Chance for rallies could be limited
COVINGTON, Indiana – We could see more of the same for soybean prices over the next few months and corn may rally later in the season.
Those were some predictions shared during Tuesday’s All Day Ag Outlook Meeting hosted by Illinois Public Media at the Beef House. Chip Nelinger with Blue Reef Agri-Marketing believes beans could still rally as China will continue to buy. There is competition out there along with trade issues and weather to keep in mind.
Ellen Dearden of AgReview in Morton noted we have good demand even without China.
“The meal market was up $10 for the week,” she said.
Dearden considers this a good sign for beans as the meal side has inched higher. Dave Chatterton from Strategic Farm Marketing feels producers will lean more toward prevent plant on crop insurance as prevent plant economics became much more attractive.
“The attitude among the producers has changed,” Chatterton observed.
Soybeans could be the game-maker for prices moving through the year, especially if we see an abundance of corn, according to Merrill Crowley with Midwest Market Solutions.
“The spreads are not telling you the bean market looks good right now.”
Crowley feels growers won’t have a very big window for pricing this year as whatever weather event leads to a rally usually doesn’t last two weeks. Dearden urged growers not to give up on beans. A long-term cycle low is due in 2021 so it is hard to be too friendly on the 2020 crop.
Dan Zwicker of Zwicker Consulting predicts a shot at a meaningful recovery rally toward that 2012 high in both corn and soybeans. He believes we still have the potential to take out last year’s high in corn.
“A rally is more likely in the second half of the calendar year,” Zwicker explained.
The greatest amount of market strength typically comes after June 1 which means one more jump up in this corn market before things go south. Zwicker said the high in 2012 means things go lower for 12 or 13 years.
“We may not do anything in this commodity complex until ’23-’25,” he said. “I don’t think we’re done going down yet.”
Mike Zuzolo of Global Commodity Analytics noted the trade is looking at currencies and the COVID-19 virus. Harvest price for crop insurance could be substantially higher than the base price.
“Don’t be surprised if we set up a demand type market after June and July,” Zuzolo told the crowd.
So many more factors are impacting the markets now compared to past years so confidence is important. Jacquie Voeks with Total Farm Marketing wants farmers to be careful to focus on their own position and what is right for their business.
“Managed money is the name of the game,” Voeks stated.
Wayne Nelson of L&M Commodities pointed to the coronavirus and burdensome supplies slowing exports, although there are teeth in the phase one trade deal. Nelson said China wants the deal to work and they need to be able to ship exports to us.
“I think we can see a little pop here.”
Curt Kimmel of Bates Commodities in Normal thinks demand is there and coming. He encourages producers to develop a strategy to keep cash flow going but staying flexible to capture any moves.
