Harvest winding down and weather impact heating up

Soybean harvest is nearing completion and corn is not far behind. Yield results are mostly known, with small tweaks likely in future USDA reports. Attention will move from harvest weather and results to other outside influences. Traders will discern the impact of energy prices, demand, the value of the U.S. dollar, and many other variables. Year-to-date exports are running ahead of a year ago this time for soybeans; corn is at 50% less. 

• READ MORE: Wheat up week-over-week | Friday, November 4, 2022

The biggest driver to prices in the months ahead will be southern hemisphere weather. As weather develops and changes, so will the price of corn and soybeans. According to the October USDA WASDE (World Agriculture Supply and Demand Estimates) report, the forecast for U.S. soybean carryout (2022 - 2023 marketing year) is 200 million bushels. That’s paper-thin. Corn, at just under 1.2 billion bushels, is snug as well. Brazil’s soybean crop is currently estimated at a record 152 million metric tons, well above the drought-shortened crop last year of nearly 125 million metric tons.

With a forecast of tight supply, there is little room for error in the upcoming crops, both in the northern hemisphere and South America. Yet, it has been a turbulent year, and outlook for price will change. Weather, demand, and supply are always in flux. Therefore, price projections will change, potentially in a big way. 

Managing the volatility of two crops in 2023 will be monumental. In fact, you may feel overwhelmed, choose to do little marketing, and instead wait to see what happens. That may not be good enough. At current prices, if demand slows and South America produces a monster crop, there could be $2 or $3 of price risk for soybeans and $1 for corn. If you sell, recognize prices could rally substantially to ration supply. Inflation clouds the issue, as your input costs continue to climb. The idea of doing nothing does not seem practical. 

With harvest winding down, take time to review your marketing approach. If necessary, revamp it for the year ahead. Become a student of marketing tools and alternatives. Have discussions with those who know how to help you make decisions. Stay away from those who are all too willing to give advice, and you know are not experts.

A starting point is to establish a “wish list” of prices where you would be willing to sell half your crop. Then ask, what happens if prices get there? How will I implement? What if prices continue higher? Or, what if prices don’t hit my wish list? What is my plan then? How much should I budget for marketing? 

Bottom line is to take time to write out these ideas and thoughts on paper and then read and reread them and formulate a strategy. The old saying is “what gets written down gets done.” On half of the expected crop, consider strategies to protect price. Again, write out and discuss these strategies. 

Navigating the marketing year ahead will be challenging. Still, attention is necessary. Teams that win at sporting events plan their strategies for various plays the opponent may implement. You will need to do the same with marketing. The next team you are up against is South American crop production.

Editor's Note: If you have any questions on this Perspective, feel free to contact Bryan Doherty at Total Farm Marketing: 800-334-9779.