Grain producers had a banner year in 2011, and 2012 could be a repeat, according to market analyst Richard Brock.
Brock will discuss the outlook for grain and strategies needed to take advantage of this possibility Saturday morning at 8:30 a.m., in the Lobby Meeting Room at the Mid-South Farm and Gin Show. The annual event, celebrating its 60th year, will be held March 2-3, at the Cook Convention Center, in Memphis.
“No two years are ever alike and with an expected sharp increase in corn acres this spring, weather problems will have less of an influence on prices than in the past,” Brock said.
The seasonal high price for corn and soybeans “likely occurred last September,” Brock said. “That means the lows will likely come late summer. But in between, price volatility will be high and opportunities could slip away fast.”
The United States provides over 45 percent of the world’s corn exports, followed by Argentina, 15 percent, the former Soviet Union and Brazil, 9 percent.
Grain prices are still offering very profitable selling opportunities, Brock says. Buyers of grain “need not be in any aggressive hurry, except if you want to lock in near-term needs. The trend remains down.”
Producers should also keep an eye on livestock markets, a subject which Brock will also touch on at the gin show. “The profitability for hogs has been good, but lenders have not been willing to lend money to increase pork production.
“Animal rights activists have also been successful in changing the way hogs are produced, getting sows into bigger areas. Many in the industry believe that as we go to that kind of production, by 2015-17, we’re going to see the number of pigs coming out decline by 3 percent or more due to higher death rates.
“The question is can we increase the efficiency and conversion rates of hogs to keep the total production up? We could see some fairly strong meat prices, but we need to keep them up there for a longer time in order to expand the pork herd so we can expand the feeding use of corn for hogs.”
Brazil, China, the European economy and ethanol will all be covered in Brock’s presentation. In 2011, the United States exported 1.19 billion gallons of ethanol, more than triple the 2010 export total of 396 million gallons. Brazil was the leading importer of U.S. ethanol in 2011, receiving 33 percent of total shipments.
Brock says wheat has discounted most of the bearish fundamentals and has less downside risk than corn, “although it’s still there. Strong demand for cash soybeans nearby will help support this market somewhat. However, with new-crop cash soybeans trading at or above $12 per bushel (at the time of this writing), the upside is not large.”
Last year this was a standing room only presentation. This year will likely be no different, so arrive early.