Looking ahead at new crop pricing
The latest Farm Progress PANEL shows respondents are thinking ahead with the 2021 crop before planters roll
By: Willie Vogt
When crop prices have challenged even the most stalwart risk management expert, a turn in values can get your attention. For the newest Farm Progress PANEL, it appears that $5 corn and $13 soybeans – at least on the board – is getting folks attention not only for the 2020 crop in the bin, but for new crops too.
In the latest panel, 58% of those responding have forward priced at least a portion of their crop already. Of course, there is variation in how much action each respondent has taken but does show that farmers are working hard to lock in known profits as soon as possible.
As for the breakdown? Out of the respondents, nearly one-fifth (19%) say they’ve priced at least 10% of their crop. That’s a solid, conservative move, that can lock in some profit while keeping options open. Whether those respondents will go farther remains to be seen, it is early.
Nearly one-third (32%) shared that they’ve priced between 11% and 50% of their 2021 crop. Banking more of the new crop profits at a range risk range they’re most comfortable taking. Often, forward pricing stops at about 50% of the crop, given the need to be flexible, and be cautious in case of crop failure.
Yet for 7% of respondents, more than 50% of the new crop has been priced ahead of planting. That’s a choice likely based on their crop history and their own risk appetite in the market.
And while 42% of those who responded have not forward priced, it is still early. Some may be waiting for prices to rise; or they’re likely watching the market and figuring out how basis may play into their strategy.
One PANEL member did respond with a comment, noting that forward pricing information was not only “None of anyone’s business” but asking “Why do farmers always show their cards?”
We thank our respondents for taking part in every PANEL we send.