
Every bushel you’re holding is costing you. Are you sure waiting for the perfect price is worth it?
USDA gave a gift last Friday to the farmers who are holding grain. The recent USDA report breathed new life into the grain markets. Notably, U.S. corn yields were adjusted down, with harvested acreage reduced by 186,000 acres and the national average yield decreased by 3.8 bushels per acre to 179.3 bpa. This brings production down by 276 million bushels to 14.867 billion bushels, a figure that falls below trade estimates.
Similarly, soybean harvested acreage was cut by 221,000 acres, and the national average yield lowered by a bushel to 50.7 bpa, reducing crop size by 95 million bushels to 4.366 billion bushels. These unexpected revisions sparked a rally since Friday’s report, as traders adjusted to the prospect of tighter supplies.
These revisions significantly changed the supply and demand dynamics. For corn, USDA increased estimates for feed/residual use and exports by 50 and 25 million bushels, respectively. Despite this, ending stocks for the 2024-25 season declined by 198 million bushels to 1.540 billion bushels, below average trade expectations. Soybean ending stocks are now projected at 380 million bushels, also under trade estimates.
As we move from mid-January into early March, market attention is shifting toward South American weather patterns and their impact on production. While Brazil anticipates record soybean production, less favorable weather in Argentina could lead to downward revisions in crop estimates.
And we have inauguration day looming. Could we see a repeat of a U.S.-China trade war? Such weather-driven markets and political change often increase uncertainty, adding more volatility to the markets.
In light of these developments, it’s crucial for producers to adopt proactive risk management strategies. And with higher interest rates, the cost of delaying decisions can be costly.
This recent rally is a gift that should not be wasted. Engaging with a trusted advisor can help transform uncertainty into opportunity, enabling the development and implementation of tailored risk management plans for 2024 and 2025 production.
Even in times of market volatility, tools like futures and options can help producers lock in prices or capitalize on upward rallies while managing risk. The recent USDA report is a reminder of how quickly market conditions can shift, making it essential to have a well-structured marketing plan and the flexibility to adapt as new information arises.
For more insights and personalized advice, consider consulting with a professional risk advisor. Their expertise can guide you through these volatile times, ensuring that your marketing strategies are both effective and resilient. With the right plan in place, farmers can navigate the uncertainties of the market and make informed decisions that support their financial success.
The risk of trading futures and options can be substantial. All information, publications, and material used and distributed by Advance Trading Inc. shall be construed as a solicitation. ATI does not maintain an independent research department as defined in CFTC Regulation 1.71. Information obtained from third-party sources is believed to be reliable, but its accuracy is not guaranteed by Advance Trading Inc. Past performance is not necessarily indicative of future results.
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Information provided may include opinions of the author and is subject to the following disclosures:
The risk of trading futures and options can be substantial. All information, publications, and material used and distributed by Advance Trading Inc. shall be construed as a solicitation. ATI does not maintain an independent research department as defined in CFTC Regulation 1.71. Information obtained from third-party sources is believed to be reliable, but its accuracy is not guaranteed by Advance Trading Inc. Past performance does not necessarily indicate future results.
The opinions of the author are not necessarily those of Farm Futures or Farm Progress.
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