Prices for all commodities are lower than they have been the last few years, and that will put some economic stress on many farmers.
“I think farmers need to have a good idea of their financial needs for this year,” says University of Missouri agricultural economist David Reinbott. “Both short- and long-term ranges and cash flow needs. Any time we get rallies back into the price levels where it can meet those cash flow and financial goals, farmers really need to start locking those in.”
There is an ample supply of old crop corn because of the record harvest in 2014. Reinbott says USDA has trimmed back the demand outlook some, but it’s still almost 13.6 billion bushels.
“Right now we are looking at corn prices for old crop around $3.80,” Reinbott says. “That’s sort of the initial level of support with possible rebounds to $4 or $4.15.”
Reinbott says if corn gets into that range, farmers should probably sell old crop they have in storage.
The outlook for new crop corn is that acres will be down 1-2 million. With an increase in demand, ending stocks could drop and with that, Reinbott says, producers could see new crop prices in the $3.90 to $4.20 range.
With fewer acres of corn expected to be planted, more acres of soybeans should be planted. Reinbott says we could easily see 87 million acres or more of soybeans.
“This would definitely push up ending stocks for new crop soybeans,” Reinbott says. “We’re probably seeing prices around $9 or possibly even slipping back into the upper $8 range. Right now I think there is going to be a lot of pressure on the new crop soybeans.”
Of course, the South American soybean crop will affect the markets. Although South American producers had early planting delays due to weather, Reinbott says their early soybeans are looking pretty good. Weather during the next four weeks will be critical and any problems could see a rally in bean prices. Reinbott says farmers should sell some new crop beans if they get above $10.
There were some problems with winter wheat planting last fall. Winter wheat will be down at least 2 million acres, which may help support it around the $5 level, Reinbott says.
“I’d say right now, $5 for July wheat is probably going to be the support,” he says. “Any kind of rallies above $5.60 for new crop probably needs to be sold.”