Every farmer would like to know what their grain will be worth at harvest time this fall. That's the million dollar question that Kansas State Extension grain marketing specialist, Dan O'Brien, tried to answer at a Cornhusker Economics conference session held recently in Columbus.
According to O'Brien, there is about an 80% chance that average farm corn prices will be between $4.50 and $4.75. On soybeans, there is an 80% chance that average farm prices will range between $10.25 and $10.75. Of course, there are many factors that will help decide if O'Brien is right. And that leaves a one in five chance of low production and average farm prices better than the projections.
Although ending stocks for corn this past year were extremely low, if the U.S. produces corn at trendline yields on more acres this fall, production could go to 14 billion bushels, O'Brien said. "Then ending stocks would be up," he said.
He said that U.S. producers will most likely plant around 94.5 million acres to corn, with 86 million acres harvested this fall.
Right now, markets are on track to be very high for 2011 corn, particularly late this summer, as stocks become very tight right before harvest. But once harvest begins, prices may tumble if new crop production figures are anywhere near normal, according to O'Brien.
With more corn acres being planted, soybeans will most likely be giving up those acres, he said. That's why there isn't a great market discount for new crop soybeans right now. If a reduced South American crop materializes, U.S. soybeans would be available to compensate, O'Brien said.
Planted soybean acres in the U.S. will probably be around 74.5 million, with an estimated 73.4 million acres harvested. These reduced acreages would support soybean prices in the spring and early summer, O'Brien said.
No one knows what the weather and yields will bring for the upcoming growing season. "Look at options, forward contracting and your crop insurance coverage" to protect profits, O'Brien said.