Grain price predictions are all over the map.
Grain market adviser Mike Kruger of The Money Farm in North Dakota says American corn prices could be as low as $4.50 a bushel by harvest time or as high as $9. Soybeans could drop to $10 a bu. or be as high as $20.
Wheat, he says, will probably be between $7 and $12.
Like other market analysts presenting at the recent Wild Oats Grain World conference in Winnipeg, Kruger says it’s all about the weather.
Rainfall in the United States is likely to be more favourable than last year, meaning grain prices are likely to be lower.
Read Also
Sask. ag group wants strychnine back
The Agricultural Producers Association of Saskatchewan has written to the federal government asking for emergency use of strychnine to control gophers
However, stocks are tight and a production shortfall would cause prices to skyrocket.
Arguably the most bullish outlook came from Harold Davis, the author of Prairie Crop Charts.
Based on technical analysis, he believes many commodities are likely to break out to the upside of their trading ranges.
Davis claims we’re likely to see $800 a tonne canola before we see $250. He believes canaryseed should break out and challenge the 30 cent a pound mark seen in 2008. Yellow mustard, he says, is also due for a breakout and could go to 55 cents a lb.
Davis suggests commodity pricing may be playing by a different set of rules with the U.S. public debt at 102 per cent of the country’s gross domestic product.
However, the majority opinion among analysts seems to be that stocks are likely to increase somewhat, and prices overall are likely to be lower for the 2013 crop.
While price predictions should always be taken with a grain of salt, the analysts provided many useful information nuggets.
Wheat seems destined to capture acres from canola this year, but there are also big changes happening in Western Canada’s wheat market.
Producers are dropping Hard Red Spring in favour of mid-grade varieties such as those in the Canada Prairie Spring and Soft White Spring classes. Seed of the most popular varieties is difficult to find.
This is a year when feed wheat is worth nearly as much as top quality wheat, and protein premiums are meagre. Not every year will mirror this one, but there’s a growing belief among producers that more money can be captured by going after yield rather than the high protein premium markets.
On flax, there has been a major customer switch in recent years. The main destination is now China rather than Europe, which makes flax seed bids more attractive on the western Prairies.
Panelists at Grainworld agreed that oats and malting barley have become specialty crops rather than commodities.
According to Patrick Rowan of BARI-Canada Inc, all the malting barley in the U.S. is custom contracted by malting companies, and he sees the same situation developing in Canada.
With new crop prices so uncertain, should farmers be locking in new crop prices to protect against a downfall or should we leave everything wide open and hope for a jackpot?
As the old saying goes, you never go broke locking in a profit. Pre-pricing some new crop production at money-making levels would seem to be a good strategy. If that ends up being the lowest price you get, that’s still a great outcome.
New crop grain prices depend heavily on the weather around the world over the next six months. Unfortunately, long-range weather forecasts have limited reliability. Protect some of your downside risk and hope for upside potential.
