WEEKLY CORN REVIEW: February Turns into Crucial Month for Corn
Revenues, margins and risk affecting planting decisions.
Bryce Knorr
Published: Feb 9, 2009
February used to be a snoozy month for the corn market. With growing season weather still months away and farmers selling old crop inventory to pay bills, prices usually remained stuck in a snow drift. It wasn't unusual for trading ranges to hold to a penny or so.
Times have changed with the growing importance of revenue based crop insurance. Corn payments for 2008 weren't as big as those for soybeans, but still helped soften the blow from the big drop in prices producers experienced in the second half of the year.
Indeed, there's evidence farmers increasingly make planting decisions with an eye towards which crop guarantees the best price. This year, expensive inputs for corn have more farmers looking not only at revenues, but margins and risk as well. Many perceive soybeans to be the safer bet, if only because it will take less cash outlay to plant.
A unique, to say the least, financial environment should shape the battle to battle acres this year. On paper, corn doesn't need to fight much of a battle. Sept. 1 old crop carryover from the 2008 crop looks like it could run around 1.8 billion bushels, a comfortable enough cushion.
To read Bryce Knorr's complete weekly corn review, click HERE.
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