Planning needed to capture best prices in market
By Jean Caspers-Simmet
simmet@agrinews.com
Date Modified: 02/04/2010 8:40 AM
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CORALVILLE, Iowa —Pete Lorenz, National Farmers Organization regional grain marketing manager, said now more than ever grain producers need to plan ahead when it comes to marketing.
"One of the ways farmers improve their position is by working together in the market place, and that's what NFO is about," Lorenz said. "You can do a lot with others that you may not be able to do on your own. NFO's GrainMarketing Plus allows farmers to work together, get better discounts on grades and negotiate supply contracts. In the environment we're in, you have t spend a lot of time planning."
At last week's NFO Convention in Coralville, Lorenz expressed concern about USDA's Jan. 12 crop production summary which boosted 2009 production to 13.15 billion bushels and caused the corn prices to plummet.
Lorenz said USDA included unharvested acres, which are at 5 percent nationwide, in its estimate. Because USDA is unsure about those harvested acres it said it would resurvey producers on the 2009 crop in March.
"When they say they may come out with another report, they're saying they don't yet know what the crop is," Lorenz said. "I think that if they don't know how much those unharvested acres will ultimately yield, they should just say so instead of coming out with an estimate."
The increase of 200 million bushels from the November report cost U.S. farmers about $6.5 billion, Lorenz said. Estimates are that there could be 10 percent losses when corn still in the field is harvested. In some cases acres may not be harvested at all.
Lorenz said NFO had been concerned about what the Jan. 12 report would show and tried to have its producers sold up going into the report.
Producers who have corn that needs to be sold because of quality issues need to carefully consider market planning, Lorenz said.
"There are ways producers could pick up gains in that market that may occur later such as options," Lorenz said. "Price concerns may straighten out in the spring because of attempts to encourage planting more corn acres."
Many farmers want to market corn right away for quality reasons, Lorenz said. Talk in the trade puts that number at 2 to 3 billion bushels with concerns of deteriorating conditions.
"It was put in wet," Lorenz said. "So it doesn't store well." And test weights may have an influence on final figures, though the depth of that impact is uncertain."
Lorenz said that so many factors beyond supply and demand drive today's markets — energy, index funds, the value of the dollar. Farmers need to look at crop insurance products that protect revenue.
"These products manage risk and allow farmers to be more aggressive in market planning," Lorenz said.