Will the market really pay for all those extra soybean acres?
Schnitkey’s recommendation is that, “Relative prices at harvest could differ from those in the spring. This suggests that farmers switching acres this spring should consider locking in some of the return difference through marketing contracts. It also suggests making acreage changes based strictly on relative prices may not result in the acreage mix that optimizes profits. Longer run rotational and yield considerations should enter into planting decisions.”
The crop insurance spring guarantee was a ratio that pointed to the market wanting more soybeans than corn. Farmers, who are going to plant more soybeans, should do so in conjunction with marketing contracts that take advantage of the current premium. Such price ratios can change during the course of the growing season, and fall delivery prices may end up being different than what had been planned in the spring.
Source: Farmgate Blog
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