Flaskerud: Good Yields Could Move Nov Beans Under $6.00

The planting intentions and stocks reports released by USDA on March 31 were regarded by the trade as overall positive for corn prices, neutral to positive for wheat and negative for soybeans.

What does this mean for prices? Keep in mind that recent highs in May futures were up over a year ago by nearly $5 for soybeans and nearly $1 for corn and wheat, according to George Flaskerud, NDSU extension crops economist.

New crop soybeans prices are subject to the greatest risk of a price downturn from a fundamental point of view, followed by wheat and then corn, according to Flaskerud, pointing out that November soybeans could be under $6.00 at harvest with average or better yields.

So what should be done in pricing the 2004 crop? Unless everything is gambled on a weather rally developing this summer, Flaskerud advises taking advantage of spring price rallies in wheat and soybeans to get up to at least two-thirds sold of anticipated production. Consider selling even a higher percentage of soybeans before harvest.

Corn prices have fundamental and technical reasons to move higher. In early April, December futures had fundamental support at prices close to $3.00, although above average yields could push prices below that at harvest. On the upside, $3.60 December futures are a possibility. Consider scaling-up sales so that a high percentage of the crop is sold if $3.60 is reached, Flaskerud advises.

Use futures fixed elevator contracts to sell the 2004 crop up to the level of production covered by crop revenue insurance, he says. Beyond that level, the use of put options would be preferred since production risk is a concern as well as price risk.

Planting intentions and stocks are just two of the many reports that will be crucial to prices, Flaskerud points out. Occasional adjustments to marketing plans may be necessary this year, since stocks of all crops are so tight, and prices will be volatile.