The USDA released its quarterly grain stocks as of March 1st along with its annual planting intentions report on Thursday. The report brought along with it a few surprises, mainly on the planting intentions side. Corn was estimated at 93.6 mln acres, which was 3.6 mln acres higher than the average trade guess. This was the largest miss on corn intended acres from the average trade estimate on record! The other notable item was wheat acres coming in lower at 49.6 mln acres. This was 2.1 mln acres less than the average trade guess. Below is a table looking at the results from yesterday…
Grain stocks were in line with trade estimates as we still work with ample supplies. Year on year soybean stocks are 15% higher than at this point last year, corn stocks are up 1% from this point last year and wheat stocks are up 20% from last year at this time.
What does this mean?
It is important to remember that the planting intentions report is a survey based report based on producer’s intentions late February through early March. Since that time quite a bit has changed with the bean: corn ratio going from 2.25 to a present 2.52 in favor of beans. Below is a look at the bean: corn ratio chart over the past year for the 2016 crop.
What to do now?
When the market is volatile producers should use different market strategies to capture volatility in the market place. One way is through minimum price contracts. With corn trending lower this may be an opportunity to lock in a floor price and gain some long term ownership through the growing season. Same story on beans as we are able to lock in futures floors in the upper $8’s heading into a very volatile spring season.
Another option is the market base builder contract. We currently have this getting priced for NC corn, beans and wheat. The average on this contract to date is currently well ahead of today’s market.
Let’s sit down and take a deeper look into what the current numbers mean for the rest of the marketing year. Markets are too volatile and unpredictable to not have a plan in place to ensure profitability. Stay tuned and keep informed on any new Wheat Grower contracts or programs. Contact your local Grain Marketing specialist for more information!