In a recent conversation with Farm Director KC Sheperd, Oklahoma State University Crop Marketing Specialist Dr. Todd Hubbs offered a candid look at the current state of grain markets. With substantial corn supplies and uncertainty in wheat conditions, Hubbs advised producers on navigating a “range-bound” market environment where prices are hovering near lows.
Corn: A “Ton of Corn” and Usage Debates
The discussion opened with the USDA’s recent World Agricultural Supply and Demand Estimates (WASDE) reports, specifically regarding corn usage estimates, which appear to be statistical outliers compared to the massive supply.
Hubbs noted that while corn demand remains strong—particularly in exports and ethanol production—the USDA’s forecast for “feed and residual” usage is suspiciously high. “Their forecast this year is sort of an outlier given… the change in supply versus the change in feed and residual usage,” Hubbs explained. He cautioned that if this usage doesn’t materialize, future reports in March and June could bring “serious volatility.”
Despite the massive supply—over 18.5 billion bushels—Hubbs does not foresee a significant price decline from current levels. “I think we’re sort of bouncing along the bottom… and I think it’s probably going to stay a bit range-bound in those areas,” he said.
For producers still holding unpriced corn in bins, Hubbs warned that holding out is a gamble. Relying on potential crop deterioration in South America or a reduction in U.S. planting acreage carries risks. “You have to understand there’s some real bearish stuff maybe hanging out there and you’re relying on a weather problem somewhere in all probability,” Hubbs stated.
Wheat: Drought, Winterkill, and Price Ceilings
Turning to wheat, Hubbs addressed the ongoing drought in the Southern Plains. While emergence issues are evident, he noted that dry winter conditions do not always correlate with poor yields at harvest. “That’s more of an April, May rains kind of thing,” he clarified.
However, the prospect of “winterkill” remains a wildcard that could spark a price rally. Hubbs pointed out that cold snaps are affecting not just the U.S., but also major competitors like Russia and Kazakhstan. “If we start getting reports out that winterkill may be a real possibility… you might see a rally start to kick in there,” he said.
Regarding prices, Hubbs reiterated his view that $5.75 is a likely ceiling for the July harvest wheat contract, barring a “black swan” event. While geopolitical instability in the Black Sea or the Middle East could disrupt markets, current conditions leave wheat prices stuck in a trading range.
Marketing Advice: “Keep Your Head on a Swivel”
Hubbs acknowledged the difficulty of advising sales in a low market but emphasized the importance of seizing rally opportunities.
For Wheat: Look for “weather premiums” to enter the market. If prices rally near the upper end of the range, producers should consider pricing.
For Corn: While corn is weighed down by supply, a rally in soybeans or clarity on biofuels policy could help lift corn prices. “It’s dire. I don’t like… telling people this depressing news about prices, but we’re just sort of stuck in these low price ranges,” Hubbs concluded. His final advice to producers was to stay vigilant: “Keeping your head on a swivel and thinking about pricing and pulling the trigger on pricing if you can get to some price targets you like”.
