Key Cooperative News > What prices do we want?

What prices do we want?

Jun 04, 2021

By: Zack Gardner, Grain Marketing and Origination Specialist
 
This past month there’s been an exceptional amount of volatility in the market. In just the past week, we have seen three limit moves ($.40) on corn. On May 25th, we were limit lower on corn and just two days later, we were limit higher. This tells me that the market doesn’t necessarily know what it wants to do, but whenever it decides, it will go that direction in a hurry.

There are both bullish and bearish scenarios out there that could play out. To me, this screams offers. If you have a price target in mind, utilize the market volatility with these wild swings and have offers out there ready to capture your price targets. If you are on the fence about forward marketing, two things to keep in mind are that we have revenue insurance that covers our forward sales and that we are closer to our highs from back in 2012 than we are to our lows from just a year ago.
 
Potentially bullish news:
  • China could take delivery on the majority of their corn purchases (shipments have been strong so far)
  • We are dry and this past months rains haven’t fully replenished subsoil moisture for most producers
  • How is your stand looking? If we don’t get weekly rains from here on out is there a chance that we don’t hit the USDA’s trend line yield?
  • We might not see the increase in corn/bean acres that some are predicting on the June 30th report
 
Potentially bearish scenarios:
  • China could cancel or roll a substantial portion of their 702 million unshipped old crop corn purchases
  • Soybean exports are behind pace and could be added back into our carryout (there is ~150 million bushels of unshipped soybean export sales, which could double our carryout)
  • We might not run out of old crop grain (basis is currently weakening and we currently have a 1.3 billion bushel corn surplus right now)
  • Politics with Russia or China might hurt our long term grain demand from China
  • The USDA could find a whole bunch of acres this month for the June 30th report


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Right now it feels like the calm before the storm. We were seeing $.40 swings on corn and $.90 swings on soybeans with no major headlines and now we are seeing day after day of $.05 moves?