With all the potential for the lower prices by harvest time in corn and soybeans, the opportunities are still tremendous for selling at high price levels. With soybeans near or above $12 and corn getting close to $6 for harvest-time delivery, how can one complain?
Yes, we can talk about higher input prices. We can talk about cuts in yield due to the drought and floods. But the bottom line: based on historical price levels corn and beans are very high. Markets are offering the highest profit opportunities in history.
Take advantage of the opportunities
One of the more difficult aspects of marketing this year for some producers is too much time and too much money. With prices high and a couple of good economic years under their belts, it is easy to put off decision-making. Why get in a hurry? It might not rain. We might get another flood. The what-ifs can go on forever and ever.
The reality is corn and soybeans just came off of a short crop and as the old saying goes, “short crops peak early and have a long tail.” The tops were made in September. It is certainly normal to have a late-winter early-springtime rally, which is what the market has been experiencing. Price strength before planting is the ultimate nail in the coffin — it encourages more planted acreage.
That is why rallies in corn and soybeans during the February/March timeframe have almost always been selling opportunities. How low is low? This is not a prediction, but an observation. After a major bull market, prices have normally retreated to breakeven production cost or slightly lower. That would be $4.30 to $4.50 for corn.
Technical analysts are looking for prices to retreat to where the move began. That would be $4 in corn futures and $10 in soybeans. Wouldn’t that be interesting?