To Develop Grain <\n>Marketing Plans for 2014
Extension marketing educator John Berry tells us that for him this is the least exciting season to be marketing fall crops.
In most years, the risk is gone for buyers. Acres are known and the harvest is nearly complete — 86 percent of the nation’s soybeans and 73 percent of the corn were in the bin as of Nov. 3.
This is in line with the five-year average. One big wild card affecting prices for 2013 crops (and beyond) is demand, which is every bit as impossible to predict as long-term weather.
We can look out and see more mouths to feed, continuing prosperity (in some countries) and ready global economic exchange. Things can change, but for now Berry is expecting a typical market response for an “adequate” harvest to play out for corn and wheat.
The market appears to be not quite as satisfied with the U.S. bean harvest, and prices may depend on our South American competitors’ 2014 harvest and thus suggest some price support for now.
Berry’s assessment is that Pennsylvania’s harvest is at least average, maybe well above average depending on the location.
Have you called the local elevators lately asking to book a delivery? Basis is way bad. Remember what basis tells us? Basis is a signal on local supply and demand.
If basis is less than normal, our buyers are telling us they do not want the grain at this time. Looking at cash bids, we see the prices for January and beyond get a little better.
Our buyers are telling us they will pay for us to store the crop and deliver it once they have had the chance to work off the harvest glut. This is one of those years we will get paid for farm storage.
In Pennsylvania, this is often the case for corn. Pricing uncommitted bushels for future delivery and storing is an appropriate decision at this time.
Looking at soybean prices, we see a different story. The nearby price (delivery now) is better than the far-off months. This again is a strong signal from the market.
However, this time we should be hearing that soybeans are not quite filling the demand right now. Buyers are willing to pay more now to get us to deliver. There is no opportunity to lock in a storage return for beans at this time.
Of course, we may wonder about selling all beans now and what will happen later in the marketing season if all the beans have been committed. This borders on predicting the future, but is a valid question.
Think about last year’s bean prices. Harvest was the peak. Prices throughout the marketing season were good but did not cover the cost of storage over the harvest price.
Berry suggests producers should consider marketing as much of their soybeans at harvest as possible and storing a minimal amount of unpriced beans as a gamble on a price increase later.
Berry tells us he has nearly quit thinking about the 2013 crops and started in earnest to consider 2014 prices. December 2014 corn has already traded from $4.65 to $6.16 on the Chicago Mercantile Exchange and is now at the low end. November 2014 soybeans have traded from $11 to $13.33.
The most interesting time to market crops is typically a year (or two) before they are harvested. The risk is huge for buyers and producers. When risk is on, bids are more aggressive on price.
To Attend the 2013 <\n>Ag Summit in Lancaster
Sponsored by the Lancaster County Agriculture Council, the “2013 Agriculture Summit: Preserving the Farmer and the Farm” on Thursday, Nov. 21, will focus on the contribution of ag to the Lancaster County economy.
The Summit will kick off at 9 a.m. with welcoming remarks from Michael Pechart, deputy secretary of the Pennsylvania Department of Agriculture and Lancaster County Commissioner Dennis Stuckey.
James Dunn and Tim Kelsey from the College of Agricultural Sciences at Penn State University will present their findings on the “Economic Value of Agriculture in Lancaster County” with a responder panel led by Michael Peachey, vice chairman of the council, which will include local economic development experts.
Representatives from Economic Modeling Specialists International will offer a look at the supply and distribution chain of the Lancaster County food hub with reaction from an industry panel that I will chair.
Earth Economics will provide its view of the “Intangible Value of Agricultural Land” with response from a panel led by Don McNutt, executive director of the Lancaster County Conservation District, and with representatives from tourism, agriculture preservation and conservation.
At lunch, Lancaster County Cooperative Extension will be recognized for 100 years of activities in Lancaster County.
The afternoon will feature 45-minute breakout sessions on such topics as “The Success of No-Till and Cover Crops” by the No-Till Alliance, “Preserving the Farmer and the Farm,” “A Realistic Assessment of Agriculture Impacts on the Chesapeake Bay Watershed” and “Lancaster County: Beyond Animal Agriculture.”
The final topics are “Building New Distribution Networks for Agriculture” and “The Potential of Agritourism.” A closing session reviews the findings of the day and points to action plans going forward.
There is no fee, but registration is required. To register, visit http://events.constantcontact.com/register/event?llr=7m5ci5jab&oeidk=a07e8fei27110a5c80a.
Quote of the Week
“If once you forfeit the confidence of your fellow citizens, you can never regain their respect and esteem.”
— Abraham Lincoln
Leon Ressler is district director of Penn State Cooperative Extension for Chester, Lancaster and Lebanon counties.