Another WASDE report this week and a lot of farmers will be lining up to vent on how terrible the USDA estimates are for the average farm price for the marketing year starting next September.
How do I know that? Because I have asked repeatedly for folks who have “the right” numbers to share their acres, yield, and price estimates so those of us without estimates can know what to expect. From a group of more than 60,000 members, there have been less than a handful of replies. It is easier to say someone else is wrong than to risk going on record and being even more wrong.
From harvest to harvest there are approximately 275-300 daily market closing prices which are or will be available to everyone, and nearly an infinite number of quotes during each of those days. If you have storage, there are approximately another 160-200 days of closing prices in the marketing year. Not only are there price quotes available right now, but there are quotes right now for days, weeks, months, and years out in the future.
There is always talk about being a price maker instead of price taker. All it takes to accomplish that is to post your offer to sell and hunt for a buyer who is interested in your offer because it is cheaper than other available offers. In fact, if you have not priced your grain, you have already missed the period when statistically you are likely to see the highest price offers for your grain. Using CZ23 as an example, price has already dropped from over 635 last October to under 500 this morning. I think most folks agree that the current prices are driven primarily by current weather and global demand. If you are fortunate enough to be able to put your grain into storage and wait, a couple of things happened. You turned the fate of your 2023 crop over to the conditions at this time in 2024, and you have $1.35 to make up just to get back to where you could have sold earlier. I am not recommending anything, just putting down the facts to go with some of the hot wind that is blowing across the country.
A discussion of future prices would not be complete without addressing the price projections that are based on projected carryout for your 2023 crop at the end of September 2024. Carryout is a well established indicator associated with price, but only loosely. Stop and think for a minute. If very few can write down what the current acreage and yield will be for 2023 corn, and are even less likely to be able to discuss the domestic demand curve for corn with you, how in the world can you accept the carryout projections as reliable numbers. Inaccurate supply minus inaccurate demand is garbage in and garbage out.
There is a major reason that many farmers will be disappointed with the WASDE numbers, regardless of how accurate or inaccurate they are. Expectations have been built on numbers that are not consistent or reliable. There is only one accurate estimate of price for the 2023 corn crop today and that is the one that is available today and not one that might be available later. If crop conditions deteriorate and demand improves, higher prices will be available next week, next month, etc. Align your expectations with reality and post your offers. If you are still holding 400-450 days into the planning, production, and marketing of this crop, you might want to assess whether you were wrong or whether the market was wrong.
Posted by Keith D. Rogers, 10 July 2023
