JOHNSTON, Iowa – New crop corn could find support from weather and acreage factors, as new crop beans may face pressure from expectations of record acreage this year. Today’s analyst is DuPont Pioneer Market Analysis Manager Virg Robinson.
I’ve just taken a look at the near-term weather forecast from the National Weather Service, both the 30 day and 90 day, and they’re concerning. We’ll leave it at that.
I think by virtue of that, plus the notion that acres will be down this season versus last, those two factors should underpin new crop values, and prevent them from a significant price decline. So, you know, those who have insurance probably have a strategy in place. Those who do not? It appears to me the new crop corn futures contract could take a swing at $5 or something above that over the course of the next 30 days. At that point, I’d be inclined to make some type of forward cash sale, or some type of price floor, which would include some use of an option strategy.
Old crop corn; weekly export sales again pretty solid. We’re on a good pace, a strong pace here to date for the crop year. I think there will be any number of choppy days where it’s very difficult to ascertain general direction, but at present, I would confine my sales to those days that are strong. Basis levels have seemed to firm up here, so I like the near-term price prospects in both old crop and new crop corn, but I think I need to add: they’re fairly measured. I’m not talking about a dollar a bushel here. Maybe 20 to 40 cents.
I think, like everyone else, there’s been no significant rationing of old crop soybean usage that we can detect. This morning export sales – no cancellations, and specifically I mean no Chinese cancellations, so the pace of sales remains very, very strong, given the supply at hand. The Department of Agriculture will address that on the 31st, with their quarterly stocks in all positions report. So between now and then, if I owned old crop beans, which I do not, I would retain ownership at least through that 31st report, so pretty strong underpinning there.
New crop beans; private analysts out yesterday forecasting a record soybean acreage this season – this spring. Clearly we need to acknowledge that. New crop prices, at least as measured by Iowa State budgets, are profitable. So I would be looking to create either a forward sale at or near this 12 dollar mark, or certainly some type of price floor.
It’s been an unusually strong market. Several contracts this morning making new contract highs. The way I track disappearance, and there will be a cold storage report this Friday, which will give us at least a month-over-month, year-over-year analysis of frozen inventory – show lists are not particularly large. Demand, at least the way I track it, remains pretty strong. I think that market will continue to move irregularly higher, until we can identify demand issues. Thus far I’ve not seen that.
It’s difficult to quantify the damage that the PEDV virus has inflicted on the swine herd.
Clearly, we’re not seeing the numbers, slaughter-wise, that we thought we’d see, as recently as a few short weeks ago. In addition to strong beef prices, pork has clearly joined the parade, and I think again, slaughter numbers moving forward, based on pig and crop reports, should increase at bit here.
If I had no hedge or forward contract in place, for the balance of the second and third quarters, I would entertain some kind of put option and create some type of floor beneath the hog market.