Chris Hurt suggested some farmers could sell July futures at harvest
By Diego Flammini
News Reporter
Farms.com
If corn producers act soon, they could be locked in with favorable crop prices, according to Chris Hurt, a professor of agricultural economics at Purdue University.
During a webinar focused on the 2017 fall crop outlook, Hurt suggested some corn producers could lock themselves into July 2018 futures at about $3.71 per bushel.
“Markets need to give somebody an incentive to store that crop,” he said during the Oct. 13 webinar. “One way futures do that is the more deferred futures prices gain on the nearby futures. The bids for next summer are based on the July futures and those (have a) 30-cent premium (compared to) current prices.”
USDA estimates corn prices will be between $2.80 and $3.60 per bushel this year.
U.S. farmers will be carrying over what equates to 16.4 percent of the total corn crop into next year, which is why the markets are putting premiums on some futures, Hurt said.
Hurt offered a few suggestions for farmers with on-farm corn storage: take the carry at harvest, sell hedge-to-arrive futures at their buyers, or wait for a rally and then sell summer futures.
One reason for the increased corn inventory is the lack of exports.
Corn farmers exported almost 2.3 billion bushels of corn in 2016/17, compared to an anticipated 1.8 billion bushels in 2017/18.
“(There was) a huge crop, particularly in Brazil,” Hurt said. “We’re really going to compete with that crop as we are shipping and selling corn.”
Soybean producers could also sell their crop at a favorable price if they lock in their July futures soon, Hurt said.
Hurt estimates soybean prices for November and December could range between $9.62 and $9.78 per bushel. But looking ahead to July 2018, farmers could sell their soybean crop for up to $10.17 per bushel.
These kinds of opportunities don’t come around often, so farmers should act quickly, said Hurt.
“When (farmers) have a chance to sell beans (for) over $10 per bushel today for next summer delivery, that’s something I always think about,” he said. “When you can sell at the high end of the USDA price range, that’s something you can’t just dismiss. (Farmers) should be thinking about that.”
Another positive factor impacting U.S. soybeans is the export demand.
USDA estimates soybean exports will rise to 2.2 million bushels in 2017/18, up from 2.1 million bushels in 2016/17.
That kind of export demand is attributable to soybean’s uses, Hurt said.
“If you talk about soybeans, sometimes they’re regarded as the miracle crop,” he said. “We talk multiple years about the carryovers being so big and when we got to the end of the year, carryovers weren’t as big as they anticipated. It seems like soybeans find a usage base (which is) clearly driven by China.”
In July, soybean importers from China signed deals to purchase 12.43 million tonnes of U.S. soybeans, the second-largest deal for that crop.