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Keep an eye on 2010

Agriculture.com Staff 08/14/2009 @ 5:34pm

Grain farmers should keep a tight eye on 2010 prices. With input costs sliding, rallies in 2009 could be viewed as opportunities to sell 2010 crop. As of this writing, December 2010 corn is trading near $4.00 and November beans under $10.00. Both offer a starting point to make 2010 sales.

So what is the rationale for starting? Simply put - value. We (and you) have no idea what the next eighteen months of weather or world events will bring. We do, however, know the market is offering value, especially in soybeans. There could be any number of reasons why prices could rally. At the same time, the world had a taste of chasing higher commodity prices last year, and our bias is that foreign countries will do everything to limit exposure to such volatility. In part, that means not only buying ahead but also growing their own crops. Expect to see an increase in corn, wheat and soybean production in the years ahead. Technology is catching up with the world. Most years see average to above-average crops and, in turn, lower fall prices.

A solid marketing strategy should include some aspect of initiating sales based on value. Most farmers are on their way to a good 2009 crop, so it only makes sense to begin looking at 2010. Some have asked us about 2011. Selling out more than two years could be risky considering personal problems that could develop in one's life, such as health or family issues. Yet, it is prudent to look out one year and, on occasion, two, especially if stellar prices are present.

December 2010 corn prices could trade in a range of $3.00 to $5.00. It will take a weather event in order for corn prices to rally significantly above $5.00. Corn prices to $3.00 or lower are likely given the current state of the livestock industry. For soybeans, a likely range is $7.00 to $12.00. With good crops in the U.S. and South America, prices could challenge the bottom end of this range.

Bottom line, it pays to pay attention. Recognize that in many years, good value was present early, but often the urgency to make a decision or strategize was never front and center. We encourage you to always be vigilant for value opportunity.

If you have questions or comments or would like to talk about opportunities in 2010, contact Top Farmer Bryan Doherty at 1-800-TOP-FARM ext. 129.

Grain farmers should keep a tight eye on 2010 prices. With input costs sliding, rallies in 2009 could be viewed as opportunities to sell 2010 crop. As of this writing, December 2010 corn is trading near $4.00 and November beans under $10.00. Both offer a starting point to make 2010 sales.

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