Store and Pray has its Dangers

Store and Pray has its Dangers

Store and Pray has its Dangers

Growers who did not lock in prices earlier this year are putting most of their harvest in storage to wait for better prices, but that philosophy also has its dangers. It is called store and pray, and many growers are doing just that with this year’s corn and soybean harvest. According to the HAT/Pioneer Poll, farmers plan to store over half of their harvest this fall.

Yet, University of Illinois economist Todd Hubbs says this approach may not be the best approach.

“I don’t think these current prices are sustainable. Unless something changes, the upside potential is very limited.”

He is not optimistic that our trade war with China will be resolved soon and does not see any major jump in soybean export demand.

 

However, Mike Silver, with Kokomo Grain, feel the lows are in, saying, “I see the market trading in a sideways pattern until we will see just how big this crop is.”

Silver is more optimistic that prices will hold above the lows that were made in September. Silver recommends that growers take some kind of action this fall to protect themselves in case Hubbs is right, “via minimum price contracts, putting grain under loan through the FSA marketing loan, DP contracts at the elevator, even some basis contracts.” He feels these strategies will pay rewards down the road.

Storage may also be a problem as the size of the crop is quickly filling up storage space on the farm and in town. This is another factor that is putting pressure on current prices. Hubbs sees current soybean carryover numbers at 885 million bushels as a low point and that the surplus will build with the large crop now being harvested. Without a pickup in demand, this surplus will weigh on the market well into 2019.

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