(NAFB) An agricultural market analyst says farmers’ frustration over low prices is understandable, but warns against selling too quickly if corn reaches $5 a bushel. Darren Frye, president and CEO of Water Street Solutions, says changing weather or demand could drive prices even higher.
“We’ve had depressed prices for three years now under the cost of production. That’s not feasible. This is one of the longest periods of time I can ever remember where we’ve stayed under the cost of production with our outputs. And so, you know, farmers are frustrated. They say, if it gets back to $5 corn, I’m just going to get rid of it. I’m going to sell ahead. I can make money there. And it kind of reminds me of what happened in 2020 when we were trading like $3.20. And we passed on $4 corn, and everybody said, boy, if we get back to $4, I’m going to sell it all. And, of course, people did. And that’s when the market took off and went to $6 and $7 and $8. I’m not suggesting that it’s going back to $8. But I am suggesting that there’s a reason why it would go back to $5. And if that’s weather or with a super El Niño or demand because energy prices are rising, I think you guys got to be careful and understand that the difference between $5 corn and $7 corn could be just a couple ingredients that change. And it could send this up and up really fast.”
As producers weigh marketing decisions, weather could be the wildcard factor that changes everything.
“We really haven’t traded a lot of weather yet. You know, you look at Europe, you look at Western Europe. Man, they’ve endured hot temperatures, 100, 105, 110, even up to 115. It’s even getting over further into the central part of Europe, and even the eastern part. But it’s been hot, and that’s affected some of their finishing on wheat, but it’s affecting their corn right now. We’ll have to downgrade that crop, but the market doesn’t seem too concerned about it. And we’ve cried wolf a few times here in the United States over the last three or four years, and then come out with big crops. So, the market doesn’t seem real concerned. But this high-pressure system, you know, you get something at 594 or 600 millibars, that’s a high-pressure system that’s got to be respected. And that’s what we’re seeing on the outlook here on some of these models. And so, we’re going to have the highest concentration of high pressure and probably the strongest ridge we’ve seen in 12 to 15 years here in the United States. And so, if it sticks around, that’s a problem for corn pollination.”
Darren Frye, along with us, president and CEO of Water Street Solutions out of Peoria, Illinois.
Audio provided by Susan Littlefield, American Ag Network
Audio with Darren Frye, president and CEO, Water Street Solutions, Peoria, Illinois
