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What’s Next? More Soybean Acres In 2018
Now that the much-anticipated January Supply & Demand report is behind the market, what is next for grains?
Once again, the report confirmed large inventories, with corn yield now at an all-time record high of 176.6 bushels an acre. This is a surprise, given the challenges producers experienced early in the growing season.
Yet, near-ideal weather conditions from midsummer through the end of the harvest season allowed for genetics and other practices to positively impact yield. Those practices were things such as late-season nitrogen applications and use of fungicides.
Weather was great, as an unusually long and warm September helped a late crop mature to its full extent, particularly in the Northern tier states. For many, the passing of the January report is welcomed, as it is the last report that will estimate yield. With yield moving in each report since August, this was an unprecedented year where a big crop, in fact, did get bigger.
South American weather is the next big event for the crops, as will be the anticipation of the March 29 Prospective Plantings report. With new-crop prices at or below cost of production, the question now is whether farmers will push corn acres in an attempt for high yield or lean toward planting more beans. Small grains will likely also get another look from producers, especially in the Northern and Northwestern tier states where crops such as oats, barley, and spring wheat may be substituted for corn.
Recent conversations with seed dealers and producers suggest more soybean acres in 2018. It won’t take a big shift to see a loss of 1 to 2 million acres of corn.
This could tighten inventories substantially, especially if yields fall short of the last two years, which were both new record highs. Lenders are likely to have more influence on what farmers plant. Margins have become tight. For many, planting a high-input crop such as corn may not fit the profile that lenders want to see.
As always, the most impactful determinant for 2018 prices is weather. The vast majority of the world’s corn crop is produced in the Northern Hemisphere. As weather goes, so will prices. From a marketing perspective, develop and execute a balanced approach. Consider placing orders above the market to reward rallies, covering these sales with call options, and purchasing puts on bushels you do not intend to forward sell.
If you have questions, comments, or would like help with any strategy for your farm operation, contact Top Farmer at 1-800-TOPFARM, ext. 129 and ask for Bryan Doherty.
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