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Farmers, analysts still bullish corn, soybeans

The range of volatility in corn prices in the last few months has been equal to the prices themselves as lately as 2005. That makes marketing grain and managing risk tall orders these days, especially when Mother Nature chimes in with such hulking variables as the 2012 drought.

Despite these circumstances and the uncertainty of those variables -- including the drought and world grain supply/demand situation -- are fueling around the countryside, many of the men and women raising corn and soybeans see a marketplace with a lot of upside potential. That was the resounding sentiment among farmers in the northern Corn Belt who took time out to chat about their markets and the ways they're adjusting plans to face a lot of new realities in play moving forward at the Marketing Talk Meetup held in Clear Lake, Iowa, recently.

This year's crop was, in many areas, shorter than it's been in a long time. That's meant higher prices, a boon for those with some crop in the bin. Some say though prices are still in profitable territory now despite lower yields, they're optimistic that it's just the start.

"There's a sense of bullishness around the countryside, even on soybeans," says Sumner, Iowa, corn and soybean farmer Craig Petersen, who spoke with before the Marketing Talk Meetup. "I think the sense is we might be throwing away the keys to the bin."

Petersen's one of the fewer-than-normal farmers this year who have been pleased with their corn and soybean yields. Like him, Dave Kirchhoff, who farms in nearby Tripoli, Iowa, is satisfied with this year's output, especially considering the dryness of the growing season. But he's just as optimistic about stronger prices moving forward.

"Looking ahead, I forward sold some 2013 crop on a very limited basis. I'm still pretty bullish on corn given the ending stocks numbers we've seen," Kirchhoff says. "We're pretty much holding off on any more sales, especially since we don't know what the year's going to bring for rainfall going into 2013."

As corn and soybean harvest nears completion, the old adage of "a small crop gets smaller and a large crop gets larger" is not exactly holding true, says Market Analyst Al Kluis, who spoke with farmers at the Marketing Talk Meetup. Recent USDA data showed a slightly larger corn crop than earlier estimated, and an uptick in both soybean acres and yields. Immediate reaction was bullish, though. Why? One word: Demand.

"A big crop is not bearish if you use it. If you look at all the numbers, demand wins. We've had a lot of negative numbers lately. But we have very tight ending stocks," Kluis says. "At the current pace of bean usage, the market's response is that we are not going to have enough crop on soybeans. If we continue using soybeans at this pace, we will either have to shut down plants or import beans from South America."

While farmers like Petersen are more bullish on corn than they are soybeans, Kluis says the stocks numbers are adding up to a lot of upside potential for beans moving forward, at least until the market can get a clear picture of what kind of crop South American farmers will produce. But don't look for the futures market to put much stock in those numbers before they start rolling in.

"The futures market is the futures market in how it's anticipatory. Lately, it's been the show-me market. They have to see it to trade it," Kluis says. "We will put $5 on soybeans at some point in the next three months, however, and solve that problem.

"I'm very optimistic on soybeans, but not as much on corn," he says.


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