crop corn have you forward contracted?” A whopping 45% of respondents said “Less than 10%” while 27% percent said they had contracted 10% to 25% of their corn crop. Nine percent of respondents said they had contracted 25% to 50% of their 2014 corn crop and 18% had contracted more than 50%.
“That does line up with what we are seeing here in northwest Ohio,” said Jeff Reese, grain buyer for Legacy Farmers Co-op. “We are seeing more corn forward contracted than last year at this time. Last year it would have been better for more guys to forward contract, but there is almost more downside risk this year than last year because we have more corn sitting in the bin. I think being in the 25% to 50% range is a good place to be in. You can protect your downside risk but you are not over contracted if we have problems this growing season and you can still take advantage of any upside if the acres don’t get planted.”
At this point, though, it looks like there may still be more downside risk for corn moving forward.
“Even with fewer corn acres, we could still see another huge crop and we already have a lot of corn in the bins. We have been telling people they needed to sell their corn in February and March because there was a lot of risk out there,” Reese said. “Since then, beans have taken a rally, which encouraged more bean acres and with planting delays, it may encourage even more bean acres. With the levels we are at right now, with $5 corn futures, there still is more downside risk for corn if we get the acres planted and get average yields.”
In terms of soybeans, Reese said it is clearly time to contract and lock in profits.
“I definitely think guys should be contracting beans,” he said. “China is unstable and we could have a record bean crop this year. Lock in profitable prices when you see them. You can’t go broke making money.”
To participate in the online OCJ/Ohio AG Net weekly surveys, visit our homepage and the survey is on the right side of the page.