Harvest is in full swing. However, according to a recent poll, many growers haven’t yet priced all the grain coming in from the fields. But with a recent bounce off the bottom for corn and soybean prices, is now a good time to price that grain? This article will compare how a number of experts weigh-in on this question.
Sell Grain or Hold
Bryan Doherty of agriculture.com authored a piece who’s title asked, “Is Now the Time to Make Sales or Hold?” Doherty begins by recognizing many growers have grain coming in from the fields that is not yet priced. Like many students of the grain market, Doherty acknowledges that harvest season typically experiences the low point for grain prices. However this season is slightly different. There has been a bump in corn and soybean prices off the recent lows. This bump has been approximately, 10%.
Of course we don’t know if this is the start of a bigger rally or an usual seasonal opportunity to price some grain. Doherty offers an essential insight.
As harvest progresses and supplies increase, we could see pressure on prices.
This means it is likely that there will be additional supply-side pressure on grain prices as harvest progresses.
Doherty goes on to answer his title question this way.
It makes sense to reward this rally with corn and bean sales, knowing you have the ability to retain ownership.
His rationale is that grain supplies will be plentiful so near-term sustained rally is unlikely.
Similar Mind – Seize Grain Selling Opportunity
Bryce Knorr of Farm Futures is of a similar mindset with Doherty. Knorr penned two pieces one about corn and the other about soybeans. His message to growers was similar, look for opportunities to price grain profitability. The corn article is titled, “Get Ready for Selling Opportunities”. Additionally his subtitle cautions growers that the slow harvest will make it tougher to figure break-even prices.
Knorr acknowledges that despite his professional goal of anticipating future pricing in the grain market, now is a challenging time to do so. Furthermore, he advises growers of the following:
Be ready to sell when you can lock in a profit, regardless of where prices may be headed. Risk remains too high to lose sight of that objective.
Knorr’s thoughts on the Soybean market for growers are similar. His piece is titled, “Stop Guessing, Start Selling”. Effectively he is imploring growers to ignore the possibility that the overall crop size may come in smaller than initially estimated. Thus, he is looking at historical behavior of the soybean market at this point in the calendar and concludes more likely than not, a sustained rally is not likely.
Similar to his advice for corn growers, he offers this advice to soybean growers:
So instead of trying to guess where the market is headed, focus on finding a price where you can make a profit.
Both Knorr and Doherty suggest to growers to use near-term price bumps as a opportunity to price some grain.
Grain Stored Unpriced
However, Rhonda Brooks of AgWeb.com authored a piece with a counter narrative. Brooks’ piece is titled is “57% Of Growers Are Storing Their Grain Unpriced. But There’s A Reason.” This piece is less of an analysis and more of conveying survey results.
Brooks highlights the findings from a poll that asks growers, what their primary marketing plan is this year. The survey found that 44% plan to storage grain on-farm and unpriced. Another 13% plan to store it off-farm and unpriced.
This survey finding offers ample evidence for Doherty’s point of view that there will be plenty of supply-side pressure on prices. There will be plenty of grain that needs to be priced in the coming weeks and months.
However, Brooks quotes Chip Flory who offers a slightly different point of view about why growers are not pricing their grain. Flory believes that growers are optimistic that higher grain prices will result from successful trade negotiations. Specifically the article mentions potential U.S. deals with Mexico, Canada, South Korea, and even India.
Bin It and Forget It
Flory is quoted as saying
“There’s going to be some of that ‘bin it and forget it’ mentality this year, because farmers anticipate this market is going to recover, that we’ll see some price improvement in the months ahead, and they’ll be able to market for a profit in 2019. They’re waiting on prices to get back to break-even.”
It is interesting to note that as Flory acknowledges storing unpriced grain as a reality. However, implicit in his statement is that the decision to sell is still encouraged around profit and break-even analysis, just like Knorr and Doherty. As a grower do you know your break-even price and do you have those orders set at specific target prices?
Read more on this topic in the Ag Nook related story titled; “Should We Be Bullish On Corn“.
The recent bump off the bottom for corn and soybean prices has given growers an opportunity to consider pricing their harvested grain. Several market analysts encourage growers to price grain if profitable to do so given the near-term concerns that prices will be under pressure as harvest continues. However, there are some who are storing their grain unpriced with the hope that trade agreement will spur greater demand in the future and thus more profitable prices for their grain.