Home / Markets / Markets Analysis / Corn market / Crunch time for corn farmers

Crunch time for corn farmers

Agriculture.com Staff 05/29/2009 @ 11:54am

The last week of May becomes critical to finish corn planting. This is especially the case this year with delayed planting and wet weather in the forecast.

The pertinent question now is, will farmers begin in earnest to shift to other crops or take preventative planting insurance payment for corn? The next ten days are critical. The majority of producers we have talked to will give it their all to plant, at least for now. For many, taking a preventative plant payment is difficult. Most are proud of their work and would rather work the land. Yet, farmers understand that this is an option that may need to be exercised. The switch from corn to beans is still undecided.

This week's corn planting progress indicated 82% complete. Assuming not all corn gets planted, what does that mean for carryout? If we take a simple 5% reduction in corn planted acres, that equates to about 4 million harvested acres. At 150 bushels per acre yield suggests 600 million less in carryout or a figure of one billion bushels. This could warrant a rally to $5.00 or higher.

Bears will argue that we have been here before with late planting, yet somehow we still manage to produce big crops. They will argue if weather cooperates, yield can still average well over 150 bushels per acre, even on late-planted corn. That argument has corn prices stagnating. However, as long as there is uncertainty, fund money flowing into commodities and continued signs that the economic recovery is holding, it is unlikely there will be a significant downturn for prices in the very near term. Yet, history has also indicated that good weather will have corn prices sliding throughout the summer.

Bottom line, be prepared. On the one hand, less than ideal conditions have set the stage for summer weather to generate significant buying interest, especially from funds who may jump in on a price uptrend. End users, as well as those who are aggressively sold ahead, should be prepared to begin buying if it appears by next week that all intended acreage does not get planted. For those who have been reluctant sellers so far, recognize that corn prices will generally drop 25% to 30% from their winter/spring highs to harvest lows. That could mean a down move of well over $1.00. This would also have December futures testing $3.50, a level that prices traded down to last December.

Outlooks and perceptions change, sometimes significantly, over a short period of time. Be prepared and be strategic. Create a balance that works best for you. You are busy, but dedicate time, at least a few minutes daily, to strategically be prepared. History is a great teacher. It has taught all of us that prices can and do change. Be ready!

If you have questions or comments, contact Bryan Doherty at Top Farmer, 1-800-TOP-FARM ext. 129.

The last week of May becomes critical to finish corn planting. This is especially the case this year with delayed planting and wet weather in the forecast.

CancelPost Comment
MORE FROM AGRICULTURE.COM STAFF more +

Farm and ranch risk management resources By: 07/07/2010 @ 9:10am Government resources USDA Risk Management Agency Download free insurance program and…

Major types of crop insurance policies By: 07/07/2010 @ 9:10am Crop insurance for major field crops comes in two types: yield-based coverage that pays an…

Marketing 101 - Are options the right tool… By: 07/07/2010 @ 9:10am "If you are looking for a low risk way to protect yourself against prices moving either higher or…

MEDIA CENTERmore +
This container should display a .swf file. If not, you may need to upgrade your Flash player.
Cool Tools Christmas Edition: Part 2