It’s day 4,001 of planting season—or it at least feels that way. With poor weather keeping farmers out of fields for so long, they’re facing difficult decisions. And with prevent plant dates for corn sneaking ever closer, some farmers are eyeing soybeans.
“Right now, the market is telling you to plant corn,” said Alan Brugler, Brugler Marketing & Management president, to U.S. Farm Report Host Tyne Morgan. “The soy-corn ratio is below 2.3:1, that’s [telling farmers to plant] more corn.”
Essentially, any farmer who still has the option to plant corn likely should, he said. “We’ve gotten a little too heavy on beans and now we’re coming back a little bit. I think that’s justified here.”
Soybeans are in an especially tough position. Gigantic stocks, paired with slow demand from issues such as ASF in China means it’ll take time for the legume to rebound. In addition, a weak peso means farmers in South America are seeing more profit opportunities than U.S. farmers.
The short-term outlook for soybeans remains pessimistic, however, a big switch to corn could bring long-term positive impact on soybeans.
“Long-term this could lead to higher bean prices but don’t expect that in the short-term,” said Brian Roach, senior risk consultant with INTL FCStone. “There’s a risk even if we don’t cut acreage or if we have a 50-bu. national average yield—we could be staring at high $7 for the harvest lows.”
This year’s late planting could put pressure on yields, but farmers are in a different world than they were in 2013—the last year with major delays.
“Remember that there's more pattern tile today than there was the last time we had a major planting delay like this,” Roach says. “There's more 24-row planters today than there were in 2013 or 2009. So little windows will see far more progress.
“And the valleys where pattern tiling made some sense will certainly breathe some opportunity into yield. And all I can say is that the technology that we're putting into the ground, both on the equipment, manpower, soil fertility, genetics, all have allowed us to see better [yields].”
“We’re coming up on big long-term moving averages a 200 day, even a one-year average on DEC corn we’re bouncing into that here today.” Roach expects to see typical price moves in corn, 10 to 30 cents above DEC corn being good marketing opportunities. However, as farmers get into June and are still facing unplanted acres or have lackluster stand, good marketing decisions will be trickier.
Wheat could see future opportunities.
“Wheat finished at the highs from a technical standpoint,” Roach said, “That’s good today. So, we’ve had some good momentum and we’ve held prices. I don’t know if there’s a big upside yet in terms of this year. That could lead into a better year next year.”
Brugler’s research sees opportunities for a rally.
“Going forward, our statistical our quantitative model said that it was actually about 3% below value—it was it was too cheap by 3%,” Brugler said. “So, I'm very much in favor of this rally from a from a quantitative standpoint.”