Agricultural News
U.S. Grain Prices Buried Under Large Supplies, Market Outlook from CHS Hedging
Mon, 23 Nov 2015 18:56:55 CST
One market analyst isn't afraid to provide honest insight into marketing this year's wheat, corn, soybean and sorghum crops. CHS Hedging Market Analyst Richard Plackemeier said he won't tell farmers what they want to hear, because "hope" is not a good marketing strategy. While farmers hope that commodity prices will trend higher, Plackemeier isn't so optimistic.
"Producers are kind of holding the bag right now," Plackemeier said. "I don't really sense that we're going to have a lot of great opportunities. We're going to probably be very range bound in our prices here for wheat and other commodities also, at least through the end of the year and probably going into next spring."
The outlook for wheat prices is grim. There's plenty of wheat worldwide and demand is being met through cheaper sources than the U.S. The stronger U.S. dollar has limited U.S. wheat exports and that doesn't paint a very bright picture for farmers that haven't sold their 2015 wheat crop. Plackemeier said export demand for U.S. wheat is at its lowest level of the past ten to 15 years. In looking at the next six to 12 months, he doesn't anticipate strong gains in the nation's wheat exports. Plackemeier hopes that farmers sold at least part of their crop at harvest or at least earlier this year, so the current prices would be the lowest that a farmer would receive. With the nation's wheat crop off to a decent start there aren't any production concerns. With large grain stock supplies and a lot of competition, he said the U.S. may have to sell at lower prices to move inventory.
Right now there's also plenty of corn and soybeans in the U.S. and global demand has dropped. The U.S. dollar is so strong relative to other currencies that exports are lower than previous years. Plackemeier said that's causing grains to back up in the U.S. supply channels. He said there could be some small price rallies in the corn and soybean market. This year's ending stocks will be higher than a year ago, he said those extra carryout stocks will be burden on any price rally. Farmers have had tight, narrow windows to capture higher prices. He said there were several days that the December corn futures contract got above $4.30, but those prices didn't hang around very long.
"Everything I'm going to tell you is probably not a good omen for waiting for something bad to happen down the road," Plackemeier said. "We've just got too much supply around right now."
One factor that's impacting the corn market in the Southern Plains region is this year's large sorghum crop. Last year, China became a big buyer of U.S. sorghum. As a result, the nation's sorghum acres and production increased significantly. Plackemeier said there's a lot of sorghum available and the export potential for sorghum going to China has declined.
With lower cattle, energy and commodity prices, Plackemeier said it will be challenging to generate more revenue to cover increasing costs that are cutting into a farmer's net margin.
Radio Oklahoma Network's Leslie Smith caught up with Plackemeier at the National Association of Farm Broadcasting Convention in Kansas City. Click or tap on the LISTEN BAR below to hear the full interview.
WebReadyTM Powered by WireReady® NSI
Top Agricultural News
More Headlines...
