Most farmers develop excellent crop production plans each year, including strategies for pest management, fertilization, and tillage. Producers then manage these practices within the farm’s physical and financial resources. A grain marketing plan works with a farm’s production plan to identify a farmer’s specific price objectives as the production and/or storage season progresses. The marketing plan also identifies strategies available to achieve these specific price objectives.
Grain price seasonality in the U.S. generally results in low grain prices during the fall harvest period due to abundant supply. The uncertainty of early summer tends to allow plenty of price fluctuation and volatility, which usually causes grain prices to reach their annual high levels. Grain prices follow a seasonal pattern as depicted by graph A from Chad Hart, Iowa State University Outreach and Extension.
Nine years out of ten, corn prices bottom during fall harvest. Further, local basis is also weakest at harvest. Prices, and local basis, begin to strengthen when harvest is complete to encourage grain to be sold out of storage. Prices continue to move higher during February into March as markets are trying to “buy” acres of production. May through July tend to be weather influenced markets, with significant market moves able to occur in both directions in response to developing drought, a coming storm front, planting progress reports, and many other events. Nine years in ten it is a good idea to have your stored grain and any pre-harvest marketing completed by the fourth of July.
Soybean prices are also usually lowest at fall harvest. Similar to corn, prices and basis tend to strengthen after harvest. However, the soybean market is dramatically affected by the South American soybean harvest starting in February. This reduces the likelihood of winter price rallies in the U.S. market unless South America has a smaller than average crop. Prices begin to climb in the United States when the South American crop size is known and U.S. planting season nears. Spring and summer prices focus on U.S. crop conditions. All of these factors work together to create soybean prices which typically peak in mid to late summer and trail off into harvest. The post-harvest price increase is not as dramatic for soybeans as corn price unless South America is experiencing weather related issues.
As Chad Hart, Iowa State University Extension Economist, noted in his market outlook presentation at the beginning of 2021 and in graph B, the price patterns in 2020 followed the one in ten-year pattern of increasing as harvest time began. “The global pandemic (COVID-19) caused a market disruption in March through May, reducing prices of most agricultural commodities. Expanding drought and a weakening US dollar caused prices of corn and soybeans to increase. A weak US dollar makes US exports cheaper to other countries and can increase the amount of commodities we export. Dry conditions in South America reduced the size of the South American crops, adding strength to US prices. As South America began their harvest, US soy prices dropped slightly in this graph. The last time we had a marketing year with this price pattern was 2012, a year of drought conditions in the US.”
Seasonal price patterns are just one of several major factors that influence the grain marketing plan. Understanding normal price patterns allows a farm to make more informed grain marketing decisions and helps them notice abnormal pricing conditions and opportunities.
Contributing Authors:
Steve Okonek, Extension Agriculture Educator, Trempealeau County
Josh Kamps, Extension Agriculture Educator, Lafayette County
Scott Reuss, Associate Professor, Extension Agriculture Agent, Marinette County
Reddy, R., Andrews, G., Feuerstein, M., Fortenberry, R., Glewen, M., Hanson, M., & Vanderlin, J. (2004). AgVentures – Grain Marketing Module. University of Wisconsin – Extension.
Grain price seasonality in the U.S. generally results in low grain prices during the fall harvest period due to abundant supply. The uncertainty of early summer tends to allow plenty of price fluctuation and volatility, which usually causes grain prices to reach their annual high levels.
Wheat markets have a tendency to decline between spring and the July harvest, then begin to rise from these harvest lows into fall and winter. With soybeans, harvest begins in September, and continues through October into mid-November.
Grain prices have dropped dramatically in the last year. Current prices for 2024 new crop delivery are around $4.15/bu for corn, $11.00/bu for soybeans (2/23/23). This is a decrease of around $1.00/bu for corn and $1.75/bu for soybeans compared to what these prices were expected one year ago (see Figure 1).
With U.S. wheat ending stocks forecast to build for the second consecutive season and larger corn supplies expected, the season-average farm price for wheat is forecast at $6.00 per bushel, down $1.10 from the previous season and well below the record of $8.83 in 2022/23.
But not always. After examining data from the past couple of years, I can definitively say that the day of the week with the highest average corn futures trading volume has been Tuesdays, when traders tend to be 15% more active (across several contracts) than they are on Wednesdays.
The forecast market year average price for 2024/25 is $4.40, forty cents lower than the $4.80 market year average price expected for 2023/24 and more than $2 lower than the $6.54 price for 2022/23.
For example, in the United States, the corn market has a seasonal cycle where prices typically rise in the Spring and Summer months due to planting and growing seasons. During this time, supplies are low, leading to higher prices. Conversely, prices tend to fall in the Fall and Winter months due to the harvest season.
Corn decreased 25.50 USd/BU or 5.41% since the beginning of 2024, according to trading on a contract for difference (CFD) that tracks the benchmark market for this commodity. Historically, Corn reached an all time high of 843.75 in August of 2012.
U.S. wheat ending stocks in 2024/25 are projected at 766 million bushels, up 11 percent from 2023/24, which would be the highest level since 2020/21. Total supplies are up 6 percent from the previous year with larger beginning stocks and production more than offsetting lower imports.
Lower ending stocks combined with growing demand for sustainable biodiesel indicate the United States may need more supply of soybeans. U.S. planted acres are likely to go up for soybeans in 2024.
Considering fewer total wheat acres and trend yield, production is projected to reach 1.97 billion bushels, the largest U.S. wheat crop in eight years. Like corn and soybeans, a lower MYA all wheat price is anticipated in 2024/25, at $6.13 per bushel.
Corn planted area is projected to decline about 4 percent relative to last year. The U.S. corn outlook for 2024/25 is for lower production, greater domestic use, increased exports, and higher ending stocks.
Corn decreased 26.79 USd/BU or 5.68% since the beginning of 2024, according to trading on a contract for difference (CFD) that tracks the benchmark market for this commodity. Historically, Corn reached an all time high of 843.75 in August of 2012.
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