Just a day or two away is one of the more unusual USDA crop reporting dates. At noon eastern time on June 30th we will get the regular “stocks” report along with the highly anticipated annual “acres” report. This acres report will be the first official indication on how many spring crop acres the U.S. planted in 2017. As this report approaches, we can expect to be subjected to the usual amount of noise as market pundits guess what the report says and where prices will go next.
I believe one of the primary challenges for those striving to be effective grain marketers is the almost constant flow of information. Sometimes additional information is useful. More often than not I feel the more information we crave the less action we take. Additionally, we tend to listen to those that tell us what we want to hear.
Given that nothing is guaranteed, and that growing season weather may be the biggest indicator of grain prices; I offer the following two charts.
I share these charts for a couple reasons;
- I like charts
- the data covers a relatively long period
- there is what appears to be a clear pattern to prices.
- The way I interpret the above price pattern is that once the acres are known to the market prices will drift lower into the next storage season.
The above prices are from the CME so need to be adjusted for our local basis. However, the lesson remains. Buyers tend to bid prices up when the risk is greatest to them (before the crop is planted). After that it is all about growing season weather.
Personally, I do not enjoy gambling on weather in the short or long term.
What is your guess on 2017 planted acres for the crops affecting your business?
Where do you believe prices will go next?
Source: psu.edu