Farmers shouldn’t refuse to sell new crop, even though the price outlook is bullish.
That was a key message from MarketsFarm’s Mike Jubinville as he looked out at a market of tight supplies, weather problems and strong demand.
“At least a partial sale into this environment looking ahead to new crop makes total sense to me,” said Jubinville during a markets outlook session at Ag in Motion.
“These are not normal, but these are very profitable pricing opportunities.”
For canola, new crop cash bids of $16 to $18 per bushel (delivered) are not something to ignore, even if prices could easily rise.
“For this part of the marketing year? We’ve never seen this before,” said Jubinville.
The roaring bull market in commodities has supported crop prices, which are helped by various production problems and tightening stocks.
With much of the United States gripped by drought, there is potential for bullish surprises in production. However, Jubinville said canola tends to peak in June, so there are reasons to not assume an easy path higher for prices.
“Incremental selling into this market is something we have to do,” he said.
Wheat markets will be interesting to watch, with the spreads between different classes and with feedgrains reflecting the onslaught of the U.S. drought.
The hard red spring wheat area is particularly suffering in the Dakotas, creating the potential for improving prices for people who get good quality crops.
“We have ample supplies of the lower protein wheats, but the higher protein wheats are probably going to be a little tighter here,” said MarketsFarm’s Bruce Burnett.
There are also production problems in Russia’s and Kazakhstan’s spring wheat areas, so that won’t relieve the pressure on high protein wheat markets.
“They are getting conditions that are pretty similar to the conditions we’ve been getting here in North America,” said Burnett.
Jubinville said high quality spring wheat might bring premium prices. That’s worth growing for.
“For what we can control, doing the most we can in order to maintain both quality and protein this year is something I think maybe gets rewarded,” said Jubinville.
Feedgrain growers are also being rewarded for their crops due to the production problems facing U.S. corn.
“I can’t remember a time we’ve seen the spread differentials between milling and feed quality as tight as they are this year,” said Jubinville.
However things work out, it should be a wild ride for prices this summer, he said.
“We’re in the midst of a full-blown weather market.
“Each tweak of the weather forecasting models right now has traders on edge.”