Grain markets are in a lull driven by supply, according to Bryan Doherty of Total Farm Marketing.
“That’s what you have when you have a bigger supply year and you’ve got low prices and the money flow continues to sell rallies, we haven’t seen any change in that. There’s not enough weather in the southern hemisphere to capture the spirit of buyers to jump in and aggressively purchase, so you end up with a year like this where the market has to chew through supply. So, end users buy only as needed, farmers got a lot to sell, the end user knows it, so they’re not going to chase the right now.”
That will change, Doherty says, once the market can find a bottom.
“Think about it this way; We went into a harvest and had a better yield than expected, more supply, farmers didn’t have as much sold, therefore the market needs to just get through inventory. All of the uncertainty lies ahead, so it wouldn’t be surprising to me if we’re trying to carve out a bottom, we just haven’t seen the trigger point yet.”
Doherty explains what this means for spring planting acres…tape
“Right now if you look at where the price of November beans is divided by December corn price, it’s 2.5. So, that would tell us we’re going to switch some acres to beans. But remember last year we switched four million acres out of beans, so there should be a natural progression back into beans to get farmers more into the rotational period. But I don’t think there’s a battle this year for acres, it’s almost the opposite, it’s who can shed acres.”