After Friday?s explosion in grain prices, you might be feeling pretty good about your chances to increase some profit margins with this year?s crop. While we all know that no yield is official until it is in the bin, no price forecast is official until all the variables are met for any possibility.
The WASDE report is due out this week, and there isn?t a whole bunch of hype about it. Most analysts believe that the markets have already prepared for the contingency and priced in the numbers they expect. However, the WASDE is also only a snapshot in time, it doesn?t give us a crystal ball as to what the future holds. A future that is fraught with ?what-ifs.?
Greg McBride is a commodity broker with Allendale. He talked with us, this morning, on the Opening Market Podcast, about a few of those what-ifs, and they start with the weather outlooks for the eastern and western cornbelt. It all comes down to which model is more accurate, and which one comes to fruition.
Unlike in the fields, the weather isn?t the only thing that is affecting the marketplace or the prices we see. McBride talks about the macroeconomic considerations that we must consider. Oil production is going to be one of the larger players in the short term. OPEC+ and Saudi Arabia have announced further oil production cuts, which is sending oil higher. This could increase demand for more biofuels, and increase market demand, or it may for consumers to stay home more.
Another thing to consider is what prices you are going to see at the elevator if you are still holding on to old crop grains. The demand isn?t there, and elevators are finding that they don?t have to pay a premium to compete with processors.
McBride talks about what producers can do to protect themselves and get the most profit out of their 2023 crops. He says that if things go as expected, corn could easily be back in the low four-dollar range, if not lower.
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