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If You Have the Room, Store Corn
Like last year, it will be profitable to store corn.
A large corn crop is expected historic, perhaps, with production forecast at over 13 bil bu. However, demand led by ethanol and exports is also expected to consume it. While local basis has improved in some areas of the Northern Plains where corn has been affected by drought, in other areas the basis and with it prices should follow a historical tendency to improve into next spring. NDSU Extension economist George Flaskerud notes that in years of high prices, the corn market tends to peak in that March June time period, and that could very well happen again next spring, with the corn market competing fiercely with soybeans for acreage.
Continue to scale up sales of the 07 crop on price recovery to Chicago Dec $3.70 or better, Flaskerud suggests.
Sell the balance next March-June. What about 08 sales? The Chicago Dec 08 futures prices was hovering near $4 in August, a very good price. And yet, that price could improve even more into next spring as the acreage battle heats up. One could forward sell some of the 08 crop now, especially if Dec 08 futures go $4 or over. Scale up sales of the 08 crop next spring when acreage competition and tight stocks may provide even better pricing opportunities.
For both the 07 and 08 corn crop, use a combination of crop insurance, contracts, and put options, Flaskerud advises. Limit elevator contracts to CRC/RA-HO guaranteed yield.
Consider a cash contract if it reflects a strong basis. Otherwise, evaluate a HTA contract in July futures with June delivery.
Corn S & D Negative for Fall 07 Prices and Suggests Fewer Acres for 2008-09
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2006-07
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2007-08
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2008-09
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Planted Acres
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78.3
|
92.9
|
91.0
|
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Harvested Acres
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70.6
|
85.4
|
83.5
|
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Yield/HA
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149.1
|
152.8
|
154.0
|
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Beginning Stocks
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1,967
|
1,136
|
1,441
|
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Production
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10,534
|
13,054
|
12,859
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|
Imports
|
10
|
15
|
15
|
|
TOTAL SUPPLY
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12,511
|
14,205
|
14,315
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Domestic Use
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9,275
|
10,540
|
11,350
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Exports
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2,100
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2,150
|
2,025
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TOTAL USE
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11,375
|
12,690
|
13,375
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Ending Stocks
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1,136
|
1,515
|
940
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Stocks/Use
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10.0%
|
11.9%
|
7.0%
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U.S. Farm Price
|
3.00
|
3.10
|
3.45
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Units: Million acres, bushels per acre, million bushels, s/u in percent, and price in dollars.
Source: USDA 08/07 for 2006-07, Wisner (ISU) estimates for 2008-09.
Barley
Theres been a relatively narrow price spread between feed and malting barley of late, yet barley prices have been excellent,
nearly double that of a year ago. But will prices hold? Barley production is expected to increase significantly over last year, and
on the malting side, there should be plenty of bushels to choose from. Feed barley could improve post-harvest in the November
time period, or follow the price of corn, improving next spring, similar to the price for both feed and malting barley in 2007.
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