Corn Could See Biggest Bear Market in History in 2013

Richard Brock, Brock & Associates, Agriculture marketing consulting Firm out of Milwaukee WI, was the keynote speaker at the North Carolina Soybean Producers annual meeting during the Southern Farm Show on Friday. Brock discusses what he’s been sharing with producers when it comes to marketing crops in 2013:

“This year will be entirely different than last year, primarily in soybeans and corn. The biggest issue this year with $7.50 corn and higher, we have really cut demand. Exports are down 50%, stock is down 47% and corn for ethanol is down 10%. Once you lose demand it’s really hard to get it back. We have two crop years right now, old crop and new crop where supplies are tight and next year we think supplies will be very large.
 

In 2013 we think corn acres will be up and soybean acres will be flat and cotton acres will be down, which will be bullish for cotton prices. It will be a good year for cotton producers who can hang on because the prices there are trending opposite of corn. If farmers are aggressive marketers it will be another very good year. In the corn market, if we get the crop planted and have anywhere near a normal crop, we think corn prices will drop by at least $2 a bushel from where they are now.
 

In the short term, soybean market looks good because the Brazilian crop has some production issues right now. There is very strong Chinese demand right now, but above $13.50 in new crop futures we start to get too high priced. Sometime between now and April, we want to be an aggressive seller in new crop beans but at this time, there is still some upside left. 
 

I think the best strategy is a function of choosing the right tool to market in right now. Due to the volatility and concerns about production right now, we are much more in favor of using option strategies than we are cash contracts because it gives us a window that we are comfortable with by locking in some very reasonable floors and still have a lot left in the ceiling on the upside. I think you need to be selective in what years you use options, but this is a year to be an aggressive user of options.
 

We need to understand that farming is cyclical, the bad times don’t last forever and the good ones don’t either. This is going to be a year where we see the biggest bear market in corn we’ve ever seen.”
 

To see more of our coverage from the 37th Annual Southern Farm Show click here
 

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