Durchholz: 27-year low not far off

January 29, 2019

 

PONTIAC – As if there already wasn’t enough bad news for the farm economy, a 27-year low could come in the next few years.

 

Dale Durchholz, senior market analyst with Agrivisor, says things will start to unfold sometime in the 2020’s.

 

“Right now is the time to start planning ahead,” Durchholz told those attending last week’s Livingston County Agronomy Day.

 

The upcoming period in agriculture may not be so much fun if a grower doesn’t have the proper financial structure. It all comes down in price cycles, in Durchholz’s opinion.

 

“If I prepare for the worst and it’s not as bad as I think, I’m still better off.”

 

Durchholz wouldn’t chase the market at this juncture but does urge producers to consider locking in some of their fuel needs. The commodities farmers are interested in will probably see improvement. The supply side is not the issue – the demand side is.

 

Bean prices will depend largely on what happens in South America. Durchholz is nervous about one aspect of the corn market: the ethanol grind, which is lagging a bit.

 

“Margins at the ethanol plants have really been hammered.”

 

Wheat prices have a tremendous impact on what can happen in the corn market so Durchholz encourages farmers not to “fall asleep at the switch” on wheat, always knowing where to price it.

 

Prices are struggling at this point, but the downside risk in the bean market is probably less than we think. Basis levels will likely stay soft because of a large carryout. Near-term strength should be used to make sales. Durchholz says $5.00 corn is possible due to weather problems somewhere in the world.

 

“I think better things are coming,” Durchholz concluded.  

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