The spring planting season has gotten off to a cold, wet start. Farmers farther north are starting to consider transitioning from spring wheat to soybeans.
Brian Grossman, market strategist with Zaner Ag Hedge, says recent winter weather events have some United States growers reconsidering their planting intentions.
“I’m a little concerned that we’re going to see a lot of acreage start shifting over to beans. Corn – I don’t want to say it’s getting late, but we’re definitely knocking on the idea. As you go further north, especially into the Dakotas where we were looking for big spring wheat acres, a lot of those guys might be second guessing their plans right now,” Grossman said.
Grossman adds – if soybean acres increase, soybean futures prices will decrease. He expects to see market prices adjust before farmers enter fields.
“I’m impressed to see the market up in this $10.40-$10.50 area, and I’m having a hard time justifying it. Weather stories are great to keep us supported, but we have a lot of bearish headwinds. If acres go up, our balance sheet is going to be that much bigger,” Grossman said.
Jim McCormick, senior adviser with Allendale, advises growers to protect against risk.
“If a grower has unpriced beans in the bin, or potentially a lot of unpriced beans to plant this year, I would encourage him to get some of that risk protected. Sell it, buy options – do something to protect from downward risk. We have a cumbersome supply to begin with. If we end up planting a million to two million more acres, due to planting acres in the north and have another good crop, we’re only going to exacerbate that supply problem. That should put prices a lot lower in the fall than they currently are. Take advantage of this rally in the beans to lock in some profits.”