The price of corn is predicted to stay low this coming year because the size of the crop should be really big. Todd Gleason has more on just how a farmer might go about marketing under such conditions.
The numbers aren’t pretty as it relates to this year’s corn crop, at least other than the number of bushels in the bin. It should be a great big one, something on the order of 15 billion bushels thinks Darrel Good. Each of those bushels will be worth a lot less than they would have been earlier in the year and now farmers must figure out how to make a lower price and a higher yield result in a sustainable income. The price is too low to call it anything more than sustainable and the crop is too big to put it all in storage says the University of Illinois agricultural economist.
Quote Summary - So, some sales must be made between now and the end of the harvest period. Getting the extra bushels sold in the next few weeks is probably a good idea as pressure continue on futures and basis through harvest. So, if you are looking at an extra 20 to 30 bushels to the acre that you normally do not have, then you should get that priced and out of the way. However, storing the crop is the decision of choice, and the one I would choose at this point. The dilemma is that it may require a fairly long storage period to see a price recovery.
It won’t be quick or even large says Darrel Good, but a recovery should come as the days pass in 2017 and the trade looks forward to the next crop year. Storing corn on the farm and waiting for a higher price is a simple enough decision. Storing it at the grain elevator is a much tougher prospect.
Quote Summary - You’ll spend about 30 cents a bushel to hold corn to next spring. Right now the carry in the market is about that. If you look at harvest time bids plus spring basis there is about a 30 cent carry in the market and this makes commercial storage a breakeven operation at this point other than just holding for higher futures prices. Still, there is likely to be an opportunity to payoff on that, but it will take a much higher price recovery to pay for off-farm storage costs than is the case for on-farm.
You may read more about marketing corn from Darrel Good on the Farm Doc Daily website. A new article on commodity marketing is posted each Monday afternoon.