NEW ORLEANS, La. — There will be opportunities to lock in profitable crop prices in 2016, according to a panel of analysts.
“Since 1973, the American farmer has always had one opportunity and this year I don’t think will be any different,” Mark Gold, analyst with Top Third Ag Marketing said during the taping of U.S. Farm Report at Commodity Classic 2016.
He said there is too much doom and gloom surrounding the farm sector.
The analysts who were saying three years ago that agriculture had achieved a new price paradigm and that prices would never fall are the same ones saying today that prices will not rise, he said.
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The yield estimates for wheat and soybeans were neutral to bullish, but these were largely a sideshow when compared with corn.
“I guess they don’t learn that markets go up and down,” Gold told farmers who gathered to listen to the taping of the popular U.S. radio program.
“The fact of the matter is you’ll have an opportunity and I really believe that it’s your job this year to really take advantage of it when it happens.”
Chip Flory, analyst with Pro Farmer, said growers should count on flat prices until the end of March and then check the weather forecast.
They need to be quick to jump on any weather rally. Corn is the crop that will be most vulnerable to a weather scare.
Soybeans will require a big yield decline to spark a price rally due to what is expected to be a substantial 450 million bushel U.S. carryout.
Wheat is almost beyond help due to bloated global supplies.
Gold pointed out that modern genetics are so good that crops are able to survive weather scares. For instance, many analysts thought there was no way last year’s crops would make trend line yields because of the wet start but they exceeded trend line yields.
The lesson is that farmers need to pounce as soon as the market starts to get uneasy.
Ted Seifried, analyst with Zaner Ag Hedge, said funds are at record short positions in futures markets and end users are buying on a hand-to-mouth basis.
If there is any kind of weather scare those two big players in the market could start competing for bids.
“That could give us a nice little pop similar to what it did last year with the too wet scare,” he said.
“There is a good setup this year to at some point see some very respectable numbers to be looking at marketing but we have to be willing or able to pull the trigger at that point.”
One farmer asked the panel when will fertilizer prices start following corn prices down.
Flory said that has already happened. A typical cocktail of fertilizer products is priced at about 18 to 19 percent of estimated new crop revenue.
“That’s historically where the sweet spot is,” he said.
“There’s room for downside movement on the inputs but not a lot.”
sean.pratt@producer.com
