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After quickly falling 50 cents lower in late February and early March, the good news is new crop December 2023 corn futures have had a 25 cent recovery rally. How much higher can it go? And if it can trade higher, historically speaking, when is the best opportunity to lock those prices in?
On the supply side, the U.S. is still dealing with nine grain and oilseed commodities with historically tight old crop ending stocks, just like last year. So, the importance of a perfect spring for planting, and great weather this summer, is paramount in order to improve supplies.
Interesting to note, the market is already shrugging off the large 92 million prospective planting number the USDA gave us from the March 31 report. After all, of the 3.41 million acre jump from last year, 1.3 million of that increase of acres is expected to come from still snow covered South Dakota, North Dakota and Minnesota. Trade is starting to get nervous for those three states, an early spring may be unlikely.
Will prices continue to come back?
Some producers are likely at or near breakeven now. Will prices continue to come back? Time will tell, but I encourage you to be aware and use the seasonal grain tendencies to your advantage this spring and early summer. Be more aggressive to capture and lock in prices early.
In hindsight, the seasonals have worked quite well this past year, nearly to the day. So, to offer a word of encouragement, seasonally, new crop corn has a tendency to start rallying higher starting on April 1.
Why April 1? The Prospective Plantings report is now old news, last minute acreage competitions are underway, something usually goes awry with the Safrinha corn crop growing in Brazil, and Mother Nature usually has a trick or two up her sleeve for the United States.
A spring rally – phew! Great news! When should you price that grain? Looking back at the past fifteen years, the summer price high does have a tendency to move around.
- 4 out of 15 years, the high occurred during the month of May.
- 6 out of the past 15 years, the high occurred in June.
- 5 out of the past 15 years, the price high for new crop corn occurred in July.
Often, the price high will occur when you’re busy in the fields finishing up planting. During this time frame, the last thing you’re thinking about is marketing your grain because you’re just hoping it comes up out of the ground. But mark it on your calendars now and be ready to pull the trigger on sales.
Please make time today to think about where your current cash sales are, how much grain you have forward contracted, and consider potentially protecting the value on any remaining unpriced bushels of grain. Also think about that 2024 crop, too.
It is rare for a bull market to last more than two years. Be confident with your cash marketing skills and forward contracting. Also, this is going to be the year to understand various put option strategies to protect unpriced bushels for 2023 and potentially beyond.
If you have questions, you can reach Naomi at [email protected] or visit TotalFarmMarketing.com.
Naomi Blohm is a specialist at helping farmers understand how to manage their cash marketing needs. In addition, she helps them understand the importance of managing basis, delivery point considerations, cash flow needs and storage capacity. Naomi is a frequent contributor on Iowa Public Television’s Market to Market program, This Week in Agri-Business, U.S. Farm Report, and Ag Day as a guest analyst. She’s also a featured speaker at multiple national events and author contributor to major ag publications. Naomi is currently a senior market advisor with Stewart-Peterson Group Inc., a part of Total Farm Marketing.
Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation
