News

The market is sending a message

A record corn crop combined with the lowest commodity prices in recent years is sending a message to farmers.  Steve Nicholson, grain and oilseed analyst with Rabo Agrifinance tells Brownfield the market is telling farmers to store their crop – and that’s exactly what they’re doing.  “They market is going to pay them to store that crop in to March,” he says.  “If the sell The Board there’s about 8 cents over-carry charges in the market for them to make.  Why not do that when you have such low prices.”

But is there enough storage in the US to hold that crop?  Nicholson says – technically – yes.  “A lot of it is going to stay on the farm,” he says.  “We’ve done some estimation and it looks like two-thirds of this corn crop is going to be stored on the farm, which is a record high.  The rest will be in commercial storage off the farm.”

And right now, he says storage off the farm is at roughly 65 percent of its capacity.