March 1, 2021

Beans, corn on different track

By Gene Lucht

The corn and soybean markets are headed in distinctly different directions, but so long as farmers understand their financial situations, they should be able to cope and profit.

“As long as you know your own farm’s cash flow needs and break-even costs, you can plan accordingly,” explains Karl Setzer, a market analyst at Maxyield Cooperative in West Bend.

Still, there is no denying the corn and soybean markets differ this fall.

The soybean market is very strong, in part because demand is strong. The United States already has made 82 percent of its yearly soybean sales, compared with 45 percent at this time a year ago.

Brazilian officials have said they have no intentions of making any sales until March.

With ethanol plants slowing their production levels due to corn rationing, livestock producers who were depending on dried distillers grains are sometimes turning to more soybeans, increasing domestic crush levels.

“It’s simple supply and demand,” Setzer says.

Meanwhile, that supply and demand idea appears to have gone too far on the corn side.

As the industry watched a drought settle over the Cornbelt this summer, it pushed prices higher in an effort to ration usage.

“We probably took it a little too far,” Setzer says.

Ethanol plants slowed production. Exports slipped. Livestock producers have reduced their breeding herds.

That last item is most concerning to Setzer, who notes cattle-placement numbers that are just 81 percent of what they were a year ago.

That 19 percent drop means animals that won’t need to be fed next year, he says.

Still, prices for corn and soybeans are good and are well above the cost of production for most producers. What’s more, there is still little incentive to store crops.

He says the key is to look at on-farm cash-flow needs and at what the market is telling you to do rather than what you wish it would do.


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