USDA’s March 31st Prospective Plantings Report will give the grain trade its first firm estimate of this year’s crop acreages. While it’s based on farmer surveys - it won’t be totally accurate. Mike Lockhart - a Farm Business Management instructor and coordinator of several marketing clubs in northwestern Minnesota - says farmers are still uncertain about what to do this spring. I think there’s a dilemma out there right now, but if you want to raise wheat, do you want to lock up a price that only going to loose us $10.00, instead of taking a chance and loosing $40.00 later on. That’s not a very good plan, but, you know they want to raise wheat and I think that’s a problem right now, looking at the wheat, the corn and the beans, there’s some profit there. Personally, the past few years don’t feel like I want to take those profits, and I’ve done some forward contracting. And I think I should be taking some more. I think the next two years are could be a little rough.
Pioneer Hi-Bred Senior Ag Economist Steven Elmore thinks reaction to next week’s prospective plantings report may help determine actual plantings. If you look at USDA’s acres, 88-89 million acres, in the 70’s flat, or so on soybeans. That’s where mostly everybody is coming right now, but it’s actually the closest band we’ve seen for awhile. It’s going to be dependant right now on the weather. And how much people said on that crop report on March 31st, if that comes out and says we’ve got a lot more soybeans when these people at the universities and everybody else come and do their balance sheets, and says we have too much soybeans or not enough corn then the market may move, and the market report will create some turbulence, and that’s what will govern final acres.
Elmore says margin recognition and margin preservation will be critical for the next few years. We think you need to look at it two, three years out,because your fundamentals are what could get you. The fundamentals for wheat looked really good in 2007, and then it’s changed because we saw what happened. In 2007 we had a poor crop in Europe and prices went up and people respond well to economics and prices. But, if they weren’t realizing that they’d come back, that’s where the wheat market has some softness now and that will continue. We need to look at that with corn and with soybeans going forward, and understand the whole fundamentals of the ag sector, and not just look at it on marketing for the next six months and anything else.
Elmore and Lockhart spoke at an Ag Trends Conference.