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Can a marketing plan be weatherproofed?

Rallies could be rare, so don’t sleep on chances to lock in profits.

Ben Potter, Senior editor

June 4, 2024

4 Min Read
Storm cloud over corn field
Getty Images/EasyBuy4u

Grain prices have struggled this past year, but farmers still hold hope that a spring or summer weather-related rally is possible. But are the odds in your favor? 

USDA set the stage for this season in its March 29 Prospective Plantings report. The agency showed corn planting estimates at 90.04 million acres, while soybeans came in at 86.51 million acres. The corn acreage estimates were somewhat bullish, because if realized, that would be about 4.6 million acres below 2023.  

“If realized” is the key, says Jacqueline Holland, Farm Futures grain market analyst. 

“The next big piece of news for the markets will be the June 30 acreage report,” she says. “In the past six years, USDA found about 1.3 million more corn acres in four of those years, while only posting two years of acreage losses in 2019 and 2020. In those years — each heavily influenced by a wet spring and high prevent plant acres — about 3 million fewer corn acres were planted than expected. If corn acres come in lower in June than in March, past statistics tell us that number will fall by a wide margin — but I’m not optimistic that will happen.” 

What weather? 

Weather-related rallies come in all forms, from spring floods that delay planting to summer droughts that decimate production. Other wild cards, such as the 2020 derecho that wiped out 440,000 acres of Iowa farmland, sometimes surprise everybody — including the markets.  

But these wild-card events are largely unpredictable. Because of that, Matt Bennett, co-founder of AgMarket.net, recommends selling into any rally that starts to materialize, especially considering the current fund position.  

“Funds are still holding onto a very short position, which isn’t typical heading into the growing season,” he says. 

Bennett, who isn’t expecting to see major rallies in the near future, says holding onto old-crop grain is increasingly risky, especially if it’s in commercial storage.  

“I’d struggle to hold onto it,” he says. “You’re paying just under 3 cents a month to hold it, if it’s in the farmer’s bin.” 

Drought doubts 

Another area worth investigating is the current and expected drought footprint. That data is not particularly bullish at this time. Only 23% of corn production was in an area impacted by drought as of April 9. Similarly, about 22% of soybeans and 18% of winter wheat were under drought conditions. 

“The drought monitor doesn’t look scary right now, but there are a lot of folks with four years of inadequate soil moisture,” says Eric Snodgrass, senior science fellow with Nutrien Ag Solutions.  

On the opposite end of the spectrum, widespread spring rains can lead to sizable planting delays. When that happens, farmers typically recover quickly, he says. 

“In Illinois, there have been times when we can plant 80% of the crop within a 10-day window,” he says. “When that window opens back up, everyone plants as fast as possible.” 

Even so, rapid planting following wet spring weather introduces some potential problems later in the season, Snodgrass says.  

“When this happens, crops go through the same growth stage all at the same time, which introduces some vulnerability,” he says. “For example, what if 60% of the crop goes into pollination when it’s dry and 97 degrees F?” 

For his own part, Snodgrass expects to see a summer featuring plenty of hot weather and strong storms, which often happens coming off a strong El Niño. 

As advisers say, “Past performance is not indicative of future results.” Weather forecasts may have a certain level of statistical probability, but 100% guarantees don’t exist. Be ready to move when prices react to weather-related incidences. 

The rush to crush 

Weather reports may be less impactful for soybean pricing. The opportunity in that market may be domestic demand, says Farm Futures grain market analyst Jacqueline Holland. 

As of early April, 2023-24 U.S. soybean exports were down more than 18% year over year, due largely to waning Chinese demand. However, Holland hopes incoming domestic demand will fill some of that gap, despite expectations for a larger soybean crop this season. 

“Several crush plants across the Midwest are due to open in late summer and early fall, which is expected to mitigate shrinking export demand from China,” she says. “Domestic soybean usage has been growing faster than production rates, so local markets are likely to continue to be farmers’ best bets for pricing opportunities in the coming months.” 

Read more about:

WeatherStrategy

About the Author(s)

Ben Potter

Senior editor, Farm Futures

Senior Editor Ben Potter brings two decades of professional agricultural communications and journalism experience to Farm Futures. He began working in the industry in the highly specific world of southern row crop production. Since that time, he has expanded his knowledge to cover a broad range of topics relevant to agriculture, including agronomy, machinery, technology, business, marketing, politics and weather. He has won several writing awards from the American Agricultural Editors Association, most recently on two features about drones and farmers who operate distilleries as a side business. Ben is a graduate of the University of Missouri School of Journalism.

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